<PAGE>
Filed pursuant to Rule 424(b)(2)
Registration No. 333-20741
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED FEBRUARY 13, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 5, 1997)
8,500,000 SHARES
[LOGO]
COMMON STOCK
---------------------
All of the shares of Common Stock, par value $.50 per share (the "Common
Stock"), offered hereby are being sold by Tyco International Ltd. (the
"Company"). Of the 8,500,000 shares of Common Stock being offered hereby,
6,800,000 shares are being offered initially in the United States and Canada by
the U.S. Underwriters and 1,700,000 shares are being offered initially outside
the United States and Canada by the International Managers. See "Underwriting."
The Common Stock is traded on the New York Stock Exchange under the symbol
"TYC." On February 12, 1997, the last reported sale price of the Common Stock,
as reported on the New York Stock Exchange, was $59 1/2 per share. See "Price
Range of Common Stock and Dividends."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share.................. $ $ $
Total(3)................... $ $ $
</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $ .
(3) The Company has granted the U.S. Underwriters and the International Managers
options, exercisable within 30 days after the date hereof, to purchase
1,020,000 and 255,000 additional shares of Common Stock, respectively, to
cover over-allotments, if any. If such options are exercised in full, the
total Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares will be made in New York, New York, on or about
, 1997.
------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
LEHMAN BROTHERS
------------------------
The date of this Prospectus Supplement is , 1997.
<PAGE>
PHOTOS FOR INSIDE FRONT COVER TO PROSPECTUS SUPPLEMENT
UPPER LEFT HAND CORNER
FIRE AND SAFETY SERVICES
FIRE PROTECTION PRODUCTS
INCLUDING EXTINGUISHERS,
VALVES AND SPRINKLER HEADS.
LOWER LEFT-HAND CORNER
ELECTRICAL/ELECTRONICS
SIMPLEX FIBER OPTIC CABLES
UPPER RIGHT-HAND CORNER
GRINNELL FLOW CONTROL
ASSORTMENT OF VALVES INCLUDING
NEOTECHA, ANVIL, GRINNELL AND MUELLER.
LOWER RIGHT-HAND CORNER
DISPOSABLE AND SPECIALTY PRODUCTS
DISPOSABLE MEDICAL PRODUCTS
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10B-6 AND
10B-7 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
THE COMPANY
Tyco International Ltd. ("Tyco" or the "Company"), through its divisions and
operating subsidiaries, engages in the manufacture and distribution of
disposable medical supplies and other specialty products, the design,
manufacture, installation and service of fire detection and suppression systems,
and the manufacture and distribution of flow control products and electrical and
electronic components. The Company, which operates in more than 50 countries
around the world, had sales of over $5 billion during its fiscal year ended June
30, 1996.
The Company's strategy is to be the low-cost, high quality producer in every
business segment in which it competes. The Company has strong leadership
positions in each of its segments of its respective markets. The Company seeks
to enhance its leadership positions in its domestic and international businesses
by investing in its existing businesses, developing new markets and acquiring
complementary products/companies that allow the Company to consolidate the
strengths from both the existing operations and the acquired businesses to
maximize its competitive advantages. The goal of this strategy is to create
value for the Company's shareholders by increasing the Company's earnings per
share.
The Company is a Massachusetts corporation. Its executive offices are
located at One Tyco Park, Exeter, New Hampshire 03833, and its telephone number
is (603) 778-9700.
THE OFFERINGS
The offering of 6,800,000 shares of Common Stock in the United States and
Canada and the concurrent offering of 1,700,000 shares of Common Stock outside
the United States and Canada are referred to herein as the "Offerings." Unless
otherwise indicated, all information included in this Prospectus Supplement
assumes the Underwriters' over-allotment options are not exercised.
<TABLE>
<S> <C>
Common Stock Offered by the Company:
United States Offering..................... 6,800,000 shares
International Offering..................... 1,700,000 shares
Total.................................... 8,500,000 shares
Common Stock Outstanding after
the Offerings:.............................. 165,179,751 shares(1)
Use of Proceeds.............................. To repay indebtedness incurred for previous
acquisitions.
New York Stock Exchange Symbol............... "TYC"
</TABLE>
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(1) Based on outstanding shares as of January 27, 1997.
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<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following tables set forth summary consolidated financial data of the
Company. The summary consolidated financial data should be read in conjunction
with the audited and unaudited Consolidated Financial Statements of the Company
and the Notes thereto, incorporated herein by reference, and the information
contained in "Selected Consolidated Financial Data" and "Management's Discussion
and Analysis of Financial Condition and Operating Results."
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER
31, FISCAL YEAR ENDED JUNE 30,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995 (2)
------------ ------------ ------------ ------------
INCOME STATEMENT DATA:
Sales.................................................... $ 3,092,056 $ 2,460,087 $ 5,089,828 $ 4,534,651
Costs and Expenses:
Cost of sales............................................ 2,245,109 1,805,646 3,692,885 3,313,301
Selling, general and administrative...................... 503,616 390,882 814,179 735,917
Merger and transaction related costs..................... -- -- -- 37,170
Interest................................................. 52,757 30,337 58,867 63,385
------------ ------------ ------------ ------------
2,801,482 2,226,865 4,565,931 4,149,773
------------ ------------ ------------ ------------
Income before income taxes and extraordinary item........ 290,574 233,222 523,897 384,878
Income taxes............................................. (116,204) (96,787) (213,750) (168,285)
------------ ------------ ------------ ------------
Income before extraordinary item......................... 174,370 136,435 310,147 216,593
Extraordinary item, net of taxes......................... -- -- -- (2,600)
------------ ------------ ------------ ------------
Net income............................................... $ 174,370 $ 136,435 $ 310,147 $ 213,993
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net Income Per Share: (1)
Income before extraordinary item......................... $ 1.12 $ 0.89 $ 2.03 $ 1.43
Extraordinary item, net of taxes......................... -- -- -- (0.02)
------------ ------------ ------------ ------------
Net income............................................... $ 1.12 $ 0.89 $ 2.03 $ 1.42
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Cash dividends per common share (1)...................... $ 0.10 $ 0.10 $ 0.20 $ 0.20
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
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(1) Income and cash dividends per share amounts for all periods presented have
been restated to give effect to a two-for-one stock split effected in the
form of a stock dividend which was distributed on November 14, 1995.
(2) Fiscal 1995 results include a charge of $37.2 million ($31.2 million
after-tax) for fees and expenses related to the merger and integration of
Tyco and Kendall International, Inc. ("Kendall"), and an extraordinary item
of $2.6 million after-tax resulting from the early extinguishment of $100
million of Kendall debt. (See Notes 2 and 4 to the Consolidated Financial
Statements of the Company, incorporated herein by reference).
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<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, FISCAL YEAR ENDED JUNE 30,
-------------------------- --------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995 (1)
------------ ------------ ------------ ------------
SEGMENT DATA:
Sales:
Disposable and Specialty Products...................... $ 946,746 $ 702,866 $ 1,459,398 $ 1,386,781
Fire and Safety Services............................... 1,252,698 954,892 1,990,865 1,703,412
Flow Control........................................... 656,108 564,171 1,158,944 1,014,357
Electrical and Electronic Components................... 236,504 238,158 480,621 430,101
------------ ------------ ------------ ------------
$ 3,092,056 $ 2,460,087 $ 5,089,828 $ 4,534,651
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Income before income taxes and extraordinary item:
Disposable and Specialty Products...................... $ 170,247 $ 130,218 $ 291,744 $ 261,154
Fire and Safety Services............................... 89,032 57,328 128,136 86,512
Flow Control........................................... 62,899 51,711 114,145 90,368
Electrical and Electronic Components................... 43,275 42,799 88,525 76,397
------------ ------------ ------------ ------------
Income from operations................................... 365,453 282,056 622,550 514,431
Interest expense....................................... (52,757) (30,337) (58,867) (63,385)
Corporate and other expenses (1)....................... (22,122) (18,497) (39,786) (66,168)
------------ ------------ ------------ ------------
$ 290,574 $ 233,222 $ 523,897 $ 384,878
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
BALANCE SHEET DATA (at end of period):
Working capital.......................................... $ 305,114 $ 403,714 $ 367,186
Total assets............................................. 5,198,090 3,953,936 3,381,461
Long-term debt........................................... 893,665 511,622 506,417
Shareholders' equity..................................... 2,228,050 1,938,439 1,634,681
</TABLE>
- ------------------------
(1) Fiscal 1995 results include a charge of $37.2 million ($31.2 million
after-tax) for fees and expenses related to the merger and integration of
Tyco and Kendall, and an extraordinary item of $2.6 million after-tax
resulting from the early extinguishment of $100 million of Kendall debt.
(See Notes 2 and 4 to the Consolidated Financial Statements of the Company,
incorporated herein by reference).
S-5
<PAGE>
THE COMPANY
Tyco International Ltd. ("Tyco" or the "Company"), through its divisions and
operating subsidiaries, engages in the manufacture and distribution of
disposable medical supplies and other specialty products, the design,
manufacture, installation and service of fire detection and suppression systems,
and the manufacture and distribution of flow control products and electrical and
electronic components. The Company, which operates in more than 50 countries
around the world, had sales of over $5 billion during its fiscal year ended June
30, 1996.
The Company's strategy is to be the low-cost, high-quality producer in every
business segment in which it competes. The Company has strong leadership
positions in each of its segments of its respective markets. The Company seeks
to enhance its leadership positions in its domestic and international businesses
by investing in its existing businesses, developing new markets and acquiring
complementary products/companies that allow the Company to consolidate the
strengths from both the existing operations and the acquired businesses to
maximize its competitive advantages. The goal of this strategy is to create
value for the Company's shareholders by increasing the Company's earnings per
share.
The Company reviews acquisition opportunities in the ordinary course of
business, some of which may be material and some of which are currently under
investigation, discussion or negotiation. There can be no assurance that any of
such acquisitions will be consummated.
DISPOSABLE AND SPECIALTY PRODUCTS
Tyco's Disposable and Specialty Products Group consists of Kendall, Ludlow
Laminating and Coating, Armin Plastics, Twitchell, and Accurate Forming. Kendall
manufactures and distributes medical supplies, disposable medical products and
adhesive products and tapes. Ludlow Laminating and Coating manufactures
laminated and coated products. Armin manufactures polyethylene film and
packaging products. Twitchell manufactures extrusion coated polyester yarns and
woven fabrics and Accurate manufactures deep-drawn metal parts. In the first
quarter of fiscal 1997, the Company acquired Carlisle Plastics, Inc.
("Carlisle"), a leading manufacturer of specialty packaging materials and
garment hangers.
KENDALL
Kendall conducts its operations through four business units: Kendall
Healthcare, Kendall International, Kendall-Polyken and Ludlow Technical
Products. In each of its business units, Kendall competes with numerous
companies, including a number of larger, well-established companies. Kendall
relies on its reputation for quality and dependable service, together with its
low cost manufacturing and innovative products, to compete in its markets.
KENDALL HEALTHCARE. The Kendall Healthcare business unit markets a broad
range of wound care, vascular therapy, urological care, incontinence care,
anesthetic care and other products to U.S. and Canadian hospitals and alternate
site health care customers. Kendall Healthcare is the industry leader in gauze
production with its Kerlix-Registered Trademark- and
Curity-Registered Trademark- brands. Kendall Healthcare's other core domestic
product category consists of its vascular therapy products, principally
anti-embolism stockings, marketed under the T.E.D.-Registered Trademark- brand
name, sequential pneumatic compression devices sold under the SCD-TM- brand name
and a venous plexus foot pump. Kendall Healthcare pioneered the pneumatic
compression form of treatment and continues to be the dominant participant in
the pneumatic compression and elastic stocking segments of the vascular therapy
market.
Kendall acquired Professional Medical Products, Inc. ("ProMed") in February
1996. ProMed is a leading provider of incontinent care products, marketing
primarily to nursing homes and other institutional providers of long term care.
ProMed also offers a range of other patient care products, including urological,
wound care, surgical care and respiratory care products.
S-6
<PAGE>
Kendall's Superior Healthcare Group, Inc., acquired in April 1994,
manufactures a broad line of disposable medical supplies including respiratory,
urology and nursing care products. In October 1994, Kendall acquired Sheridan
Catheter Corporation, a manufacturer of airway management, temperature
monitoring and specialty products serving patients in anesthesia, critical care
and emergency medicine.
Kendall Healthcare distributes its products both directly through its sales
force and through a network of over 250 independent distributors. Kendall
Healthcare's sales force is divided into three groups: one promoting its
vascular therapy products, one promoting its wound care and other health care
products and one selling all of its products into the alternate site markets.
Most of the U.S. distributors also sell similar products made by Kendall's
competitors, a practice common in the industry.
KENDALL INTERNATIONAL. Kendall International is responsible for the
manufacturing, marketing, distribution and export of Kendall products in
numerous countries worldwide. Kendall International's operations are organized
primarily into three geographic regions--Europe, Latin America and the Far East.
Kendall International generally markets a range of products similar to those of
Kendall Healthcare, although the mix of product lines varies from country to
country. Kendall International markets directly to hospital and medical
professionals and through independent distributors.
KENDALL-POLYKEN. The Kendall-Polyken division manufactures and markets
specialty adhesive products and tapes for industrial applications, including
external corrosion protection tape products for oil, gas and water pipelines.
Other industrial applications include tapes used in the automotive industry for
wire harness wraps, sealing and other purposes, and tapes used in the aerospace
and heating and air conditioning (HVAC) industries. Kendall-Polyken also
produces duct, packaging and electrical tapes for consumer applications and
bandages and medical tapes for Kendall's healthcare product units and for
others.
The Company acquired Nashua Corporation's tape business and Betham
Corporation in May 1996. The tape operation manufactures duct, foil and
strapping tapes and spray adhesives for industrial and consumer markets
worldwide. Betham develops specialty pressure sensitive adhesives and coatings,
principally for the automotive, medical and specialty markets. Both are being
integrated with Polyken's existing operations.
Polyken generally markets its pipeline products directly, working with local
manufacturers' representatives, international engineering and construction
companies, and the owners and operators of pipeline transportation facilities.
Polyken sells its other industrial products either directly to major end users
or through diverse distribution channels, depending on the industry being
served.
TECHNICAL PRODUCTS. The Technical Products division manufactures and sells
a variety of disposable medical products, specialized paper and film products.
These products include disposable electrodes for medical devices, hydrogels,
adhesive tapes, pressure sensitive coated papers and films used for business
forms and in printing applications, high quality facsimile paper and recording
chart papers for medical and industrial instrumentation.
The Technical Products division was originally a division of Ludlow.
Subsequent to the acquisition of Kendall, the Company reorganized to align
Technical Products with Kendall. Over the last three years, Technical Products
has made a series of acquisitions to expand its product line and presence in the
disposable medical products field. Uni-Patch, acquired in December 1993, is a
manufacturer and distributor of transcutaneous electrical nerve simulation
("TENS") electrodes and related products which are used primarily in physical
therapy and other forms of rehabilitation medicine. Classic Medical Products,
acquired in December 1993, is a manufacturer of medical electrodes for EKGs and
similar diagnostic tests. Promeon, acquired in January 1994, is a leading
manufacturer of gels which are used with medical electrodes for testing and
other monitoring purposes. LMI, acquired in November 1994, is a manufacturer of
medical electrodes. Cambrex, acquired in December 1994, is a producer of
hydrogel wound care
S-7
<PAGE>
products. Sentry Medical, acquired in May 1996, manufactures neonatal
electrodes, diagnostic and monitoring electrodes, electrotherapy electrodes and
cable and lead wires.
These products are marketed primarily by the division's internal sales
force. Competitors vary from small regional firms to larger firms that compete
with Technical Products on a national basis. Competition is on the basis of
price and quality.
LUDLOW LAMINATING AND COATING
Ludlow Laminating and Coating produces protective packaging and other
materials made of coated or laminated combinations of paper, polyethylene and
foil. Coated packaging materials provide barriers against grease, oil, light,
heat, moisture, oxygen and other contaminants that could damage the contained
products. The division produces structural coated and laminated products such as
plastic coated kraft, linerboard and bleached boards for rigid urethane
insulation panels, automotive components and wallboard panels. Other
applications include packaging for photographic film, frozen foods, health care
products, electrical and metallic components, agricultural chemicals, cement and
specialty resins.
Ludlow markets its laminated and coated products through its internal sales
force and through independent manufacturers' representatives. The Company
competes with many large manufacturers of laminated and coated products on the
basis of price, service, marketing coverage and custom application engineering.
There are numerous specialized competitors which tend to differ from market to
market.
ARMIN
Armin manufactures polyethylene film and packaging products in a wide range
of size, gauge, construction strength, stretch capacity, clarity and color.
Armin extrudes low density, high density and linear low density polyethylene
film from resin purchased in pellet form, using such additives as coloring, slip
and anti-block chemicals. Armin's products include plastic supermarket
packaging, greenhouse sheeting, shipping covers and liners and a variety of
other packaging configurations for the aerospace, agricultural, automotive,
construction, cosmetics, electronics, food processing, healthcare,
pharmaceutical and shipping industries. Armin also manufactures a number of
other polyethylene products, such as reusable plastic pallets, transformer pads
for electric utilities, and a large variety of disposable gloves for the
cosmetic, medical, foodhandling and pharmaceutical industries. A majority of
sales are generated through Armin's internal sales force. Armin serves over
6,000 customers in the United States.
Armin competes with a wide range of manufacturers, including some vertically
integrated companies and companies that manufacture polyethylene resins for
their own use. Armin competes in many market segments by emphasizing product
innovation, specialization and customer service.
TWITCHELL
Twitchell manufactures extrusion coated polyester yarns and woven PVC-coated
yarn fabrics and woven and knit paper fabrics. These fabrics are sold by
Twitchell's internal sales force and through distributors to manufacturers for
use principally in outdoor furniture, wall coverings, window screening, awnings,
housewares and other specialty products. Non-woven fabric is coated and sold for
use as disposable medical clothing. Competition is on the basis of price,
quality and service. Twitchell competes with a number of U.S. and foreign
manufacturers in the sale of woven fabrics and coated products.
ACCURATE FORMING
Accurate Forming manufactures deep-drawn metal parts, primarily barrels,
caps and clips for pens and pencils and containers, caps and closures for
cosmetics, pharmaceutical packaging and automotive applications. Accurate sells
its products on a direct basis through its internal sales force and also
utilizes manufacturers' representatives. The Company competes with many small,
independent deep-drawn metal
S-8
<PAGE>
manufacturers and plastic extruders, several of which have manufacturing
locations in the Far East. Competition is on the basis of price.
CARLISLE
Carlisle was acquired in September 1996 and is a leading producer of
industrial and consumer plastic products. Carlisle's products include trash
bags, flexible packaging, sheeting and garment hangers. Carlisle's trash bag
products include institutional lines, as well as Carlisle's own national
consumer brands. Sales are primarily in North America.
Carlisle supplies plastic trash bags to mass merchants, grocery chains, and
institutional customers. Carlisle manufactures Ruffies-Registered Trademark-, a
national brand consumer trash bag, for mass merchants and other retail stores.
Carlisle also provides heavy duty trash can liners for institutional customers,
such as food service distributors, janitorial supply houses, restaurants, hotels
and hospitals.
In the consumer trash bag market, Carlisle competes primarily with two
nationally advertised brands. Carlisle has historically concentrated on mass
merchants as the primary market for its branded Ruffies trash bags, while the
other major national brands are marketed primarily through food retailers.
Film-Gard-Registered Trademark-, Carlisle's leading plastic sheeting
product, is sold to consumers and professional contractors through
do-it-yourself outlets, home improvement centers and hardware stores. A wide
range of Film-Gard products are sold for various uses, including painting,
renovation, construction, landscaping and agriculture. Carlisle's industrial
packaging film is sold through distributors and manufacturers for use as shrink
wrap and for other packaging requirements.
Carlisle sells molded plastic garment hangers to garment manufacturers,
national retailers, regional or local retailers, and mass merchants. Garment
manufacturers place their clothes on Carlisle's hangers before shipping to
retail outlets. Carlisle creates, manufactures and sells customized hanger
designs to national retailers. Regional or local retailers buy standard Carlisle
hanger lines for retail clothing displays. Carlisle also supplies mass merchants
with consumer plastic hangers for sale to the general public. Carlisle operates
in a competitive marketplace where success is dependent upon price, service and
quality.
FIRE AND SAFETY SERVICES
The Company is the largest contractor in the world for the design and
installation of fire detection, suppression and sprinkler systems, and for the
servicing for such systems. The Company is also a leading manufacturer and
distributor of fire detection and suppression products.
The Company's Grinnell subsidiary ("Grinnell"), which was founded in 1850,
is the largest installer, manufacturer and supplier of automatic fire sprinkler
and fire alarm and detection systems in North America. Wormald International
Limited ("Wormald"), which was founded in 1889, operates as a major fire
protection company with contracting, manufacturing and distribution operations
throughout Western Europe and the Asia-Pacific region. Grinnell and Wormald, in
combination, is the largest fire protection company in the world, forming a
network of over 300 offices on five continents. The acquisition of Thorn
Security Group ("Thorn") in July 1996 expands the Company's worldwide position
in the fire detection and security systems market.
CONTRACTING AND SERVICE
The Company designs, fabricates, installs and services automatic fire
sprinkler systems, fire alarm and detection systems, special hazard suppression
systems and security systems in buildings and other installations. Grinnell's
fire protection contracting and service business in North America operates
through a network of offices located in the United States, Canada, Mexico and
Puerto Rico. Internationally, the Company engages in fire protection contracting
and service through a network of offices in the United
S-9
<PAGE>
Kingdom, Continental Europe, Saudi Arabia, United Arab Emirates, Australia, New
Zealand, Southeast Asia and South America.
The Company installs fire protection systems in both new and existing
structures. Typically, the contracting businesses bid on contracts for fire
protection installation which are let by owners, architects, construction
engineers and mechanical or general contractors. In recent years, the business
of retrofitting existing buildings in the United States and Canada has grown as
a result of local and state legislation requiring installation of fire
protection systems and reduced insurance premiums available on structures with
automatic sprinkler systems. The retrofitting and servicing of fire protection
systems in existing buildings represented approximately 65% of Grinnell's North
American contracting sales in fiscal 1996. Revenue from the servicing,
maintenance, repair and inspection of fire protection, detection and suppression
systems installed by the Company and other contractors has increased in recent
years.
A majority of the fire suppression systems installed by the Company are
water-based, but the Company is also the world's leader in providing custom
designed special hazard fire protection systems which incorporate various
specialized non-water agents such as foams, dry chemicals and gases. Systems
using agents other than water are suited for fire protection in certain
manufacturing, power generation, petrochemical, offshore oil exploration,
transportation, telecommunications, mining and marine applications. The Company
holds exclusive manufacturing and distribution rights in several regions of the
world for INERGEN-Registered Trademark- fire suppression products.
INERGEN-Registered Trademark-, an alternative to the ozone depleting agent known
as halon, consists of a mixture of three inert gases designed to effectively
extinguish fires without polluting the environment or damaging costly equipment.
In Australia, New Zealand and Asia, the Company, through its O'Donnell
Griffin division, engages in the installation of electrical wire and related
electrical equipment in new and existing structures and offers specialized
electrical contracting services in these markets for different types of
construction, including applications for railroad and bridge construction.
Substantially all of the mechanical components (and, in North America, most
of the pipe) used in the fire protection systems installed by the Company are
manufactured by the Company. The Company also has fabrication plants worldwide
that cut, thread and weld pipe, which is then shipped with other prefabricated
components to job sites for installation. The Company has developed its own
computer-aided-design technology that reduces the time required to design
systems for specific applications and coordinates fabrication and delivery of
system components. The Company also installs alarms, detection and activation
devices and centralized monitors. With the acquisition of Thorn, the Company is
now a major manufacturer of alarms, detection and activation devices and central
monitoring stations.
In its fire protection contracting business, the Company employs both
non-union and union employees in North America, Europe and Asia-Pacific. Many of
the union employees are employed on an hourly basis for particular jobs. In
North America, the largest number of union employees is represented by a number
of local unions affiliated with the United Association of Plumbers and
Pipefitters ("UA"). In April 1994, following lengthy negotiations, Grinnell's
contracts with a number of locals of the UA were not renewed. Employees in those
locations, representing 64% of those employees represented by the UA unions,
went on strike. Grinnell has continued to operate with former union members who
have crossed over and with replacement workers. The labor action has not had,
and is not expected to have, any material adverse effect on Grinnell's business
or results of operations.
Generally, competition in the fire protection business varies by geographic
location. In North America, Grinnell competes with hundreds of smaller
contractors on a regional or local basis for the installation of fire
suppression and alarm and detection systems. Many of the regional and local
competitors employ non-union labor. In Europe, the Company competes with many
regional or local contractors on a country by country basis. In Australia, New
Zealand and Asia, the Company competes with a few large fire protection
contractors as well as with many smaller regional or local companies. The
Company competes for fire protection contracts primarily on the basis of price,
service and quality.
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<PAGE>
MANUFACTURING AND DISTRIBUTION
The Company manufactures most of the components used in its own fire
protection contracting business, as well as a variety of products for sale to
other fire protection contractors. In North America, the Company manufactures
pipe and pipe fittings, fire hydrants, sprinkler heads and substantially all of
the mechanical sprinkler components used in an automatic fire suppression
system. In the United Kingdom, France, Germany and Asia-Pacific, the Company
manufactures and sells sprinkler heads, specialty valves, fire doors and
electronic panels for use in fire detection systems. In Mexico, the Company
manufactures fire extinguishers, fire hose and related equipment. With the
recent addition of Thorn, the Company now manufactures a complete line of alarm
and detection equipment that is installed by the Company's units. Thorn's
products are also sold to other alarm and detection installers.
The Company's Ansul subsidiary manufactures and sells various lines of dry
chemical, liquid and gaseous portable fire extinguishers and related agents for
industrial, government, commercial and consumer applications. Ansul also
manufactures and sells special hazard fire suppression systems designed for use
in restaurants, marine applications, mining applications, the petrochemical
industry, confined industrial spaces and commercial spaces housing delicate and
electronic equipment. Ansul also manufactures spill control products designed to
absorb, neutralize and solidify spills of various hazardous materials.
Fire protection products are sold through the Company's flow control
products distribution network discussed in "Flow Control", below, and through
independent distributors.
ENVIRONMENTAL SERVICES
In January 1996, the Company acquired The Earth Technology Corporation
("Earth Tech"), a provider of a broad range of environmental, consulting and
engineering services throughout the United States. The principal services of
Earth Tech consist of full-spectrum environmental and hazardous waste management
services, infrastructure design and construction services, facilities
engineering and construction management services for institutional, civic,
commercial and industrial clients, and contract operations and management
services for water, waste water and remediation treatment facilities for
municipal and industrial clients.
Services are provided through a network of 40 offices located throughout
North America. Earth Tech competes with a number of national, regional and local
companies on the basis of price and breadth and quality of services.
FLOW CONTROL PRODUCTS
The Company is a manufacturer and distributor of flow control products in
North America, Europe and Asia-Pacific. Flow control products include pipe,
fittings, valves, meters and related products which are used to transport,
control and measure the flow of liquids and gases. The Company's Flow Control
Group includes Grinnell, Allied Tube & Conduit, Mueller Co. and a number of
specialized manufacturers of valves, fittings and couplings.
MANUFACTURING
The Company manufactures and distributes a wide range of flow control
products, including pipe and pipe fittings, tubing, valves, meters, couplings,
pipe hangers, strut and related components. These products are used in plumbing,
heating, ventilation and air conditioning (HVAC) systems, mechanical
contracting, power generation, water and gas utilities, oil and gas exploration,
petrochemical and numerous other industrial applications. The Company also
manufactures certain related products such as steel tubing, custom iron
castings, malleable iron pipe fittings and fencing materials.
S-11
<PAGE>
Allied is the leading North American manufacturer of pipe and other tubular
products. Allied manufactures a full line of steel pipe for the fire protection
and construction industries and for commercial, residential and institutional
markets. Its mechanical tube division offers steel tubing in a wide assortment
of shapes and sizes for a variety of industrial and commercial applications.
Allied's fence division is a leader in the manufacture of products for the
residential and industrial/commercial fence markets. Allied also manufactures
metal framing systems used in the construction, industrial and OEM markets.
Mueller, a manufacturer of water and gas distribution products, manufactures
fire hydrants, iron butterfly and gate valves, service-line brass valves and
fittings, gas valves and meter bars, water meters, backflow preventers and
related products for sale to independent distributors and, to a lesser extent,
directly to waterworks contractors, municipalities and gas companies throughout
the United States and Canada.
Over the past 5 years, the Company has expanded its worldwide manufacturing
and distribution presence through a series of acquisitions and internal growth.
In North America, Grinnell manufactures forged steel fittings and valves. In
Switzerland, Neotecha, acquired in April 1992, manufactures Teflon lined
specialty valves for use in highly corrosive environments. In the United
Kingdom, Charles Winn (Valves) Ltd. and Hindle Cockburns, acquired in April
1993, manufacture specialty high performance butterfly valves and ball valves
that are used principally in the oil and gas, chemical and processing
industries. In Spain, Belgicast, acquired in July 1995, manufactures valves used
for waterworks and other industrial applications. In Malaysia the Company
manufactures couplings, fittings, steel tubing and metal framing products.
In September 1996, the Company acquired Henry Pratt Co., James Jones Company
and Edward Barber & Co. from Watts Industries, Inc. The three operations,
located in the United States and the United Kingdom, are engaged in the
manufacture and sale of valves, hydrants and fittings used primarily in water
utility, wastewater treatment and power generation markets.
DISTRIBUTION
The Company operates through a 45 branch distribution network for the sale
of flow control and fire protection products in North America. Three Regional
Distribution Centers ("RDC's") are strategically located in Georgia, Illinois
and California to support the branches' product needs and to ship directly to
customers. The Company plans to open two additional RDC's, in Pennsylvania and
Texas, in fiscal 1997. Each RDC stocks over 8,500 products. The Company's
Worldwide Flow Control operations also stock and sell products through various
distribution centers in Europe, Australia, New Zealand, the Middle East and
Asia. In Europe, the Company distributes fire protection products, industrial
valves and products for mechanical markets through warehouses located in the
Netherlands, the United Kingdom, Germany and France. Products are sold
principally to distributors and to fire protection contractors and in some
instances to mechanical and industrial contractors and original equipment
manufacturers. In the Asia-Pacific region, the Company distributes fire
protection and flow control products through warehouses located in Australia,
New Zealand and Singapore. Products are sold directly to fire protection and
other contractors as well as to mechanical and industrial contractors and
independent distributors. While distribution patterns vary, most centers stock
an extensive line of valves, fittings, pipe and other products for fire
protection systems, components for HVAC installations and water and gas
distribution, and specialized valves and piping for the chemical, food, power
and beverage processing industries. Products manufactured by the Company
accounted for approximately 81% of its North American distribution sales and for
approximately 65% of its European distribution sales in fiscal 1996.
Grinnell's North American distribution network competes with independent
manufacturers' representatives and other manufacturers and to a lesser extent
with local and regional supply houses, all of which carry lines of other
domestic or foreign manufacturers. Grinnell competes on the basis of price, the
S-12
<PAGE>
breadth of its product line, service and quality. Grinnell competes for the sale
of gray iron pipe fittings, malleable and ductile iron fittings and other flow
control products and fire protection sprinklers and devices principally with
other domestic producers, as well as with foreign manufacturers of fittings.
Grinnell uses an internal sales force for the sale of certain other iron
castings sold direct to original equipment manufacturers and other end users.
Allied competes for the sale of steel pipe, which is sold through Grinnell's
distribution network discussed above, with pipe from other domestic and foreign
producers. Competition for the sale of pipe is based on price, service and
breadth of product line. Fence and other specialized industrial tubing is sold
to wholesalers, original equipment manufacturers and other distributors.
Competition for the sale of fence products is principally from national and
regional domestic producers and to a lesser extent from foreign companies, on
the basis of price, service and distribution. The Company competes with many
small regional manufacturers for sales of specialized industrial tubing on the
basis of price and breadth of product line.
Mueller's water and natural gas distribution flow control products are sold
through independent distributors, and, to a lesser extent, directly to
utilities, municipalities and gas distribution companies. Certain of its gas
distribution products are also sold through the Grinnell distribution network.
The Company competes for the sale of these products on the basis of product
quality, service, price, breadth of product line and conformity with municipal
codes and other engineering standards. The Company competes with several other
manufacturers in the United States and Canada for the sale of iron and brass
flow control devices for water and natural gas distribution systems.
ELECTRICAL AND ELECTRONIC COMPONENTS
The Company's Electrical and Electronic Components group consists of Simplex
Technologies, Inc. ("Simplex"), Allied's Electrical Conduit division and the
Company's Printed Circuit Group. Simplex manufacturers underwater communications
cable and cable assemblies. Allied manufactures and distributes electrical
conduit and related components used in commercial electrical installations. The
Printed Circuit Group manufactures printed circuit boards and assembles
backplanes for the electronics industry.
SIMPLEX
Simplex is the largest U.S. manufacturer of undersea fiber optic
telecommunications cable. Simplex also manufacturers cable and cable assemblies
for the U.S. Navy, underwater electric power cable and optical ground wire for
use by power authorities and utilities, and electro-mechanical cable for unique
field applications. Simplex's principal customer is AT&T-SSI, which accounted
for approximately 78% of its revenues in fiscal 1996.
Under a multi-year engineering development program, Simplex and AT&T Labs,
Inc. have developed a proprietary encapsulation process for AT&T-SSI supplied
optic fibers used in underwater telecommunications cables. Simplex manufactures
the cable and performs system assembly and has proprietary rights to the
encapsulation process. Over the past ten years, Simplex has manufactured more
than 110,000 kilometers of undersea optical cable deployed by AT&T and others.
For more than thirty years, Simplex has been the primary supplier of cable
and cable assemblies to the U.S. Navy for use in data-gathering systems. Cable
for U.S. Navy systems is manufactured under various types of contracts,
including cost-plus-incentive fee, time and material, and fixed-price.
Simplex, usually in conjunction with AT&T, competes on a worldwide basis
primarily against two other entities: Alcatel-Alsthom, headquartered in France
and KDD, located in Japan. Alcatel is vertically integrated and produces its own
cable, whereas AT&T utilizes Simplex in the manufacture of its underwater cable
and KDD utilizes a Japanese cable manufacturer.
S-13
<PAGE>
ALLIED ELECTRICAL CONDUIT
Allied's electrical conduit division is one of the leading producers of
steel electrical conduit in the United States. Electrical conduit is galvanized
steel tubing designed to contain current-carrying electrical wires both inside
and outside building structures. The conduit also serves as an electrical ground
that ensures proper operation of circuit interruptors and provides a channel
into which additional wires can be inserted or removed as electrical needs
change. The division manufactures a full line of electrical conduit as well as
metal framing and other products.
The division's electrical conduit and related products are sold to wholesale
electrical distributors through Allied's distribution facilities by an internal
sales force and a network of commissioned sales agents. The division competes
for the sale of electrical products primarily with several other large domestic
manufacturers. Competition in the electrical conduit industry is primarily based
upon price, quality, delivery and breadth of product line.
PRINTED CIRCUIT GROUP
Tyco's Printed Circuit Group of companies is one of the largest independent
manufacturers of complex multi-layered printed circuit boards and assemblers of
backplanes in the United States. Printed circuit boards are used in the
electronics industry to mount and interconnect components to create electronic
systems. They are categorized by the number of sides or layers that contain
circuitry, which could be single-sided, double-sided or multi-layer. In general,
single and double-sided boards are less advanced. Multi-layer boards provide
greater interconnection density while decreasing the number of separate printed
circuit boards which are required to accommodate powerful and sophisticated
components. Backplanes include printed circuit boards and are assemblies of
connectors and other electronic components which distribute power and
interconnect printed circuit boards, power supplies and other system elements.
The Group manufactures highly sophisticated double-sided, mass molded boards
of up to eight layers, precision tooled, custom laminated multi-layer boards of
up to 68 layers and sophisticated flex-rigid circuit boards for use in
environmentally demanding conditions. The majority of the Group's sales are
derived from its high-density multi-layer boards. The Company's backplanes
facility produces fully assembled units utilizing press-fit or soldered
connection technology, custom pin grid array sockets and surface mounted
assembly. The printed circuit boards and backplanes manufactured by the Company
are designed by customers and are manufactured on a job order basis to the
customers' specifications.
The Group markets its products mainly through independent manufacturers'
representatives and, to a lesser extent, through its own internal sales
organization. The Group's customers are generally original equipment
manufacturers in the telecommunications, aircraft, computer, military and other
industrial and consumer electronics industries. The Company competes with
several large companies which manufacture less complex single-sided and double-
sided printed circuit boards in the United States, as well as with many
companies that have their own in-house manufacturing capabilities. The Company
believes that far fewer competitors manufacture the more complex, high-density
double-sided and multi-layer boards. The Group competes on the basis of quality,
price, reliability and timeliness of delivery.
In January 1997, the Company acquired ElectroStar, Inc. ("ElectroStar"), a
leading U.S. manufacturer of complex printed circuit boards used in
sophisticated electronic equipment. ElectroStar has manufacturing facilities in
Logan, Utah and in Inglewood, California.
ENVIRONMENTAL MATTERS
Tyco believes its facilities are in substantial compliance with federal,
state and local laws relating to the protection of the environment. Compliance
has not had and is not expected to have a material adverse effect upon the
capital expenditures, earnings or competitive position of the Company.
S-14
<PAGE>
The Company believes that, consistent with applicable laws and regulations,
it exercises due care and takes appropriate precautions in the management of
wastes. The Company has received notification from the U.S. Environmental
Protection Agency and certain state environmental agencies that conditions at a
number of sites where hazardous wastes were disposed of by the Company and other
persons require cleanup and other possible remedial action.
The Company also has a number of projects underway at several of its
manufacturing facilities in order to comply with environmental laws. In
addition, the Company remains responsible for certain environmental issues at
manufacturing locations sold by the Company. These projects relate to a variety
of activities, including solvent and metal contamination clean up, oil spill
containage and clean up, containment area upgrades, feasibility studies and
equipment upgrades and replacement. These projects, some of which are voluntary
and some are required under applicable law, involve both remediation expenses
and capital improvements.
The ultimate cost of site cleanup is difficult to predict given the
uncertainties regarding the extent of the required cleanup, the interpretation
of applicable laws and regulations and alternative cleanup methods. Based upon
the Company's experience with the foregoing environmental matters, the Company
has concluded that there is at least a reasonable possibility that remedial
costs will be incurred with respect to these issues in an aggregate amount in
the range of $11.0 million to $41.7 million. At June 30, 1996 the Company has
concluded that the most probable amount which will be incurred within this range
is $19.6 million and such amount is included in the caption "accrued expenses"
in the accompanying consolidated balance sheet. Based upon information available
to the Company, at those sites where there has been an allocation of the
liability for cleanup costs among a number of parties, including the Company,
and such liability could be joint and several, management believes it is
probable that other responsible parties will fully pay the cost allocated to
them, except with respect to one site for which the Company has assumed that one
of the identified responsible parties will be unable to pay the cost apportioned
to it and that such party's cost will be reapportioned among the remaining
responsible parties. In view of the Company's financial position and reserves
for environmental matters of $19.6 million, the Company has concluded that its
payment of such estimated amounts will not have a material adverse effect on its
consolidated financial position or results of operations.
OTHER MATTERS
In connection with the acquisition of Kendall, the Company generally assumed
the obligations under a registration rights agreement among Kendall and certain
of its equity securityholders. Pursuant to such agreement, if the Company
registers any of its equity securities (subject to certain exceptions), the
Company is required to provide notice to such securityholders of the
registration and use its best efforts to include in such registration any
securities requested by such holders within 15 business days of such notice.
Promptly after the closing of the Offerings, the Company will register on a
shelf registration statement to be kept effective for 15 business days any
securities held by any such securityholders that are covered by the registration
rights agreement and that are not freely tradeable (estimated to be rights to
acquire up to 130,600 shares of Common Stock) and will reimburse any such holder
for any difference between the net offering price per share received by the
Company in the Offerings and the net price per share received by such holder for
its securities in a bona fide market transaction under the shelf registration
statement.
S-15
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the shares of Common Stock offered hereby
are expected to be used to repay indebtedness incurred for previous
acquisitions. The net proceeds will be used to pay off the $200 million
outstanding under the Company's $300 million Credit Agreement and the balance to
reduce its uncommitted lines of credit. The due dates of the outstanding
borrowings range from approximately seven to thirty days at interest rates
ranging from 5.50% to 5.67% per annum. Certain affiliates of the Underwriters
are lenders under the Credit Agreement and will receive a significant portion of
the net proceeds. See "Underwriting."
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock of the Company is traded on the New York Stock Exchange
under the symbol "TYC." The following table sets forth the high and low sales
prices for the Company's Common Stock, as reported on the New York Stock
Exchange, and the quarterly dividends per share declared on the Common Stock for
the periods indicated. The prices and dividends have been restated to reflect a
two-for-one stock split effected in the form of a stock dividend which was
distributed on November 14, 1995.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------
<S> <C> <C> <C>
DIVIDENDS
HIGH LOW PER SHARE
--------- --------- -------------
FISCAL 1995
First Quarter.................................................................... $ 24 3/16 $ 21 1/4 $ .05
Second Quarter................................................................... 25 1/16 21 13/16 .05
Third Quarter.................................................................... 26 13/16 23 1/4 .05
Fourth Quarter................................................................... 29 1/8 25 1/2 .05
FISCAL 1996
First Quarter.................................................................... $ 31 5/8 $26 11/16 $ .05
Second Quarter................................................................... 35 5/8 29 1/2 .05
Third Quarter.................................................................... 39 1/4 32 3/8 .05
Fourth Quarter................................................................... 41 3/8 35 1/8 .05
FISCAL 1997
First Quarter.................................................................... $ 44 7/8 $ 35 1/2 $ .05
Second Quarter................................................................... 56 42 7/8 .05
Third Quarter (through February 12, 1997)........................................ 59 5/8 51 3/4
</TABLE>
On February , 1997, the Company had approximately Common Stock holders
of record, which does not include beneficial owners holding through nominee or
"street" name. The last reported sale price of the Common Stock on the New York
Stock Exchange on February 12, 1997 was $59 1/2 per share.
S-16
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of December 31, 1996. This table should be read in conjunction with
the audited and unaudited Consolidated Financial Statements of the Company and
the Notes thereto, incorporated herein by reference. See also "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1996
-------------------------------
<S> <C>
(IN THOUSANDS EXCEPT SHARE
DATA)
<CAPTION>
<S> <C>
Loans payable and current portion of long-term debt:............................. $ 362,754
-----------
-----------
Long-term debt:
Credit agreements.............................................................. $ 100,000
Uncommitted lines of credit.................................................... 254,700
8.125% public notes due 1999................................................... 144,934
6.5% public notes due 2001..................................................... 298,490
6.375% public debentures due 2004.............................................. 104,425
9.5% public debentures due 2022................................................ 199,599
8.0% public debentures due 2023................................................ 49,962
Other.......................................................................... 104,309
Less current portion....................................................... (362,754)
-----------
Total long-term debt....................................................... 893,665
-----------
Shareholders' equity:
Preferred stock ($1 par value, authorized 2,000,000 shares, none
outstanding)................................................................. --
Common stock ($.50 par value, authorized 500,000,000 shares, 156,657,322
outstanding)................................................................. 78,328
Capital in excess of par value (net of deferred compensation of $27,867)....... 747,173
Currency translation adjustment................................................ (24,693)
Retained earnings.............................................................. 1,427,242
-----------
Total shareholders' equity................................................. 2,228,050
-----------
Total capitalization............................................................. $ 3,121,715
-----------
-----------
</TABLE>
S-17
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA(2)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following table sets forth selected consolidated financial information
of the Company for the five years in the period ended June 30, 1996. On October
19, 1994, Tyco acquired Kendall in a merger, which has been accounted for using
the pooling of interests method of accounting. The selected consolidated
financial information reflects the combined financial position, operating
results and cash flows of Tyco and Kendall as if they had been combined for all
periods presented subsequent to June 30, 1992, the date Kendall consummated a
financial restructuring (the "Kendall Restructuring"). Financial data for the
six months ended December 31, 1996 and 1995 are unaudited but, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary to summarize fairly the Company's financial position and
results of operations. The selected financial information should be read in
conjunction with the audited and unaudited Consolidated Financial Statements of
the Company and the Notes thereto, incorporated herein by reference, and the
information contained in "Management's Discussion and Analysis of Financial
Condition and Operating Results."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31, FISCAL YEAR ENDED JUNE 30, (2)
-------------------- -------------------------------------------------------
1996 1995 1996 1995 (3) 1994 1993 (4)(5) 1992 (6)
--------- --------- --------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales.............................................. $3,092,056 $2,460,087 $5,089,828 $4,534,651 $4,076,383 $3,919,357 $3,066,485
Costs and Expenses:
Cost of sales...................................... 2,245,109 1,805,646 3,692,885 3,313,301 3,003,194 2,909,947 2,390,218
Non-recurring inventory charge..................... -- -- -- 22,485 --
Selling, general and administrative................ 503,616 390,882 814,179 735,917 682,568 682,520 446,244
Merger and transaction related costs............... -- -- -- 37,170 -- -- --
Restructuring and severance charges................ -- -- -- -- -- 39,325 25,612
Interest........................................... 52,757 30,337 58,867 63,385 62,431 85,785 63,261
--------- --------- --------- --------- --------- ----------- ---------
2,801,482 2,226,865 4,565,931 4,149,773 3,748,193 3,740,062 2,925,335
--------- --------- --------- --------- --------- ----------- ---------
Income before income taxes, extraordinary item and
cumulative effect of accounting changes.......... 290,574 233,222 523,897 384,878 328,190 179,295 141,150
Income taxes....................................... (116,204) (96,787) (213,750) (168,285) (138,999) (84,837) (45,884)
--------- --------- --------- --------- --------- ----------- ---------
Income before extraordinary item and cumulative
effect of accounting changes..................... 174,370 136,435 310,147 216,593 189,191 94,458 95,266
Extraordinary item, net of tax benefit............. -- -- -- (2,600) -- (2,816) --
Cumulative effect of accounting changes............ -- -- -- -- -- (71,040) --
--------- --------- --------- --------- --------- ----------- ---------
Net income......................................... $ 174,370 $ 136,435 $ 310,147 $ 213,993 $ 189,191 $ 20,602 $ 95,266
--------- --------- --------- --------- --------- ----------- ---------
--------- --------- --------- --------- --------- ----------- ---------
Net Income Per Share: (1)
Income before extraordinary item and cumulative
effect of accounting changes................... $ 1.12 $ 0.89 $ 2.03 $ 1.43 $ 1.28 $ 0.65 $ 1.03
Extraordinary item............................... -- -- -- (0.02) -- (0.02) --
Cumulative effect of accounting changes.......... -- -- -- -- -- (0.49) --
--------- --------- --------- --------- --------- ----------- ---------
Net Income......................................... $ 1.12 $ 0.89 $ 2.03 $ 1.42 $ 1.28 $ 0.14 $ 1.03
--------- --------- --------- --------- --------- ----------- ---------
--------- --------- --------- --------- --------- ----------- ---------
Cash dividends per common share (1)................ $ 0.10 $ 0.10 $ 0.20 $ 0.20 $ 0.20 $ 0.19 $ 0.18
--------- --------- --------- --------- --------- ----------- ---------
--------- --------- --------- --------- --------- ----------- ---------
BALANCE SHEET DATA (at end of period):
Working capital.................................... $ 305,114 $ 403,714 $ 367,186 $ 329,918 $ 341,154 $ 274,278
Total assets....................................... 5,198,090 3,953,936 3,381,461 3,144,598 3,164,966 2,451,537
Long-term debt..................................... 893,665 511,622 506,417 588,491 812,585 534,951
Shareholders' equity............................... 2,228,050 1,938,439 1,634,681 1,367,026 1,138,786 1,040,551
</TABLE>
- ------------------------------
(1) Income and cash dividends per share amounts for all periods presented have
been restated to give effect to a two-for-one stock split effected in the
form of a stock dividend which was distributed on November 14, 1995.
(2) The selected financial data reflects the combined results of operations and
financial position of Tyco and Kendall for all periods subsequent to June
30, 1992, the date on which Kendall undertook a financial restructuring. The
selected financial data at and for the year ended June 30, 1992 reflect only
the results of operations and financial position of Tyco.
(3) Fiscal 1995 results include a charge of $31.2 million after-tax for fees and
expenses related to the merger and integration of Tyco and Kendall, and an
extraordinary item of $2.6 million after-tax resulting from the early
extinguishment of $100 million of Kendall debt. (See Notes 2 and 4 to the
Consolidated Financial Statements).
(4) Effective July 1, 1992 the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") 109 "Accounting for Income Taxes"
and SFAS 106 "Employers' Accounting for Post-Retirement Benefits Other Than
Pensions." Kendall adopted SFAS 109 and SFAS 106 effective with its
restructuring and, accordingly, there is no cumulative effect reflected in
the Consolidated Financial Statements.
(5) Fiscal 1993 results include restructuring and severance charges of $27.3
million after-tax, a non-recurring inventory charge of $22.5 million before
and after-tax, a reduction in tax expense of $6.7 million attributable to
revisions in previous tax estimates, incremental income tax expense due to
tax rate changes of $7.8 million and a special pension charge of $1.2
million after-tax.
(6) Fiscal 1992 results include restructuring and severance charges of $14.9
million after-tax and a reduction in tax expense of $16.9 million
attributable to revisions in previous tax estimates.
S-18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND OPERATING RESULTS
RESULTS OF OPERATIONS FOR THE FIRST SIX MONTHS OF FISCAL 1997 COMPARED WITH THE
FIRST SIX MONTHS OF FISCAL 1996
OVERVIEW
For the first six months of fiscal 1997, net income was $174.4 million, or
$1.12 per share, compared with $136.4 million, or $.89 per share, for the first
six months of fiscal 1996. The increase was attributable to strong earnings in
the Disposable and Specialty Products and Fire and Safety Services groups as
well as increased income in the Flow Control Products group.
SALES
Sales during the first six months of fiscal 1997 were $3.09 billion, a 26%
increase over fiscal 1996 sales of $2.46 billion. Sales of the Disposable and
Specialty Products group increased $243.9 million to $946.7 million, or 35% due
to increased sales principally at Kendall, Ludlow and Armin, as well as the
inclusion of Carlisle Plastics ("Carlisle"), acquired in September 1996. Sales
of the Fire and Safety Services group increased $297.8 million to $1.25 billion,
or 31%, due to increased sales in the contracting business in each geographic
region as well as the inclusion of Thorn Security Group ("Thorn"), acquired in
July 1996 and Earth Technology Corporation ("Earth Tech") acquired in January
1996. Sales of the Flow Control Products group increased $91.9 million to $656.1
million, or 16%, reflecting higher volume at Europe Flow Control, which includes
businesses acquired in the second quarter of fiscal 1997, as well as from
Mueller, which includes businesses acquired in the first quarter of fiscal 1997,
and Grinnell's distribution operations. Sales of the Electrical and Electronic
Components group decreased slightly to $236.5 million resulting principally from
lower sales of underwater communications cable systems at Simplex partially
offset by increased sales at the Printed Circuit Group operations.
INCOME BEFORE INCOME TAXES
For the first six months of fiscal 1997 as compared to the first six months
of fiscal 1996, operating profits of the Disposable and Specialty Products group
increased $40.0 million to $170.2 million, or 31% reflecting higher earnings at
Kendall, Ludlow and Armin, as well as the inclusion of Carlisle from September
1996. Operating profits of the Fire and Safety Services group rose $31.7 million
to $89.0 million, or 55%, due principally to higher margins at fire protection
operations in each geographic region, as well as the inclusion of Thorn and
Earth Tech. The operating profits of the Flow Control Products group increased
$11.2 million to $62.9 million, or 22%, resulting principally from increased
earnings at Allied, Mueller and European distribution operations, which includes
businesses acquired during fiscal 1997. Operating profits of the Electrical and
Electronic Components group increased $.5 million to $43.3 million, or 1% due to
increased earnings at the Printed Circuit Group operations and Allied's
electrical conduit operations, partially offset by decreased earnings at
Simplex. The impact of the consolidated sales and results of operations from
changes in foreign exchange rates relative to the value of the U.S. dollar for
the first six months of fiscal 1997 as compared to the same period of fiscal
1996 was not material.
INTEREST EXPENSE
Interest expense increased $22.5 million to $52.8 million during the first
six months of fiscal 1997 as compared to the first six months of fiscal 1996 due
principally to higher average debt balances, resulting from the effect of
acquisitions.
S-19
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED JUNE 30, 1996
OVERVIEW
Income before extraordinary item was $310.1 million, or $2.03 per share, for
fiscal 1996 compared with $216.6 million, or $1.43 per share, for fiscal 1995.
Income before extraordinary item rose 25% excluding the $31.2 million ($0.21 per
share) after-tax charge for merger and transaction related costs from the
Kendall merger in fiscal 1995 (see Note 2 to the Consolidated Financial
Statements). The increase was attributable to strong earnings improvements in
each of the Company's business segments.
SALES
Sales increased 12% during fiscal 1996 to $5.09 billion from $4.53 billion
in fiscal 1995. Sales of the Disposable and Specialty Products group increased
$72.6 million to $1.46 billion, or 5%. Increased sales at Kendall and, to a
lesser extent, at Ludlow were partially offset by decreased sales at Armin, due
to reduced raw material pricing, and by Kendall's sale of Futuro in the second
quarter of fiscal 1996. Kendall's sales include the sales of Professional
Medical Products, Inc. which was acquired during the third quarter of fiscal
1996. Sales of the Fire and Safety Services group increased $287.5 million to
$1.99 billion, or 17%, due to increased sales in the North American, European
and Asia-Pacific regions contracting businesses, as well as sales resulting from
the acquisition of Earth Tech in the third quarter of fiscal 1996. Sales of the
Flow Control Products group increased $144.6 million, or 14%, to $1.16 billion,
reflecting higher volume at Allied, including businesses acquired by Allied in
the second half of fiscal 1995 as well as from Grinnell's distribution
operations, Mueller and European Flow Control. Sales of the Electrical and
Electronic Components group increased $50.5 million to $480.6 million, or 12%,
resulting principally from higher sales of underwater communications cable
systems at Simplex as well as at the printed circuit businesses and at Allied's
electrical conduit operations.
Sales increased 11% during fiscal 1995 to $4.53 billion from $4.08 billion
in fiscal 1994. Sales of the Disposable and Specialty Products group increased
$187.6 million to $1.39 billion, or 16%, due to increased sales at Kendall,
Armin and Ludlow. Sales of the Fire and Safety Services group increased $177.5
million to $1.70 billion, or 12%, due primarily to increased sales in the Asia-
Pacific and North American operations. Sales were slightly higher in Europe,
where the impact of the sale of certain fire products operations in the fourth
quarter of fiscal 1994 was offset by the impact of changes in average foreign
exchange rates on non-U.S. dollar denominated sales. Had average foreign
currency exchange rates during fiscal 1995 remained constant with the averages
during fiscal 1994, and excluding the effect of the fire products sale, the
increase in Fire Protection group sales would have been approximately $27.0
million lower than reported above. Sales of the Flow Control Products group
increased $100.0 million to $1.01 billion, or 11%, reflecting higher volume and,
in some cases, higher unit selling prices at Grinnell's distribution operations,
Allied's pipe and tube business, Mueller and European Flow Control businesses.
Sales of the Electrical and Electronic Components group decreased $6.8 million
to $430.1 million, or 2%, resulting principally from slightly lower sales at
Allied's electrical conduit operations, lower sales of underwater communications
cable systems at Simplex and lower sales at the printed circuit businesses.
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM
Pre-tax income before extraordinary item was $523.9 million in fiscal 1996
and $384.9 million in fiscal 1995. Pre-tax income increased 24% excluding the
$37.2 million charge for merger and transaction related costs in fiscal 1995.
Operating profits of the Disposable and Specialty Products group increased
$30.5 million to $291.7 million, or 12%, reflecting higher earnings at Kendall
and Ludlow partially offset by decreased earnings at Armin, where profits were
adversely affected by changes in raw material costs. Operating profits of the
Fire and Safety Services group rose $41.6 million to $128.1 million, or 48%, due
to higher margins at fire protection operations in each geographic region, as
well as the inclusion of earnings from Earth Tech,
S-20
<PAGE>
which was acquired during the third quarter of fiscal 1996. Operating profits of
the Flow Control Products group increased $23.7 million to $114.1 million, or
26%, resulting from increased earnings principally at Allied and Mueller and, to
a lesser extent, at the group's other operating units. Operating profits of the
Electrical and Electronic Components group increased $12.1 million to $88.5
million, or 16%, due to increased earnings at Simplex, the printed circuit
businesses and at Allied's electrical conduit operations.
The impact on the consolidated sales and results of operations from changes
in foreign exchange rates relative to the U.S. dollar for fiscal 1996 as
compared to fiscal 1995 was not material.
Corporate and other expenses rose to $39.8 million from $29.0 million in
fiscal 1995 (excluding merger and transaction related costs) due principally to
an increase in expense associated with the Company's accounts receivable
financing program. Under the program, the discount on accounts receivable is
included in selling, general and administrative expense and is excluded from
interest expense. See Note 5 to the Consolidated Financial Statements.
Pre-tax income before extraordinary item was $384.9 million in fiscal 1995
and $328.2 million in fiscal 1994. Fiscal 1995 results include pre-tax charges
of $37.2 million for merger and transaction related costs associated with the
Kendall merger. See Note 2 to the Consolidated Financial Statements.
Operating profits of the Disposable and Specialty Products group increased
$69.5 million to $261.2 million, or 36%, reflecting increased volume and higher
margins principally at Kendall, Armin and, to a lesser extent, Ludlow. Operating
profits of the Fire and Safety Services group rose $16.3 million to $86.5
million, or 23%, due principally to higher margins at the North American and
Asia-pacific contracting and manufacturing businesses, partially offset by lower
margins at the European businesses. The operating profits of the Flow Control
Products group increased $16.3 million to $90.4 million, or 22%, resulting
principally from increased earnings at Grinnell's North American distribution
operations, Allied, Mueller and European Flow Control. Operating profits of the
Electrical and Electronic Components group increased $3.9 million to $76.4
million, or 5%, due to higher margins at Allied's electrical conduit operations
and increased earnings at Simplex.
The impact on the consolidated results of operations from changes in average
foreign exchange rates for fiscal 1995 as compared to fiscal 1994 was not
material.
Corporate and other expenses for fiscal 1995 include the $37.2 million
charge for merger and transaction related costs noted above. Also included is
expense of $8.2 million, as compared to $4.1 million for fiscal 1994, related to
the Company's accounts receivable financing program. See Note 5 to the
Consolidated Financial Statements.
INTEREST EXPENSE
Interest expense decreased $4.5 million to $58.9 million during fiscal 1996
due to lower average interest rates partially offset by higher average debt
levels. Interest expense increased $1.0 million to $63.4 million during fiscal
1995 due to higher average interest rates partially offset by lower average debt
levels.
EXTRAORDINARY ITEM
During fiscal 1995, the Company refinanced $100 million principal amount of
Kendall's subordinated notes due 2003. In connection with the refinancing, the
Company recorded a charge of $4.3 million ($2.6 million after-tax), representing
unamortized debt issuance fees and a call premium, as an extraordinary loss.
S-21
<PAGE>
INCOME TAX EXPENSE
Income tax expense before extraordinary item was $213.8 million in fiscal
1996 and $168.3 million in fiscal 1995. An analysis of income taxes and the
effective income tax rate is presented in Note 7 to the Consolidated Financial
Statements.
LIQUIDITY AND CAPITAL RESOURCES
As presented in the Consolidated Statement of Cash Flows, net cash provided
by operating activities was $165.8 million during the first six months of fiscal
1997. The significant changes in working capital accounts were an increase of
$62.7 million in inventory and a $106.1 million decrease in accounts payable and
accrued expenses. Net changes in other working capital accounts were not
significant during the period.
During the first six months of fiscal 1997, the Company used cash to (i)
acquire a U.S. and a German Disposable and Specialty Products company, a U.K.
based and a German based Fire and Safety Services company, three Australian Fire
and Safety Services companies, three European Flow Control companies, two U.S.
Flow Control companies, and a U.S. Electrical and Electronic Components company,
for an aggregate of $773.0 million, including $501.9 million in cash, 3.1
million shares of the Company's common stock, valued at $116.1 million and the
assumption of $155.0 million in debt; (ii) purchase $100.4 million of property
and equipment; (iii) pay dividends of $15.4 million; and (iv) reacquire shares
for $5.3 million.
At December 31, 1996 the Company's total debt was $1.26 billion as compared
to $639.4 million at June 30, 1996. The increase resulted from the acquisitions
discussed above, partially offset by net operating cash flows.
Shareholders' equity was $2.23 billion, or $14.22 per share, at December 31,
1996, compared to $1.94 billion, or $12.67 per share, at June 30, 1996. The
increase is due primarily to net income of $174.4 million and the issuance of
the Company's shares for the Carlisle acquisition. Total debt as a percent of
total capitalization (total debt and shareholders' equity) was 36% at December
31, 1996 and 25% at June 30, 1996.
In October 1996, the Company issued $300 million principal amount of 6.5%
notes due 2001. The net proceeds were used to redeem debt assumed in the
Carlisle acquisition, as well as to reduce certain amounts outstanding under the
Company's credit agreement and uncommitted lines of credit. The Company believes
that its funding sources are adequate for its anticipated capital and operating
requirements through expected cash flows from operations and established
financing arrangements.
In January 1997 the Company filed a shelf registration to enable it to offer
from time to time unsecured debt securities or shares of common stock, or any
combination of the two, at an aggregate initial offering price not to exceed
$900 million. The Securities and Exchange Commission has declared the shelf
registration effective. The Company intends to use the net proceeds from the
sale of any such debt securities or shares of common stock to refinance, in
part, existing indebtedness, to finance, in part, the cost of acquisitions and
for general corporate purposes. Funds not required immediately for such purposes
may be invested temporarily in short-term marketable securities. The Common
Stock is being offered pursuant to such registration.
Working capital requirements for the remainder of fiscal 1997 are not
expected to significantly exceed fiscal 1996 levels. The level of capital
expenditures is expected to increase in fiscal 1997 as compared to fiscal 1996
due to recent acquisitions as well as certain capital projects in process, and
the source of funds for such expenditures is expected to be cash from
operations.
Subsequent to December 31, 1996, the Company utilized cash on hand as well
as its existing financing arrangements to complete the acquisitions of
ElectroStar, Inc., Sempell Valve Group and American Tube and Pipe Co., Inc. with
the aggregate purchase price totaling approximately $266 million.
S-22
<PAGE>
BACKLOG
The backlog of unfilled orders was approximately $1.40 billion at December
31, 1996 and $1.15 billion at June 30, 1996. Backlog increased in the Company's
Disposable and Specialty Products, Fire and Safety Services, and Flow Control
Products segments, partially offset by a decrease in the Electrical and
Electronic Components segment. Within Fire and Safety Services, backlog
increased in each geographic region as well as from the acquisition of Thorn.
Within Electrical and Electronic Components, a decrease at Simplex was partially
offset by increases at the Printed Circuit Group.
ACCOUNTING PRONOUNCEMENT
In October 1995 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation." The standard defines a fair value based method of accounting for
employee stock options. The compensation expense arising from this method can be
reflected in the financial statements or, alternatively, the pro forma net
income and income per share effect of the fair value based accounting can be
disclosed in the footnotes to the financial statements. The Company will adopt
SFAS 123 in fiscal 1997 and expects to adopt the footnote disclosure
alternative.
S-23
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the United States purchase
agreement (the "U.S. Purchase Agreement") among the Company and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston Corporation,
J.P. Morgan Securities Inc. and Lehman Brothers Inc. (the "U.S. Underwriters"),
and concurrently with the sale of 1,700,000 shares of Common Stock to the
International Managers (as defined below), the Company has agreed to sell to
each of the U.S. Underwriters, and each of the U.S. Underwriters severally has
agreed to purchase from the Company, the number of shares of Common Stock set
forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
U.S. UNDERWRITERS COMMON STOCK
- ------------------------------------------------------------------------------ --------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................................
Credit Suisse First Boston Corporation........................................
J.P. Morgan Securities Inc. ..................................................
Lehman Brothers Inc. .........................................................
--------------
Total............................................................... 6,800,000
--------------
--------------
</TABLE>
The Company has also entered into a purchase agreement (the "International
Purchase Agreement" and, together with the U.S. Purchase Agreement, the
"Purchase Agreements") with Merrill Lynch International, Credit Suisse First
Boston (Europe) Limited, J.P. Morgan Securities Ltd. and Lehman Brothers
International (Europe) (the "International Managers" and, together with the U.S.
Underwriters, the "Underwriters"). Subject to the terms and conditions set forth
in the International Purchase Agreement and concurrently with the sale of
6,800,000 shares of Common Stock to the U.S. Underwriters pursuant to the U.S.
Purchase Agreement, the Company has agreed to sell to the International
Managers, and the International Managers have severally agreed to purchase, an
aggregate of 1,700,000 shares of Common Stock. The initial public offering price
per share and total underwriting discounts per share are identical under the
U.S. Purchase Agreement and the International Purchase Agreement.
In each Purchase Agreement, the several U.S. Underwriters and the several
International Managers have agreed, respectively, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any of such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting U.S.
Underwriters or International Managers (as the case may be) may be increased.
The sale of Common Stock to the U.S. Underwriters is conditioned upon the sale
of shares of Common Stock to the International Managers.
The U.S. Underwriters have advised the Company that they propose to offer
the shares of Common Stock offered hereby to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share of Common
Stock. The U.S. Underwriters may allow, and such dealers may reallow, a discount
not in excess of $ per share of Common Stock on sales to certain other
dealers. After the Offerings, the public offering price, concession and discount
may be changed.
The Company has granted an option to the U.S. Underwriters, exercisable
during the 30-day period after the date of this Prospectus, to purchase up to an
additional 1,020,000 shares of Common Stock at the public offering price set
forth on the cover page hereof, less the underwriting discount. The U.S.
Underwriters may exercise this option only to cover over-allotments, if any,
made on the sale of shares of Common Stock offered hereby. To the extent that
the U.S. Underwriters exercise this option, each U.S. Underwriter will be
obligated, subject to certain conditions, to purchase approximately the number
of additional shares of Common Stock proportionate to such U.S. Underwriter's
initial amount reflected in the foregoing table. The Company has also granted an
option to the International Managers, exercisable
S-24
<PAGE>
during the 30-day period after the date of this Prospectus, to purchase up to an
additional 255,000 shares of Common Stock to cover over-allotments, if any, on
terms similar to those granted to the U.S. Underwriters.
The Company has been informed that the U.S. Underwriters and the
International Managers have entered into an agreement (the "Intersyndicate
Agreement") providing for the coordination of their activities. Under the terms
of the Intersyndicate Agreement, the U.S. Underwriters and the International
Managers are permitted to sell shares of Common Stock to each other for purposes
of resale at a per share of Common Stock price equal to the initial public
offering price, less an amount not greater than the selling concession. Under
the terms of the Intersyndicate Agreement, the International Managers and any
dealer to whom they sell shares of Common Stock will not offer to sell or sell
shares of Common Stock to persons who are United States persons or Canadian
persons or to persons they believe intend to resell to persons who are United
States persons or Canadian persons, and the U.S. Underwriters and any dealer to
whom they sell shares of Common Stock will not offer to sell or sell shares of
Common Stock to persons who are non-United States and non-Canadian persons or to
persons they believe intend to resell to non-United States and non-Canadian
persons, except in each case for transactions pursuant to such agreement.
The Company and certain of the Company's officers have agreed, subject to
certain exceptions, including exceptions relating to employee benefit
arrangements, that they will not, directly or indirectly, for a period of 60
days following the date of this Prospectus Supplement, except with the prior
consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of the
Underwriters, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, or otherwise dispose of or transfer any shares
of the Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
Company or with respect to which the Company has or hereafter acquires the power
of disposition, or file any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
Certain of the Underwriters have provided from time to time, and expect to
provide in the future, investment banking services to the Company, for which
such Underwriters have received and will receive customary fees and commissions.
In addition, from time to time, in the ordinary course of their respective
businesses, certain of the Underwriters and certain of their affiliates engage
and may in the future engage in investment banking and commercial banking
transactions with the Company. Morgan Guaranty Trust Company of New York
("MGT"), an affiliate of J.P. Morgan Securities Inc. and J.P. Morgan Securities
Ltd., is the agent bank on the Company's $300 million Credit Agreement. Credit
Suisse, an affiliate of Credit Suisse First Boston Corporation and Credit Suisse
First Boston (Europe) Limited, is a lender under the Credit Agreement. As
lenders under the Credit Agreement, MGT and Credit Suisse may receive in excess
of 10% of the net proceeds of the Offerings. See "Use of Proceeds." Accordingly,
this offering will be conducted in accordance with Rule 2710(c)(8) of the
National Association of Securities Dealers, Inc. ("NASD").
S-25
<PAGE>
VALIDITY OF SHARES
The validity of the Common Stock offered hereby will be passed upon for the
Company by M. Brian Moroze, Esq., General Counsel of the Company, Exeter, New
Hampshire. Mr. Moroze owns 20,800 shares of the Company's Common Stock. Certain
other legal matters will be passed upon for the Company by Kramer, Levin,
Naftalis & Frankel, 919 Third Avenue, New York, New York 10022. Joshua M.
Berman, a director and the Secretary of the Company, is counsel to the law firm
of Kramer, Levin, Naftalis & Frankel and owns 36,000 shares of the Company's
Common Stock. Certain legal matters will be passed upon for the Underwriters by
Fried, Frank, Harris, Shriver & Jacobson (a partnership including professional
corporations), One New York Plaza, New York, New York 10004.
S-26
<PAGE>
PROSPECTUS
$900,000,000
------------------
TYCO INTERNATIONAL LTD.
---------------
DEBT SECURITIES
COMMON STOCK
---------------------
Tyco International Ltd. (the "Company" or "Tyco") may offer from time to
time (i) unsecured debt securities ("Debt Securities") consisting of debentures,
notes and/or other evidences of unsecured indebtedness in one or more series, or
(ii) shares of common stock, par value $0.50 per share ("Common Stock") (the
Debt Securities and Common Stock are collectively referred to as "Securities"),
or any combination of the foregoing, at an aggregate initial offering price not
to exceed U.S.$900,000,000, or its equivalent if some or all of the Debt
Securities are denominated in one or more foreign currencies, at prices and on
terms to be determined at or prior to the time of sale in light of market
conditions at the time of sale.
Specific terms of the particular Securities in respect of which this
Prospectus is being delivered will be set forth in one or more accompanying
Prospectus Supplements (each a "Prospectus Supplement"), together with the terms
of the offering of the Securities and the initial price and the net proceeds to
the Company from the sale thereof. The Prospectus Supplement will set forth with
regard to the particular Securities, without limitation, the following: (i) in
the case of Debt Securities, the specific designation, aggregate principal
amount, ranking as senior debt or subordinated debt, authorized denomination,
maturity, rate or method of calculation of interest and dates for payment
thereof, any exchangeability, conversion, redemption, prepayment or sinking fund
provisions, the currency or currencies or currency unit or currency units in
which principal, premium, if any, or interest, if any, is payable, any
modification of the covenants and any other specific terms thereof; and (ii) in
the case of Common Stock, the number of shares of Common Stock and the terms of
the offering and sale thereof. The amounts payable by the Company in respect of
Debt Securities may be calculated by reference to the value, rate or price of
one or more specified commodities, currencies or indices as set forth in the
Prospectus Supplement. The Prospectus Supplement will also contain information,
where applicable, about certain United States federal income tax considerations
relating to the Securities covered by the Prospectus Supplement.
The Company may sell Securities offered hereby to or through underwriters or
dealers, and also may sell Securities directly to other purchasers or through
agents. The Prospectus Supplement will also set forth the names of the
underwriters, dealers and agents involved in the sale of the Securities offered
hereby, the principal amounts, if any, to be purchased by the underwriters or
agents and the compensation, if any, of such underwriters or agents and any
applicable commissions or discounts. The net proceeds to the Company from the
sale of the Securities offered hereby will also be set forth in the Prospectus
Supplement.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is February 5, 1997.
<PAGE>
No person has been authorized to give any information or to make any
representation not contained or incorporated by reference in this Prospectus or
the accompanying Prospectus Supplement and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Company or any underwriter, dealer or agent. Neither the delivery of this
Prospectus or the accompanying Prospectus Supplement nor any sale made hereunder
or thereunder shall, under any circumstances, create an implication that the
information contained herein or in the accompanying Prospectus Supplement is
correct as of any date subsequent to the date hereof or thereof or that there
has been no change in the affairs of the Company since the date hereof or
thereof. Neither this Prospectus nor the accompanying Prospectus Supplement
constitutes an offer to sell or a solicitation of an offer to buy Securities in
any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to any person to whom it is unlawful to make such offer or solicitation.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"), all of which may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661; and New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The
Commission maintains a site on the World Wide Web, and the reports, proxy
statements and other information filed by the Company with the Commission may be
accessed electronically on the Web at http://www.sec.gov. Such material can also
be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005, where the Common Stock is listed.
This Prospectus constitutes part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits certain of the information
contained in the Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Company and the Securities. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
where a copy of such document has been filed as an exhibit to the Registration
Statement or otherwise has been filed with the Commission, reference is made to
the copy of the applicable document so filed. Each such statement is qualified
in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus:
The Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1996.
The Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996.
The Company's Current Report on Form 8-K dated October 29, 1996.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Securities made hereby shall
be deemed to be incorporated by reference into this Prospectus from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be
2
<PAGE>
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner of Securities, upon
the written or oral request of any such person, a copy of any and all of the
documents that have been or may be incorporated by reference herein other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Such requests should be directed to David
Brownell, Senior Vice President, Tyco International Ltd., One Tyco Park, Exeter,
New Hampshire 03833 (telephone: (603) 778-9700).
3
<PAGE>
THE COMPANY
Tyco International Ltd. ("Tyco" or the "Company"), through its divisions and
operating subsidiaries, engages in the manufacture and distribution of
disposable medical supplies and other specialty products, the design,
manufacture, installation and service of fire detection and suppression systems,
and the manufacture and distribution of flow control products and electrical and
electronic components. The Company, which operates in more than 50 countries
around the world, had sales of over $5 billion during its fiscal year ended June
30, 1996.
The Company's strategy is to be the low-cost, high-quality producer in every
business segment in which it competes. The Company has strong leadership
positions in each of its segments of its respective markets. The Company seeks
to increase its leadership positions in its domestic and international
businesses, develop new markets and acquire additional products/companies that
are designed to allow the Company to maximize its existing competitive
advantages and cost structure. The goal of this strategy is to create value for
the Company's shareholders by increasing the Company's earnings per share.
The Company is a Massachusetts corporation. Its executive offices are
located at One Tyco Park, Exeter, New Hampshire 03833, and its telephone number
is (603) 778-9700.
CURRENT DEVELOPMENTS
Tyco has recently announced results of operations for the six month period
ended December 31, 1996. Net income increased 28% to $174.4 million or $1.12 per
share for the first six months of fiscal 1997, compared to $136.4 million or
$0.89 per share for the first six months of fiscal 1996. Sales increased 26% to
$3.1 billion in the first six months of fiscal 1997 compared to $2.5 billion in
the first six months of fiscal 1996. Results for the first six months of fiscal
1997 included, among other acquisitions, the operations of Carlisle Plastics,
Inc., acquired by the Company's Disposable and Specialty Products group in
September 1996, and Thorn Security Group Limited, acquired by the Company's Fire
and Safety Services group in July 1996.
The Company reviews acquisition opportunities in the ordinary course of its
business, some of which may be material and some of which are currently under
investigation, discussion or negotiation.
USE OF PROCEEDS
Except as otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities to
refinance, in part, existing indebtedness, to finance, in part, the cost of
acquisitions and for general corporate purposes. Funds not required immediately
for such purposes may be invested temporarily in short-term marketable
securities.
4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the five years in the period ended June 30, 1996 and for the
three-month period ended September 30, 1996:
<TABLE>
<CAPTION>
THREE MONTHS FISCAL YEAR
ENDED ENDED JUNE 30,
SEPTEMBER 30, -------------------------------
1996 1996 1995 1994
----------------- --------- --------- ---------
<S> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)(2)............................... 5.11 6.99 5.42 4.98
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Ratio of earnings to fixed charges(1)(2)............................... 2.68 2.78
</TABLE>
- ------------------------
(1) The merger of the Company with Kendall International, Inc. ("Kendall Inc.")
on October 19, 1994 (the "Merger") has been accounted for using the pooling
of interests basis of accounting. As such, the ratio of earnings to fixed
charges for the years ended June 30, 1995, 1994 and 1993 include the effect
of the Merger. Kendall Inc. undertook a financial restructuring as of June
30, 1992. As of that date, a new reporting entity was created with no
retained earnings or accumulated deficit. Accordingly, the ratio of earnings
to fixed charges for all periods prior to and including June 30, 1992
represents the Company's historical ratio.
(2) Earnings consist of pre-tax earnings from continuing operations before fixed
charges. Fixed charges consist of interest on indebtedness, amortization of
debt expenses and one-third of rent expense which is deemed representative
of an interest factor.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities offered hereby will be issued under an Indenture dated
as of April 30, 1992, as amended (hereinafter referred to as the "Indenture"),
between the Company and First Trust of New York, National Association, as
successor to BankAmerica National Trust Company pursuant to the Certificate of
Transfer and Assignment of New York Appointments pursuant to Section 604-a of
the New York Banking Law, as Trustee (hereinafter referred to as the "Trustee").
The following statements are subject to the detailed provisions of the
Indenture, a copy of which is filed as an exhibit to the Registration Statement
and which is also available for inspection at the office of the Trustee. Section
references are to the Indenture. Wherever particular provisions of the Indenture
are referred to, such provisions are incorporated by reference as part of the
statements made and the statements are qualified in their entirety by such
reference.
GENERAL
The Indenture does not limit the aggregate principal amount of debt
securities which may be issued thereunder and provides that the debt securities
may be issued from time to time in one or more series. Except as otherwise
specified, references to Debt Securities in this section include, in addition to
the Debt Securities offered hereby, any other debt securities that have been or
in the future may be issued under the Indenture. As of the date of this
Prospectus, $200,000,000 principal amount of the Company's 9 1/2% Debentures due
2022, $50,000,000 principal amount of the Company's 8% Debentures due 2023,
$105,000,000 principal amount of the Company's 6 3/8% Notes due 2004,
$145,000,000 principal amount of the Company's 8 1/8% Notes due 1999 and
$300,000,000 principal amount of the Company's 6 1/2% Notes due 2001 have been
issued and are outstanding under the Indenture.
Debt Securities offered pursuant to this Prospectus will be direct,
unsecured and unsubordinated obligations of the Company and will rank equally
with any other unsecured and unsubordinated obligations of the Company for
borrowed money. Except as described under "Certain Covenants," the Indenture
does not limit other indebtedness or securities which may be incurred or issued
by the Company or any of its subsidiaries or contain financial or similar
restrictions on the Company or any of its subsidiaries. The
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Company's rights and the rights of its creditors, including holders of Debt
Securities, to participate in any distribution of assets of any subsidiary upon
the latter's liquidation or reorganization or otherwise are effectively
subordinated to the claims of the subsidiary's creditors, except to the extent
that the Company or any of its creditors may itself be a creditor of that
subsidiary.
A Prospectus Supplement will set forth where applicable the following terms
of and information relating to the Debt Securities offered pursuant to this
Prospectus: (i) the designation of the Debt Securities; (ii) the aggregate
principal amount of the Debt Securities; (iii) the date or dates on which
principal of, and premium, if any, on the Debt Securities is payable; (iv) the
rate or rates at which the Debt Securities shall bear interest, if any, or the
method by which such rate shall be determined, the date or dates from which
interest will accrue and on which such interest will be payable and the related
record dates; (v) if other than the offices of the Trustee, the place where the
principal of and any premium or interest on the Debt Securities will be payable;
(vi) any redemption, repayment or sinking fund provisions; (vii) if other than
denominations of $1,000 or multiples thereof, the denominations in which the
Debt Securities will be issuable; (viii) if other than the principal amount
thereof, the portion of the principal amount due upon acceleration; (ix) whether
the Debt Securities shall be issued in the form of a global security or
securities; (x) any other specific terms of the Debt Securities (which may, for
example, include the currency, and any index used to determine the amount, of
payment of principal of and any premium and interest on the Debt Securities);
and (xi) if other than the Trustee, the identity of any trustees, paying agents,
transfer agents or registrars with respect to the Debt Securities. (Section
2.3).
Debt Securities offered pursuant to this Prospectus will be issued either in
certificated, fully registered form, without coupons, or as global notes under a
book-entry system, as specified in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
principal and premium, if any, will be payable, and the Debt Securities offered
pursuant to this Prospectus will be transferable and exchangeable without any
service charge, at the office of the Trustee. However, the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection with any such transfer or exchange. (Section 2.8).
Interest on any series of Debt Securities offered pursuant to this
Prospectus will be payable on the interest payment dates set forth in the
accompanying Prospectus Supplement to the persons in whose names the Debt
Securities are registered at the close of business on the related record date
and may be paid by checks mailed to such persons. (Sections 2.7 and 3.1).
If Debt Securities offered pursuant to this Prospectus are issued as
original issue discount securities (bearing no interest or interest at a rate
which at the time of issuance is below market rates) to be sold at more than a
de minimis discount below their stated principal amount, the federal income tax
consequences and other special considerations applicable to such original issue
discount securities will be as described in the Prospectus Supplement.
Unless otherwise described in the applicable Prospectus Supplement, there
are no covenants or provisions contained in the Indenture which afford the
holders of Debt Securities offered pursuant to this Prospectus protection in the
event of a highly leveraged transaction, reorganization, restructuring, merger
or similar transaction involving the Company. The consummation of any highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction could cause a material decline in the credit quality of the
outstanding Debt Securities.
BOOK-ENTRY SYSTEM
If so specified in the applicable Prospectus Supplement, Debt Securities of
any series offered pursuant to this Prospectus may be issued under a book-entry
system in the form of one or more global securities ("Global Securities"). Each
Global Security will be deposited with, or on behalf of, a depositary, which,
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unless otherwise specified in the accompanying Prospectus Supplement, will be
The Depository Trust Company, New York, New York (the "Depositary"). The Global
Securities will be registered in the name of the Depositary or its nominee.
The Depositary has advised the Company as follows: The Depositary is a
limited purpose trust company organized under the laws of the State of New York,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of section 17A of the Exchange Act. The
Depositary was created to hold securities of persons who have accounts with the
Depositary ("participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of certificates. The Depositary's
participants include securities brokers and dealers, banks, trust companies and
clearing corporations, and may include certain other organizations. Indirect
access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Upon the issuance of a Global Security, the Depositary or its nominee will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Security to
the accounts of participants. The accounts to be credited will be designated by
the underwriters or agents, if any, or by the Company, if such Debt Securities
are offered and sold directly by the Company. Ownership of beneficial interests
in the Global Security will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in the Global Security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of beneficial
interests in the Global Security by persons that hold through participants will
be shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to transfer beneficial interests in a Global
Security.
So long as the Depositary or its nominee is the registered owner of a Global
Security, it will be considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the Indenture. Except
as set forth below, owners of beneficial interests in such Global Security will
not be entitled to have the Debt Securities represented thereby registered in
their names, will not receive or be entitled to receive physical delivery of
certificates representing the Debt Securities and will not be considered the
owners or holders thereof under the Indenture.
Payment of principal of, premium, if any, and any interest on Debt
Securities represented by a Global Security will be made to the Depositary or
its nominee, as the case may be, as the registered owner or the holder of the
Global Security. None of the Company, the Trustee, any paying agent or registrar
for such Debt Securities will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Security or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company has been advised by the Depositary that the Depositary will
credit participants' accounts with payments of principal, premium, if any, or
interest on the payment date thereof in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
as shown on the records of the Depositary. The Company expects that payments by
participants to owners of beneficial interests in the Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers registered in "street name," and will be the responsibility of such
participants.
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A Global Security may not be transferred except as a whole to a nominee or
successor of the Depositary. If the Depositary is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within ninety days, the Company will issue certificates in
registered form in exchange for the Global Security or securities representing
the Debt Securities. In addition, the Company may at any time and in its sole
discretion determine not to have Debt Securities of a series represented by a
Global Security and, in such event, will issue certificates in definitive form
in exchange for the Global Security representing such Debt Securities. (Section
2.12).
CERTAIN COVENANTS
LIMITATIONS ON LIENS. The Company covenants that, so long as any Debt
Securities remain outstanding (but subject to defeasance, as provided in the
Indenture), it will not, and will not permit any Restricted Subsidiary (as
defined below) to, issue, assume or guarantee any Indebtedness (as defined
below) which is secured by a mortgage, pledge, security interest, lien or
encumbrance (each a "lien") upon any Principal Property (as defined below), or
any shares of stock or Indebtedness issued by any Restricted Subsidiary, without
effectively providing that, for so long as such lien shall continue in existence
with respect to such secured Indebtedness, the Debt Securities (together with,
if the Company shall so determine, any other Indebtedness of the Company ranking
equally with the Debt Securities) shall be equally and ratably secured with (or
at the Company's option prior to) such secured Indebtedness, except that the
foregoing covenant shall not apply to (a) liens existing on the date of the
Indenture; (b) liens on the stock, assets or Indebtedness of a corporation
existing at the same time such corporation becomes a Restricted Subsidiary; (c)
liens on the assets or Indebtedness of a corporation existing at the time such
corporation is merged into the Company or a Subsidiary; (d) liens on any
Principal Property existing at the time of acquisition thereof, or to secure the
payment of the purchase price of such Principal Property, or to secure
Indebtedness incurred, assumed or guaranteed by the Company or a Restricted
Subsidiary for the purpose of financing all or any part of the purchase price of
such Principal Property or improvements or construction thereon, which
Indebtedness is incurred, assumed or guaranteed prior to, at the time of, or
within one year after such acquisition (or in the case of real property,
completion of such improvement or construction or commencement of full operation
of such property, whichever is later); (e) liens securing Indebtedness owing by
any Restricted Subsidiary to the Company or a Subsidiary; (f) liens in favor of
the United States or any State thereof or any other country, or political
subdivision thereof, to secure partial, progress, advance or other payments
pursuant to any contract, statute, rule or regulation or to secure any
Indebtedness incurred or guaranteed for the purpose of financing all or any part
of the purchase price (or, in the case of real property, the cost of
construction or improvement) of the Principal Property subject to such liens
(including but not limited to, liens incurred in connection with pollution
control, industrial revenue or similar financings); (g) pledges, liens or
deposits under worker's compensation or similar legislation, or in connection
with bids, tenders, contracts (other than for the payment of money) or leases to
which the Company or any Restricted Subsidiary is a party, or to secure the
public or statutory obligations of the Company or any Restricted Subsidiary, or
in connection with self-insurance, or to obtain the benefits of any law
pertaining to unemployment insurance, old age pensions, social security or
similar matters, or to secure surety, performance, appeal or customs bonds to
which the Company or any Restricted Subsidiary is a party, or in litigation or
other proceedings in connection with the matters heretofore referred to in this
clause(s), such as, but not limited to, interpleader proceedings, and other
similar pledges, liens or deposits made or incurred in the ordinary course of
business; (h) certain liens in connection with legal proceedings, including
certain liens arising out of judgments or awards, to the extent such proceedings
are being contested or appealed in good faith, or liens incurred for the purpose
of obtaining a stay or discharge in the course of any litigation or other
proceeding; (i) liens for certain taxes or assessments, landlord's liens and
liens and charges incidental to the conduct of the business of the Company or
any Restricted Subsidiary, or the ownership of their assets, which were not
incurred in connection with the borrowing of money and which do not, in the
opinion of the Board of Directors of the Company, materially impair the use of
such Principal Property in the operation of the business of the
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Company or such Restricted Subsidiary or the value of such Principal Property
for the purposes thereof; (j) liens to secure the Company's or any Restricted
Subsidiary's obligations under agreements with respect to spot, forward, future
and option transactions, entered into in the ordinary course of business; (k)
liens not permitted by the foregoing clauses (a) to (j), inclusive, if at the
time of, and after giving effect to, the creation or assumption of such lien,
the aggregate amount of all outstanding Indebtedness of the Company and its
Restricted Subsidiaries (without duplication) secured by all liens not so
permitted by the foregoing clauses (a) through (j), inclusive, together with the
Attributable Debt (as defined below) in respect of Sale and Lease-Back
Transactions (as defined below) permitted by paragraph (a) under "Limitation on
Sale and Lease-Back Transactions" below does not exceed the greater of
$100,000,000 and 10% of Consolidated Net Worth (as defined below); and (l) any
extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part, of any lien referred to in the foregoing
clauses (a) to (k), inclusive. (Section 3.9).
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS. The Company will not, and
will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back
Transaction with respect to a Principal Property unless (a) the Company or such
Restricted Subsidiary would, at the time of entering into a Sale and Lease-Back
Transaction, be entitled to incur Indebtedness secured by a lien on the
Principal Property to be leased in an amount at least equal to the Attributable
Debt in respect of such transaction, without equally and ratably securing the
Debt Securities pursuant to the provisions described under "Limitations on
Liens" above, or (b) the direct or indirect proceeds of the sale of the
Principal Property to be leased are at least equal to their fair value (as
determined by the Company's Board of Directors) and an amount equal to the net
proceeds is applied, within 180 days of the effective date of such transaction,
to the purchase or acquisition (or, in the case of real property, commencement
of the construction) of property or assets or to the retirement (other than at
maturity or pursuant to a mandatory sinking fund or mandatory redemption
provision) of Debt Securities, or of Funded Indebtedness (as defined below) of
the Company that ranks on a parity with the Debt Securities or of Funded
Indebtedness of a consolidated Subsidiary of the Company (subject to credits for
certain voluntary retirement of Funded Indebtedness and certain delivery of Debt
Securities to the Trustee for retirement and cancellation). (Section 3.10).
DEFINITIONS. "Attributable Debt" means in connection with a Sale and
Lease-Back Transaction, as of any particular time, the aggregate of present
values (discounted at a rate per annum equal to the average interest borne by
all outstanding Debt Securities determined on a weighted average basis and
compounded semi-annually) of the obligations of the Company or any Restricted
Subsidiary for net rental payments during the remaining term of the applicable
lease (including any period for which such lease has been extended or may, at
the option of the lessor, be extended). The term "net rental payments" under any
lease of any period shall mean the sum of the rental and other payments required
to be paid in such period by the lessee thereunder, not including, however, any
amounts required to be paid by such lessee (whether or not designated as rental
or additional rental) on account of maintenance and repairs, reconstruction,
insurance, taxes, assessments, water rates or similar charges required to be
paid by such lessee thereunder or any amounts required to be paid by such lessee
thereunder contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges.
"CONSOLIDATED NET WORTH" means, at any date, the total assets less the total
liabilities, each as appearing on the most recently prepared consolidated
balance sheet of the Company and its subsidiaries as of the end of a fiscal
quarter of the Company, prepared in accordance with generally accepted
accounting principles.
"CONSOLIDATED TANGIBLE ASSETS" means, at any date, the total assets less all
intangible assets appearing on the most recently prepared consolidated balance
sheet of the Company and its subsidiaries as of the end of a fiscal quarter of
the Company, prepared in accordance with generally accepted accounting
principles. "Intangible Assets" means the value (net of any applicable
reserves), as shown on or reflected in such balance sheet of: (i) all trade
names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organizational costs; and (iii) deferred charges (other than prepaid items such
as insurance, taxes,
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interest, commissions, rents and similar items and tangible assets being
amortized); but in no event shall the term "intangible assets" include product
development costs.
"FUNDED INDEBTEDNESS" means any Indebtedness maturing by its terms more than
one year from the date of the determination thereof, including any Indebtedness
renewable or extendible at the option of the obligor to a date later than one
year from the date of the determination thereof.
"INDEBTEDNESS" means, without duplication, the principal or face amount of
(i) all obligations for borrowed money, (ii) all obligations evidenced by
debentures, notes or other similar instruments, (iii) all obligations in respect
of letters of credit or bankers acceptances or similar instruments (or
reimbursement obligations with respect thereto), (iv) all obligations to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (v) all obligations as lessee which
are capitalized in accordance with generally accepted accounting principles, and
(vi) all Indebtedness of others guaranteed by the Company or any of its
Subsidiaries or for which the Company or any of its Subsidiaries is legally
responsible or liable (whether by agreement to purchase indebtedness of, or to
supply funds or to invest in, others).
"PRINCIPAL PROPERTY" means (i) certain manufacturing, processing or assembly
plants and facilities, warehouse facilities and distribution facilities
specified in the Indenture and (ii) any manufacturing, processing or assembly
plant or facility or any warehouse or distribution facility which is located
within the United States and is used by the Company or any Subsidiary after the
date hereof, other than any such plants, facilities, warehouses or portions
thereof, which in the opinion of the Board of Directors, are not collectively of
material importance to the total business conducted by the Company and its
Restricted Subsidiaries as an entirety, or which, in each case, has a book
value, on the date of the acquisition or completion of the initial construction
thereof by the Company, of less than 1.5% of Consolidated Tangible Assets.
"RESTRICTED SUBSIDIARY" means any Subsidiary organized under the laws of the
United States or any State thereof or the District of Columbia (i) substantially
all of the property of which is located, or substantially all of the business of
which is carried on, within the United States and (ii) which owns or leases a
Principal Property.
"SALE AND LEASE-BACK TRANSACTION" means an arrangement with any person
providing for the leasing by the Company or a Restricted Subsidiary of any
Principal Property whereby such Principal Property has been or is to be sold or
transferred by the Company or a Restricted Subsidiary to such person; provided,
however, that the foregoing shall not apply to any such arrangement involving a
lease for a term, including renewal rights, for not more than three years.
"SUBSIDIARY" means any corporation of which at least a majority of the
outstanding securities having voting power under ordinary circumstances for the
election of the board of directors of said corporation shall at the time
directly or indirectly be owned or controlled by the Company or by one or more
Subsidiaries or by the Company and one or more Subsidiaries or by one or more
Subsidiaries. (Section 1.1).
MERGER, CONSOLIDATION, SALE, LEASE OR CONVEYANCE
The Indenture provides that the Company will not merge or consolidate with
any other corporation and will not sell, lease or convey all or substantially
all of its assets to any person, unless the Company shall be the continuing
corporation, or the successor corporation or person that acquires all or
substantially all of the assets of the Company shall be a corporation organized
under the laws of the United States or a State thereof or the District of
Columbia and shall expressly assume the payment of principal of, premium, if
any, and interest on the Debt Securities and the observance of all the covenants
and agreements under the Indenture to be performed or observed by the Company,
and immediately after such merger, consolidation, sale, lease or conveyance, the
Company, such person or such successor corporation shall not
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be in default in the performance of the covenants and agreements of the
Indenture to be performed or observed by the Company. Notwithstanding the
foregoing, the Company may engage in a transaction or series of related
transactions for the purpose of causing (w) the Company to become a direct or
indirect wholly-owned subsidiary of a corporation (the "Foreign Parent")
organized under a jurisdiction other than the United States or any State thereof
or the District of Columbia, (x) the public shareholders of the Company to
become shareholders of the Foreign Parent, (y) one or more Subsidiaries of the
Company organized under a jurisdiction other than the United States or any State
thereof or the District of Columbia (the "Foreign Subsidiaries") to cease to be
Subsidiaries of the Company and to become subsidiaries of the Foreign Parent,
and (z) intercompany debt of the Foreign Subsidiaries held by one or more
Subsidiaries of the Company to be held by the Foreign Parent or one or more of
its subsidiaries; provided, however, that (i) the Company shall remain
incorporated under the laws of the United States or a State thereof or the
District of Columbia, (ii) the Company shall remain the obligor on the Debt
Securities, (iii) the Consolidated Net Worth of the Company immediately after
giving effect to and solely as a result of the transaction or transactions
referred to in this sentence shall not be materially less than the Consolidated
Net Worth of the Company immediately prior to giving effect to such transaction
or transactions, and (iv) immediately following consummation of the transaction
or transactions referred to in this sentence the Company shall not be in default
in the performance of the covenants and agreements of the Indenture to be
performed or observed by the Company. (Section 8.1).
EVENTS OF DEFAULT
An Event of Default with respect to Debt Securities of any series issued
under the Indenture is defined in the Indenture as being: default for 30 days in
payment of any interest upon any Debt Securities of such series; default in any
payment of principal of or premium, if any, on any Debt Securities of such
series (including any sinking fund payment); default by the Company in
performance of any other of the covenants or agreements in respect of the Debt
Securities of such series or the Indenture which shall not have been remedied
for a period of 90 days after written notice to the Company by the Trustee or
the holders of at least 25% of the principal amount of all Debt Securities of
all affected series, specifying that such notice is a "Notice of Default" under
the Indenture; default by the Company in the payment at the final maturity
thereof, after the expiration of any applicable grace period, of principal of,
premium, if any, or interest on indebtedness for money borrowed (other than
Non-Recourse Indebtedness, as defined) in the principal amount then outstanding
of $25,000,000 or more, or acceleration of any indebtedness in such principal
amount so that it becomes due and payable prior to the date on which it would
otherwise have become due and payable and such acceleration is not rescinded
within ten business days after notice to the Company by the Trustee or the
holders of at least 25% of the principal amount of all of the Debt Securities at
the time outstanding (treated as one class); certain events involving
bankruptcy, insolvency or reorganization of the Company; or any other Event of
Default established for the Debt Securities of such series set forth in the
accompanying Prospectus Supplement. (Section 4.1). The Indenture provides that
the Trustee shall transmit notice of any uncured default under the Indenture
with respect to any series, within 90 days after the occurrence of such default,
to the holders of Debt Securities of each affected series, except that the
Trustee may withhold notice to the holders of any series of the Debt Securities
of any default (except in payment of principal of, premium, if any, or interest
on, such series of Debt Securities) if the Trustee considers it in the interest
of the holders of such series of Debt Securities to do so. (Section 4.11).
The Indenture provides that (a) if an Event of Default due to the default in
payment of principal of, premium, if any, or interest on, any series of Debt
Securities issued under the Indenture or due to the default in the performance
or breach of any other covenant or agreement of the Company applicable to the
Debt Securities of such series but not applicable to all outstanding Debt
Securities issued under the Indenture shall have occurred and be continuing,
either the Trustee or the holders of not less than 25% in principal amount of
the Debt Securities of each affected series issued under the Indenture and then
outstanding (each such series voting as a separate class) may declare the
principal of all Debt Securities of such affected series and interest accrued
thereon to be due and payable immediately; and (b) if an Event of
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Default due to a default in the performance of any other of the covenants or
agreements in the Indenture applicable to all outstanding Debt Securities issued
thereunder and then outstanding, or due to a default in payment at final
maturity upon or acceleration of indebtedness for money borrowed in the
principal amount then outstanding of $25,000,000 or more, or to certain events
of bankruptcy, insolvency and reorganization of the Company shall have occurred
and be continuing, either the Trustee or the holders of not less than 25% in
principal amount of all Debt Securities issued under the Indenture and then
outstanding (treated as one class) may declare the principal of all such Debt
Securities and interest accrued thereon to be due and payable immediately, but
upon certain conditions such declarations may be annulled and past defaults may
be waived (except a continuing default in payment of principal of, premium, if
any, or interest on such Debt Securities) by the holders of a majority in
principal amount of the Debt Securities of all such affected series then
outstanding (each such series voting as a separate class or all such Debt
Securities voting as a single class, as the case may be). (Sections 4.1 and
4.10).
The holders of a majority in principal amount of the Debt Securities of each
series then outstanding and affected (with each series voting as a separate
class) shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee with respect to the Debt
Securities of such series under the Indenture, subject to certain limitations
specified in the Indenture, provided that the holders of such Debt Securities
shall have offered to the Trustee reasonable indemnity against expenses and
liabilities. (Sections 4.9 and 5.2(d)).
The Indenture provides that no holder of Debt Securities of any series may
institute any action against the Company under the Indenture (except actions for
payment of overdue principal, premium, if any, or interest) unless such holder
previously shall have given to the Trustee written notice of default and
continuance thereof and unless the holders of not less than 25% in principal
amount of the Debt Securities of each affected series (with each series voting
as a separate class) issued under the Indenture and then outstanding shall have
requested the Trustee to institute such action and shall have offered the
Trustee reasonable indemnity, and the Trustee shall not have instituted such
action within 60 days of such request, and the Trustee shall not have received
direction inconsistent with such written request by the holders of a majority in
principal amount of the Debt Securities of each affected series (with each
series voting as a separate class) issued under such Indenture and then
outstanding. (Sections 4.6 and 4.7).
The Indenture requires the annual filing by the Company with the Trustee of
a written statement as to compliance with the covenants and agreements contained
in the Indenture. (Section 3.5).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge or defease its obligations under the Indenture as
set forth below.
Under terms satisfactory to the Trustee, the Company may discharge this
Indenture with respect to any series of Debt Securities issued under the
Indenture which have not already been delivered to the Trustee for cancellation
and which have either become due and payable or are by their terms due and
payable within one year (or which may be called for redemption within one year)
by irrevocably depositing with the Trustee cash or direct obligations of the
United States as trust funds in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of, premium, if any, and interest on
such Debt Securities. However, the Company may not thereby avoid its duty to
register the transfer or exchange of such series of Debt Securities, to replace
any mutilated, destroyed, lost or stolen Debt Securities of such series or to
maintain an office or agency in respect of such series of Debt Securities.
(Section 9.1).
In the case of any series of Debt Securities in respect of which the exact
amounts of principal of and interest due on such series can be determined at the
time of making the deposit referred to below, the Company at its option at any
time may also (i) discharge any and all of its obligations to holders of such
series of Debt Securities issued under the Indenture ("defeasance"), but may not
thereby avoid its duty to register the transfer or exchange of such series of
Debt Securities, to replace any mutilated, destroyed, lost, or stolen Debt
Securities of such series or to maintain an office or agency in respect of such
series of Debt
12
<PAGE>
Securities or (ii) be released with respect to any outstanding series of Debt
Securities issued under the Indenture from the obligations imposed by the
covenants described under the captions "Covenants" and "Merger, Consolidation,
Sale, Lease, or Conveyance" above and omit to comply with such covenants without
creating an Event of Default ("covenant defeasance"). Defeasance or covenant
defeasance may be effected only if, among other things: (i) the Company
irrevocably deposits with the Trustee cash and/or direct obligations of the
United States, as trust funds in an amount certified by a nationally recognized
firm of independent public accountants to be sufficient to pay each installment
of principal of, premium, if any, and interest on all outstanding Debt
Securities of such series issued under the Indenture on the dates such
installments of principal, premium, if any, and interest are due; (ii) no
default or Event of Default shall have occurred and be continuing on the date of
the deposit referred to in clause (i) or, in respect of certain events of
bankruptcy, insolvency or reorganization, during the period ending on the 121st
day after the date of such deposit (or any longer applicable preference period);
and (iii) the Company delivers to the Trustee an opinion of counsel to the
effect that the holders of such series of Debt Securities will not recognize
income, gain or loss for United States federal income tax purpose as a result of
such defeasance or covenant defeasance and will be subject to United States
federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such defeasance or covenant defeasance had
not occurred (in the case of defeasance, such opinion must be based on a ruling
of the Internal Revenue Service or a change in United States federal income tax
law occurring after the date of the Indenture). (Sections 9.2, 9.3, 9.4 and
9.5).
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority of principal amount
of the Debt Securities at the time outstanding of all series affected (voting as
one class), to modify the Indenture or any supplemental indenture or the rights
of the holders of the Debt Securities, except that no such modification shall
(i) extend the final maturity of any of the Debt Securities or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any amount payable on redemption thereof, or reduce
the amount of any original issue discount security payable upon acceleration or
provable in bankruptcy or impair or affect the right of any holder of the Debt
Securities to institute suit for the payment thereof without the consent of the
holder of each of the Debt Securities so affected or (ii) reduce the aforesaid
percentage in principal amount of Debt Securities, the consent of the holders of
which is required for any such modification, without the consent of the holders
of all Debt Securities then outstanding. (Section 7.2).
The Indenture contains provisions permitting the Company and the Trustee,
without the consent of any holders of Debt Securities, to enter into a
supplemental indenture, among other things, for purposes of curing any ambiguity
or correcting or supplementing any provision contained in the Indenture or in
any supplemental indenture or making other provisions in regard to the matters
or questions arising under the Indenture or any supplemental indenture as the
Board of Directors of the Company deems necessary or desirable and which does
not adversely affect the interests of the holders of Debt Securities in any
material respect. The Company and the Trustee, without the consent of any
holders of Debt Securities, may also enter into a supplemental indenture to
establish the form or terms of any series of Debt Securities as are not
otherwise inconsistent with any of the provisions of the Indenture. (Section
7.1).
CONCERNING THE TRUSTEE
The Trustee may hold Debt Securities, act as a depository for funds of, make
loans to, or perform other services for, the Company and its Subsidiaries as if
it were not the Trustee. (Section 5.4).
13
<PAGE>
DESCRIPTION OF COMMON STOCK
The description of the Company's capital stock contained in the Prospectus
does not purport to be complete and is qualified in its entirety to the
applicable provisions of the Company's Restated Articles of Organization and
By-Laws, copies of which are filed as exhibits to the Registration Statement.
The authorized capital stock of the Company consists of 2,000,000 shares of
preferred stock, par value $1 per share ("Preferred Stock"), of which no series
was authorized or shares outstanding at December 31, 1996, and 500,000,000
shares of Common Stock, of which 156,657,322 shares were issued and outstanding
at December 31, 1996. Preferred Stock is divisible into and issuable in one or
more series. Different series may be established, and the variations in the
relative rights and preferences as between them may be fixed, by the Board of
Directors of the Company.
The holders of Common Stock are entitled to receive dividends when and as
declared by the Company's Board of Directors but only out of funds legally
available for the payment thereof, subject to restrictions imposed by certain
indebtedness of the Company. No cash payment or distribution may be made to
holders of Common Stock until all accrued dividends on all series of Preferred
Stock, if any, have been declared and set apart for payment through the last
preceding dividend date set for all such securities.
Holders of Common Stock are entitled to one vote per share at any annual or
special meeting of shareholders. Holders of Preferred Stock, if any, are
entitled to the voting rights fixed by the Board of Directors of the Company for
their respective series. Voting rights are not cumulative, and therefore holders
of more than 50% of the voting power of the Company could, if they chose to do
so, elect all directors, in which case holders of the remaining voting power
would be unable to elect any director.
Upon the dissolution of the Company or upon any distribution of the
Company's assets, holders of Common Stock are entitled to all of the Company's
assets available for distribution to shareholders after the holders of all
series of Preferred Stock, if any, have received the preference fixed by the
Board of Directors for their respective series. Holders of Common Stock do not
have any preemptive rights to subscribe for additional issues of capital stock,
and they are not liable to further calls or to assessment by the Company.
The Company is not prohibited by its Restated Articles of Organization from
repurchasing shares of its Common Stock. Any such repurchases would be subject
to any limitations on the amount available for such purpose under applicable
corporate law, any applicable restrictions under the terms of any outstanding
Preferred Stock or indebtedness and, in the case of market purchases, such
restrictions on the timing, manner and amount of such purchases as might apply
in the circumstances under applicable securities laws.
The outstanding Common Stock is listed on the New York Stock Exchange under
the symbol "TYC". Any Common Stock offered will be listed, subject to notice of
issuance, on such exchange.
ChaseMellon Shareholder Services, L.L.C. is the registrar and transfer agent
of the shares of Common Stock.
Article I, Section 6 of the Company's By-Laws provides that any person (a
"Related Person") who together with its Affiliates and Associates (each as
defined in the Company's By-Laws) owns 5% or more of the outstanding shares of
Voting Stock (defined in the Company's By-Laws to include all outstanding shares
of capital stock of the Company entitled to vote in the election of directors
upon the occurrence of a specified event or condition) of the Company, and any
Affiliate or Associate of such person (other than the Company and its
Subsidiaries (as defined in the Company's By-Laws)), must comply with certain
minimum price and procedural requirements or, in the alternative, obtain the
advance approval of a majority of the Company's Continuing Directors (as defined
in the Company's By-Laws) or holders of not less than 80% of the Company's
Voting Stock in order to effect a merger or other Business Combination involving
the Company. The various transactions in the definition of "Business
Combination" include: any
14
<PAGE>
merger or consolidation of the Company or a Subsidiary with or into a Related
Person; any sale, lease, exchange, transfer, or other disposition, in one
transaction or a series of transactions, (i) to a Related Person or an Affiliate
or Associate of a Related Person of any Substantial Part (as defined in the
Company's By-Laws) of the assets of the Company or a Subsidiary or (ii) from a
Related Person or an Affiliate or Associate of a Related Person, in an amount
that would constitute a Substantial Part of the assets of the Company; any
issuance or sale by the Company or a Subsidiary of any of its securities to a
Related Person or an Affiliate or Associate of a Related Person other than
pursuant to an employee plan approved by a majority of the Continuing Directors
and the shareholders of the Company; any acquisition by the Company or a
Subsidiary of any securities of a Related Person or Affiliate or Associate of a
Related Person; any adoption of any plan for the liquidation or dissolution of
the Company proposed by or on behalf of a Related Person or any Affiliate or
Associate of a Related Person; and any reclassification of securities,
recapitalization of the Company or any other transaction that has the effect of
increasing the proportion of the outstanding shares of any class of the
Company's or any Subsidiary's equity securities owned by a Related Person or any
Affiliate or Associate of a Related Person. The By-Laws of the Company confer
upon a majority of the Continuing Directors the authority to determine, among
other things, whether a person is a Related Person and whether any proposed
Business Combination complies with the minimum price and procedural
requirements. This section of the By-Laws cannot be repealed or amended, nor may
an inconsistent provision be adopted, without the affirmative vote of a majority
of the Continuing Directors or holders of not less than 80% of the outstanding
shares of the Voting Stock of the Company.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters or dealers, and
also may sell Securities directly to other purchasers or through agents. Each
Prospectus Supplement will describe the method of distribution of the offered
Securities.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company or from purchasers of Securities for whom they may
act as agents in the form of discounts, concessions, or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions, or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers, and agents that participate in the distribution
of Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from the Company will be described, in the Prospectus
Supplement.
Underwriters and agents who participate in the distribution of Securities
may be entitled under agreements which may be entered into by the Company to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase offered Securities from the
Company pursuant to contracts providing for payment and delivery on a future
date. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the offered Securities shall not at the
15
<PAGE>
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Company by M. Brian Moroze, Esq., General Counsel of the Company, Exeter, New
Hampshire. Mr. Moroze holds 20,800 shares of the Company's Common Stock. Certain
other legal matters will be passed upon for the Company by Kramer, Levin,
Naftalis & Frankel, 919 Third Avenue, New York, New York 10022. Joshua M.
Berman, a director and the Secretary of the Company, is counsel to the law firm
of Kramer, Levin, Naftalis & Frankel and owns 36,000 shares of the Company's
Common Stock.
EXPERTS
The Consolidated Financial Statements of the Company incorporated in this
Prospectus by reference to the Annual Report on Form 10-K of the Company as of
June 30, 1996 and 1995 and for the three years in the period ended June 30, 1996
have been incorporated herein in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
16
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF ANY OFFER
TO BUY, THE COMMON STOCK TO ANY PERSON IN ANY JURISDICTION WHERE, OR IN ANY
CIRCUMSTANCE IN WHICH, SUCH OFFER OR SOLICITATION MAY NOT BE LEGALLY MADE.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY OR
THE INFORMATION SET FORTH IN THE PROSPECTUS SUPPLEMENT OR THE PROSPECTUS SINCE
THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Supplement Summary................... S-3
The Offerings................................... S-3
Summary Consolidated Financial Data............. S-4
The Company..................................... S-6
Use of Proceeds................................. S-16
Price Range of Common Stock and Dividends....... S-16
Capitalization.................................. S-17
Selected Consolidated Financial Data............ S-18
Management's Discussion and Analysis of
Financial Condition and Operating Results..... S-19
Underwriting.................................... S-24
Validity of Shares.............................. S-26
PROSPECTUS
Available Information........................... 2
Incorporation of Certain Information by
Reference..................................... 2
The Company..................................... 4
Current Developments............................ 4
Use of Proceeds................................. 4
Ratio of Earnings to Fixed Charges.............. 5
Description of Debt Securities.................. 5
Description of Common Stock..................... 14
Plan of Distribution............................ 15
Validity of Securities.......................... 16
Experts......................................... 16
</TABLE>
8,500,000 SHARES
[LOGO]
COMMON STOCK
------------------
P R O S P E C T U S S U P P L E M E N T
------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
LEHMAN BROTHERS
FEBRUARY , 1997
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
ALTERNATE INTERNATIONAL
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED FEBRUARY 13, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 5, 1997)
8,500,000 SHARES
[LOGO]
COMMON STOCK
---------------------
All of the shares of Common Stock, par value $.50 per share (the "Common
Stock"), offered hereby are being sold by Tyco International Ltd. (the
"Company"). Of the 8,500,000 shares of Common Stock being offered hereby,
1,700,000 shares are being offered initially outside the United States and
Canada by the International Managers and 6,800,000 shares are being offered
initially in the United States and Canada by the U.S. Underwriters. See
"Underwriting."
The Common Stock is traded on the New York Stock Exchange under the symbol
"TYC." On February 12, 1997, the last reported sale price of the Common Stock,
as reported on the New York Stock Exchange, was $59 1/2 per share. See "Price
Range of Common Stock and Dividends."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share.................. $ $ $
Total(3)................... $ $ $
</TABLE>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $ .
(3) The Company has granted the International Managers and the U.S. Underwriters
options, exercisable within 30 days after the date hereof, to purchase
255,000 and 1,020,000 additional shares of Common Stock, respectively, to
cover over-allotments, if any. If such options are exercised in full, the
total Price to Public, Underwriting Discount and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares will be made in New York, New York, on or about
, 1997.
------------------------
MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN SECURITIES LTD.
LEHMAN BROTHERS
------------------------
The date of this Prospectus Supplement is , 1997.
<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-U.S. HOLDERS OF COMMON STOCK
GENERAL
The following is a general discussion of certain anticipated United States
federal income tax consequences of the ownership and disposition of Common Stock
by a person that, for United States federal income tax purposes, is not a
"United States Person" (a "Non-U.S. Holder"). For these purposes, a "United
States Person" means a citizen or resident of the United States, a corporation,
a partnership or other entity created or organized in or under the laws of the
United States or any state thereof, or an estate or trust, the income of which
is subject to United States federal income taxation regardless of its source.
The following discussion does not consider specific facts and circumstances
that may be relevant to a particular Non-U.S. Holder's tax position, including
the benefits that may be available to any person under an applicable tax treaty
to which the United States is a party. Specifically, without limitation, this
discussion does not address the United States tax consequences to any Non-U.S.
Holder who at any time owns (directly or through attribution) more than 5% of
the Common Stock or to any Non-U.S. Holder that is a controlled foreign
corporation, a foreign personal holding company, a foreign private foundation, a
foreign government, or a U.S. expatriate. Furthermore, the following discussion
is based on current provisions of the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), and on administrative and judicial pronouncements
thereunder, all of which are subject to change. Each Non-U.S. Holder is urged to
consult a tax advisor with respect to the United States tax consequences of
acquiring, holding and disposing of Common Stock, as well as any tax
consequences that may arise under the laws of any foreign, state, local or other
tax jurisdiction.
DIVIDENDS
Dividends paid on shares of Common Stock will be treated as dividends for
United States federal income tax purposes to the extent of the Company's current
or accumulated earnings and profits (as determined pursuant to the Code). Any
portion of a payment that exceeds such earnings and profits will be treated as a
return of capital to the extent of each Non-U.S. Holder's adjusted tax basis in
his or her Common Stock. Any portion of a payment that exceeds the sum of a
stockholder's proportionate share of earnings and profits and his or her
adjusted tax basis will be treated as a gain from the sale or exchange of his or
her Common Stock to the extent of any such excess, with the consequences
described below under "Gain on Disposition of Common Stock."
Each Non-U.S. Holder who receives a payment treated as a dividend for United
States federal income tax purposes (including, for this purpose, payments
representing a return of capital or gain) will be subject to withholding of
United States federal income tax at a rate of 30% of such payment unless either
(i) such holder is eligible for a reduced tax rate or a tax exemption under an
applicable income tax treaty or (ii) such holder is engaged in the conduct of a
trade or business within the United States and the dividend is effectively
connected with that trade or business. If the dividend is effectively connected
with the conduct of a trade or business within the United States by a Non-U.S.
Holder, the dividend (as adjusted by any applicable deductions) will be subject
to United States federal income tax at regular rates generally applicable to
United States Persons. Any such effectively connected dividends received by a
corporate Non-U.S. Holder may, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty. Certain certification requirements
may have to be satisfied to claim treaty benefits or exemption from withholding
under the foregoing rules. A Non-U. S. Holder of Common Stock that is eligible
for a reduced rate of U.S. federal withholding tax pursuant to a tax treaty may
obtain a refund of any excess amounts currently withheld by filing an
appropriate claim for refund with the U.S. Internal Revenue Service. Non-U.S.
Holders that are partnerships or trusts may be subject to certain additional
withholding requirements and are urged to consult their tax advisors as to the
application of such requirements.
GAIN ON DISPOSITION OF COMMON STOCK
Except as described below, a Non-U.S. Holder will generally not be subject
to United States federal income tax (and no tax will generally be withheld) with
respect to gain recognized on a sale or other disposition of the Common Stock
unless (i) the gain is effectively connected with a trade or business conducted
by the Non-U.S. Holder in the United States (and, if an applicable tax treaty so
provides, is attributable to a United States permanent establishment of such
holder), (ii) the Company is, or has been during the five year period ending on
the date of disposition, a United States real property holding corporation for
United States federal income tax purposes (a "USRPHC"), or (iii) in the case of
an individual Non-U.S. Holder who holds the Common Stock as a capital asset,
such holder is present in the United States for 183 days or more in the taxable
year of the disposition and either (a) has a tax home in
S-24
<PAGE>
the United States within the meaning of Section 911(d)(3) of the Code or (b) the
gain is attributable to an office or other fixed place of business maintained by
such holder in the United States.
With respect to (i) if the gain is effectively connected with the conduct of
a trade or business within the United States by the Non-U.S. holder (and, if an
applicable tax treaty so provides, is attributable to a United States permanent
establishment of such holder), the gain as adjusted by any applicable deductions
will be subject to United States federal income tax at rates generally
applicable to United States Persons (and may, in the case of a corporate
Non-U.S. Holder, also be subject to "branch profits tax"). With respect to (ii),
the Company believes that it has not been and is not currently a USRPHC and does
not anticipate becoming a USRPHC. Notwithstanding the foregoing, even if the
Company were treated as a USRPHC, the Common Stock would not be treated as an
interest in a USRPHC if (a) a Non-U.S. Holder has not owned (directly or through
attribution) more than 5% of the Common Stock for the five year period ending on
the date of disposition, and (b) the Common Stock is regularly traded on an
established securities exchange. An individual Non-U.S. Holder to whom (iii)
applies will generally be taxed at a rate of 30% on any gain recognized during
any year on the sale of Common Stock (as offset by U.S. capital losses, if any).
FEDERAL ESTATE TAXES
Common Stock held by an individual Non-U.S. Holder at the date of his or her
death will be included in his or her gross estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides otherwise.
UNITED STATES INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
The Company must report annually to the Internal Revenue Service the total
amount of United States federal income taxes withheld from dividends paid to
Non-U.S. Holders. In addition, the Company must report annually to the Internal
Revenue Service and each Non-U.S. Holder the amount of dividends and other
payments distributed to and the tax withheld with respect to such holder. These
information reporting requirements apply regardless of whether withholding is
reduced or eliminated by an applicable treaty or is not required because the
dividends are effectively connected with a U.S. trade or business of a Non-U.S.
Holder. Under certain treaties, the Internal Revenue Service may make this
information available to the tax authorities in the country of a Non-U.S.
Holder's residence.
Backup withholding tax (which generally is a withholding tax imposed at the
rate of 31% on certain payments to persons that are not "exempt recipients" and
that fail to furnish certain information under United States information
reporting requirements) and information reporting relating thereto generally
will not apply to dividends and other payments paid to Non-U.S. Holders that are
either (i) subject to the 30% withholding discussed above or (ii) not so subject
because a tax treaty applies that reduces or eliminates such withholding. In
addition, dividends payable at an address located outside of the United States
to a Non-U.S. Holder are generally not subject to the backup withholding and
information reporting rules. These backup withholding requirements and
information reporting rules will apply to the gross proceeds paid by or through
a United States office of a broker to a Non-U.S. Holder upon the disposition of
shares of Common Stock, unless the Non-U.S. Holder certifies under penalty of
perjury that it is a foreign person or the Non-U.S. Holder otherwise establishes
an exemption. Under existing regulations, information reporting (but not backup
withholding) will also apply to the payment of gross proceeds of a sale or other
disposition of Common Stock by or through a foreign office of a broker with
certain United States connections, unless the broker has documentary evidence
that the holder is a Non-U.S. Holder and the broker has no actual knowledge to
the contrary. Proposed regulations generally provide that backup withholding
will not apply to such payments, unless the broker has actual knowledge that the
payee is United States Person. Any amounts withheld under the backup withholding
rules from a payment to a Non-U.S. Holder will be refunded (or credited against
the Non-U.S. Holder's United States federal income tax liability, if any),
provided that the required information is furnished to the Internal Revenue
Service.
S-25
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an international purchase
agreement (the "International Purchase Agreement") among the Company and Merrill
Lynch International, Credit Suisse First Boston (Europe) Limited, J. P. Morgan
Securities Ltd. and Lehman Brothers International (Europe) (the "International
Managers") and concurrently with the sale of 6,800,000 shares of Common Stock to
the U.S. Underwriters (as defined below), the Company has agreed to sell to the
International Managers, and each of the International Managers severally has
agreed to purchase from the Company, the aggregate number of shares of Common
Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
----------
<S> <C>
Merrill Lynch International......................................................
Credit Suisse First Boston (Europe) Limited......................................
J.P. Morgan Securities Ltd.......................................................
Lehman Brothers International (Europe)...........................................
----------
Total.................................................................. 1,700,000
----------
----------
</TABLE>
The Company has also entered into a purchase agreement (the "U.S. Purchase
Agreement" and, together with the International Purchase Agreement, the
"Purchase Agreements") with Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Credit Suisse First Boston Corporation, J. P. Morgan Securities Inc. and Lehman
Brothers Inc. (the "U.S. Underwriters" and, together with the International
Managers, the "Underwriters"). Subject to the terms and conditions set forth in
the U.S. Purchase Agreement, and concurrently with the sale of 1,700,000 shares
of Common Stock to the International Managers pursuant to the International
Purchase Agreement, the Company has agreed to sell to the U.S. Underwriters, and
the U.S. Underwriters severally have agreed to purchase from the Company, an
aggregate of 6,800,000 shares of Common Stock. The initial public offering price
per share and the total underwriting discount per share are identical under the
International Purchase Agreement and the U.S. Purchase Agreement.
In each Purchase Agreement, the several International Managers and the
several U.S. Underwriters, respectively, have agreed, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting
International Managers or U.S. Underwriters (as the case may be) may be
increased. The sale of Common Stock to the International Managers is conditioned
upon the sale of the shares of Common Stock to the U.S. Underwriters.
The International Managers have advised the Company that they propose
initially to offer the shares of Common Stock to the public at the initial
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per share
of Common Stock. The International Managers may allow, and such dealers may
reallow, a discount not in excess of $ per share of Common Stock on sales to
certain other dealers. After the Offerings, the initial public offering price,
concession and discount may be changed.
The Company has granted an option to the International Managers, exercisable
during the 30-day period after the date of this Prospectus, to purchase up to an
aggregate of 255,000 additional shares of Common Stock at the public offering
price set forth on the cover page of this Prospectus, less the underwriting
discount. The International Managers may exercise this option only to cover
over-allotments, if any, made on the sale of Common Stock offered hereby. To the
extent that the International Managers exercise this option, each International
Manager will be obligated, subject to certain conditions, to purchase the number
of additional shares of Common Stock proportionate to such International
Manager's initial amount reflected in the foregoing table. Certain holders of
Common Stock participating in the Offerings have also granted an option to the
U.S. Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to an aggregate of 1,020,000 additional shares of
Common Stock to cover over-allotments, if any, on terms similar to those granted
to the International Managers.
The Company has been informed that the International Managers and the U.S.
Underwriters have entered into an agreement (the "Intersyndicate Agreement")
providing for the coordination of their activities. Under the terms of the
Intersyndicate Agreement, the International Managers and the U.S. Underwriters
are permitted to sell shares of Common Stock to each other for purposes of
resale at a per share of Common Stock price equal to the initial public offering
price, less an amount not greater than the selling concession. Under the terms
of the Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom
they sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to persons who are non-United States and non-Canadian persons or to
persons they believe intend to resell to persons who are non-United States and
non-Canadian persons, and the International Managers and any dealer to whom they
sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to persons who are United States persons or Canadian persons or to persons
they believe intend to resell to United States persons or Canadian persons,
except in each case for transactions pursuant to such agreement.
S-26
<PAGE>
Each International Manager has agreed that (i) it has not offered to sell or
sold, and it will not offer to sell or sell, in the United Kingdom by means of
any document any shares of Common Stock other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as principal or
agent, except in circumstances which do not constitute an offer to the public
within the meaning of the Public Offering of Securities Regulation 1995, (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act of 1986 (the "Financial Services Act") with respect to anything
done by it in relation to the Common Stock in, from or otherwise involving the
United Kingdom and (iii) it has only issued or passed on and will only issue or
pass on to any person in the United Kingdom any document received by it in
connection with the issuance of Common Stock if that person is of a kind who is
described in Article 11(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1995.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practice of the country of
purchase, in addition to the offering price set forth on the cover page hereof.
The Company and certain of the Company's officers have agreed, subject to
certain exceptions, including exceptions relating to employee benefit
arrangements, that they will not, directly or indirectly, for a period of 60
days following the date of this Prospectus Supplement, except with the prior
consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of the
Underwriters, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, or otherwise dispose of or transfer any shares
of the Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or hereafter acquired by the
Company or with respect to which the Company has or hereafter acquires the power
of disposition, or file any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act.
Certain of the Underwriters have provided from time to time, and expect to
provide in the future, investment banking services to the Company, for which
such Underwriters have received and will receive customary fees and commissions.
In addition, from time to time, in the ordinary course of their respective
businesses, certain of the Underwriters and certain of their affiliates engage
and may in the future engage in investment banking and commercial banking
transactions with the Company. Morgan Guaranty Trust Company of New York
("MGT"), an affiliate of J.P. Morgan Securities Ltd. and J.P. Morgan Securities
Inc., is the agent bank on the Company's $300 million Credit Agreement. Credit
Suisse, an affiliate of Credit Suisse First Boston (Europe) Limited and Credit
Suisse First Boston Corporation, is a lender under the Credit Agreement. As
lenders under the Credit Agreement, MGT and Credit Suisse may receive in excess
of 10% of the net proceeds of the Offerings. See "Use of Proceeds." Accordingly,
this offering will be conducted in accordance with Rule 2710(c)(8) of the
National Association of Securities Dealers, Inc. ("NASD").
VALIDITY OF SHARES
The validity of the Common Stock offered hereby will be passed upon for the
Company by M. Brian Moroze, Esq., General Counsel of the Company, Exeter, New
Hampshire. Mr. Moroze owns 20,800 shares of the Company's Common Stock. Certain
other legal matters will be passed upon for the Company by Kramer, Levin,
Naftalis & Frankel, 919 Third Avenue, New York, New York 10022. Joshua M.
Berman, a director and the Secretary of the Company, is counsel to the law firm
of Kramer, Levin, Naftalis & Frankel and owns 36,000 shares of the Company's
Common Stock. Certain legal matters will be passed upon for the Underwriters by
Fried, Frank, Harris, Shriver & Jacobson (a partnership including professional
corporations), One New York Plaza, New York, New York 10004.
S-27
<PAGE>
[ALTERNATE INTERNATIONAL]
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF ANY OFFER
TO BUY, THE COMMON STOCK TO ANY PERSON IN ANY JURISDICTION WHERE, OR IN ANY
CIRCUMSTANCE IN WHICH, SUCH OFFER OR SOLICITATION MAY NOT BE LEGALLY MADE.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY OR
THE INFORMATION SET FORTH IN THE PROSPECTUS SUPPLEMENT OR THE PROSPECTUS SINCE
THE DATE HEREOF.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Supplement Summary................... S-3
The Offerings................................... S-3
Summary Consolidated Financial Data............. S-4
The Company..................................... S-6
Use of Proceeds................................. S-16
Price Range of Common Stock and Dividends....... S-16
Capitalization.................................. S-17
Selected Consolidated Financial Data............ S-18
Management's Discussion and Analysis of
Financial Condition and Operating Results..... S-19
Certain United States Tax Consequences to Non-
U.S. Holders of Common Stock.................. S-24
Underwriting.................................... S-26
Validity of Shares.............................. S-27
PROSPECTUS
Available Information........................... 2
Incorporation of Certain Information by
Reference..................................... 2
The Company..................................... 4
Current Developments............................ 4
Use of Proceeds................................. 4
Ratio of Earnings to Fixed Charges.............. 5
Description of Debt Securities.................. 5
Description of Common Stock..................... 14
Plan of Distribution............................ 15
Validity of Securities.......................... 16
Experts......................................... 16
</TABLE>
8,500,000 SHARES
[LOGO]
COMMON STOCK
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P R O S P E C T U S S U P P L E M E N T
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MERRILL LYNCH INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN SECURITIES LTD.
LEHMAN BROTHERS
FEBRUARY , 1997
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