<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1994
REGISTRATION STATEMENT NO. 33-53297
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
UNITED STATES SURGICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 13-2518270
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
150 GLOVER AVENUE, NORWALK, CONNECTICUT 06856
(203) 845-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
DONALD F. CRANE, JR.
SENIOR SEC COUNSEL
UNITED STATES SURGICAL CORPORATION
150 GLOVER AVENUE
NORWALK, CONNECTICUT 06856
(203) 845-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: from time
to time after the Registration Statement becomes effective.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================
TITLE OF EACH CLASS OF
SECURITIES BEING REGISTERED AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
REGISTERED PER UNIT OFFERING PRICE REGISTRATION
FEE
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<S> <C> <C> <C> <C>
Depositary Shares, each representing one-
fiftieth of a share of DECS, Series A
Convertible Preferred Stock, par value $5
per share(1)................................ 8,870,000 Shares $22.55 $200,018,500 $68,972
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DECS, Series A Convertible Preferred Stock,
par value $5 per share...................... (2) (2) (2) N/A
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Common Stock, par value $.10 per share........ (3) (3) (3) N/A
===================================================================================================================
</TABLE>
(1) 8,870,000 Depositary Shares originally offered and issued on March 28, 1994,
at $22.55 per share, and offered for resale hereunder.
(2) One-fiftieth of the number of Depositary Shares registered hereby. DECS are
represented by the Depositary Shares and no additional registration fee is
required.
(3) Up to 8,870,000 shares issuable upon, or in connection with, the conversion
or redemption of the Depositary Shares, as to which no additional
registration fee is required.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
PROSPECTUS
[LOGO]
8,870,000 SHARES
UNITED STATES SURGICAL CORPORATION
$2.20 DEPOSITARY SHARES
EACH REPRESENTING A ONE-FIFTIETH INTEREST IN A SHARE OF
SERIES A CONVERTIBLE PREFERRED STOCK
(DIVIDEND ENHANCED CONVERTIBLE STOCKSM -- DECSSM)
COMMON STOCK
This Prospectus relates to the resale of 8,870,000 of $2.20 Depositary Shares
(the "Depositary Shares"), each representing a one-fiftieth interest in a share
of Series A Convertible Preferred Stock, par value $5 per share ("DECS"), of
United States Surgical Corporation (the "Company"), of the DECS, and of up to
8,870,000 shares of Common Stock issuable upon redemption or conversion of the
Depositary Shares (collectively, the "Resale Securities") by the holders named
herein of the Resale Securities (each, a "Selling Stockholder" and collectively,
the "Selling Stockholders").
The Depositary Shares were issued in a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act") by the
Company on March 28, 1994. See "Issuance of Resale Securities to Selling
Stockholders".
The Selling Stockholders directly, through agents designated from time to time,
or through dealers or underwriters to be designated, may sell the Resale
Securities from time to time on terms determined at the time of sale. See "Plan
of Distribution." The Company will not receive any of the proceeds from the sale
of the Resale Securities by the Selling Stockholders.
Upon any sale of the Resale Securities offered hereby, Selling Stockholders and
participating agents, brokers and dealers may be deemed to be underwriters as
that term is defined in the Securities Act. The Company, however, understands
that the Selling Stockholders do not admit that they are underwriters within the
meaning of the Securities Act.
The Company will pay the expenses of registration of the Resale Securities,
except for underwriters' discounts or commissions, if any.
Dividends on the Depositary Shares are cumulative at the annual rate of $2.20
per share (being one-fiftieth of the annual dividend rate of $110.00 for each
share of DECS), payable quarterly in arrears, commencing July 1, 1994. Each
Depositary Share has a liquidation preference (being one-fiftieth of the
liquidation preference of each share of DECS) equal to the sum of (i) $22.55 and
(ii) one-fiftieth of the amount of accrued and unpaid dividends on each share of
DECS.
At any time after April 1, 1997 (subject to certain limitations), the Depositary
Shares may be redeemed by the Company for an amount of Common Stock of the
Company, par value $.10 per share (the "Common Stock"), equal to $20.50,
together with an additional cash dividend as set forth herein. On April 1, 1998
(the "Mandatory Conversion Date"), each Depositary Share still outstanding will
automatically convert into one share of Common Stock, subject to adjustment in
certain events. Prior to any such redemption by the Company, each Depositary
Share may be converted at any time at the option of the holder into 0.953 of a
share of Common Stock (equivalent to 47.65 shares of Common Stock for each share
of DECS).
For a detailed description of the terms of DECS and the Depositary Shares, see
"Description of DECS" and "Description of Depositary Shares".
If the Resale Securities are resold through underwriters, dealers, or agents, by
certain means other than sales into the market, this Prospectus will be
accompanied by a Prospectus Supplement which names such underwriters, dealers or
agents and describes the arrangements therewith.
The Common Stock will be listed for trading on the New York Stock Exchange under
the symbol USS. Neither the Depositary Shares nor the DECS are required to be
listed for trading on any exchange. The Depositary Shares are eligible for
trading in the Private Offerings, Resales and Trading through Automatic Linkage
("Portal") Market.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER MATTERS DISCUSSED UNDER
"INVESTMENT CONSIDERATIONS".
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE 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 June 27, 1994.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., and at the
Commission's regional offices in New York (75 Park Place, New York, New York
10007) and in Chicago (Northwestern Atrium Center, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661). Copies of such materials can be obtained at
prescribed rates by writing to the Securities and Exchange Commission, Public
Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. Such materials also can be inspected at the office of the New York Stock
Exchange (20 Broad Street, New York, New York 10005).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by the Company
(File No. 1-9776) are incorporated by reference in their entirety in this
Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994.
3. The Company's Proxy Statement for the Annual Meeting held May 18,
1994.
4. The description of the Company's Common Stock, $.10 par value
("Common Stock") contained in the Company's Registration Statement
on Form 8-B, dated August 3, 1990.
All documents filed by the Company pursuant to Section 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 shall be deemed to be incorporated
by reference in this Prospectus and to be a part of this Prospectus from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this Prospectus 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 in this
Prospectus 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 hereby undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon the request of such person, a copy of
any or all of the documents referred to above, other than exhibits to such
documents unless such exhibits are specifically incorporated by reference herein
or in any incorporated document. Requests should be directed to United States
Surgical Corporation, Marianne Scipione, Vice President, Corporate
Communications, 150 Glover Avenue, Norwalk, Connecticut 06856 (telephone number:
(203) 845-1000).
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
THE COMPANY
United States Surgical Corporation (the "Company") is a Delaware
corporation primarily engaged in developing, manufacturing and marketing a
proprietary line of technologically advanced surgical wound management products
to hospitals throughout the world. (Prior to reincorporating in Delaware in
1990, the Company was a New York corporation which was organized in 1975 and was
the successor to a Maryland corporation activated in 1964.) The Company
currently operates domestically and internationally through subsidiaries,
branches and distributors. Except where the context otherwise requires, the term
Company includes the Company's divisions, subsidiaries, branches and
predecessors.
The Company is the leading manufacturer and marketer of innovative
mechanical products for the wound closure market. Its principal products include
a series of surgical stapling instruments (both disposable and reusable),
disposable surgical clip appliers and presterilized disposable loading units for
use with stapling instruments. The Company's stapling instruments are an
alternative to manual suturing techniques and enable surgeons to reduce blood
loss, tissue trauma and operating time while joining internal tissue,
reconstructing or sealing off organs, removing diseased tissue, occluding blood
vessels and closing skin, either with titanium, stainless steel, or absorbable
POLYSURGICLIP(R) copolymer clips. Surgical stapling also makes possible several
surgical procedures which cannot be achieved with surgical needles and suturing
materials.
The Company is also the leading manufacturer and marketer of specialized
wound management products designed for use in the rapidly growing field of
minimally invasive surgery. This surgical technique, also referred to as
endoscopic or laparoscopic surgery, requires incisions of up to one-half inch
and generally provides patients with significant reductions in post-operative
hospital stays, pain, recuperative time and hospital costs. Applications for
minimally invasive surgery include cholecystectomy (gallbladder removal),
hysterectomy, hernia repair, and various forms of bowel, stomach, gynecologic
and thoracic surgery. The Company's products in this area include a variety of
specialized surgical clip appliers and staplers, trocars (which provide entry
ports to the body for laparoscopic surgery) and a line of laparoscopic
instruments which allow surgeons to cut, clamp, retract or otherwise manipulate
tissue during laparoscopic procedures.
Disposable instruments reduce the user's capital investment, eliminate the
cleaning, maintenance, sterilizing and repair required for reusable instruments,
and provide the surgeon with a new sterile instrument for each procedure,
offering more efficacious and safer practice for both patients and operating
room personnel.
The Company also manufactures and markets a line of sutures, which was
introduced in 1991. The Company believes that sutures, which represent a major
portion of the wound closure market, are a natural complement to its other wound
management products. This market is currently dominated by other manufacturers.
The Company continues to expand its sutures line to enable it to compete
effectively with the full range of suture products currently offered in the
marketplace.
The Company's executive offices are located at 150 Glover Avenue, Norwalk,
Connecticut 06856, and its telephone number is (203) 845-1000.
3
<PAGE> 5
SUMMARY DESCRIPTION OF DECS AND DEPOSITARY SHARES
SECURITIES...................... Depositary Shares, each such share
representing a one-fiftieth interest in a
share of DECS and entitling the holder to
that proportion of all the rights,
preferences, and privileges of a share of
DECS (including dividend, voting, conversion,
and liquidation rights and preferences)
represented thereby, are offered hereby. The
Depositary Shares mandatorily convert into
shares of Common Stock on April 1, 1998 (the
"Mandatory Conversion Date"), and the Company
has the option to redeem the shares of DECS
(and the related Depositary Shares), in whole
or in part, on or after April 1, 1997 (the
"Initial Redemption Date") and prior to the
Mandatory Conversion Date, at the DECS Call
Price (as defined herein) payable in shares
of Common Stock, provided that the Current
Market Price (as defined herein) of the
Common Stock is greater than a defined amount
described herein. In addition, the Depositary
Shares are convertible at the option of the
holder at any time prior to the Mandatory
Conversion Date as set forth below.
DIVIDENDS....................... Annual cumulative dividends accrue at a rate
of $2.20 with respect to each Depositary
Share (equivalent to a rate of $110.00 per
annum for each share of DECS), from the date
of initial issuance, payable quarterly in
arrears on each January 1, April 1, July 1
and October 1, commencing July 1, 1994. See
"Description of DECS -- Dividends" and
"Description of Depositary
Shares -- Dividends and Other Distributions".
MANDATORY CONVERSION............ On the Mandatory Conversion Date, unless
previously redeemed or converted, each
outstanding Depositary Share will mandatorily
convert into (i) one share of Common Stock,
subject to adjustment in certain events, and
(ii) the right to receive cash in an amount
equal to all accrued and unpaid dividends
(other than previously declared dividends
payable to a holder of record as of a prior
date) with respect to such Depositary Share.
See "Description of DECS -- Mandatory
Conversion of DECS" and "Description of
Depositary Shares -- Conversion and Call
Provisions". The value of the Common Stock
that may be received by holders of Depositary
Shares upon their mandatory conversion may be
more or less than the amount paid for the
Depositary Shares offered hereby due to
market fluctuations in the price of the
Common Stock.
OPTIONAL REDEMPTION............. Shares of DECS (and the related Depositary
Shares) are not redeemable either (i) prior
to the Initial Redemption Date or (ii) at any
time on or after the Initial Redemption Date
when the Current Market Price of the Common
Stock is less than or equal to the sum of (x)
the DECS Call Price and (y) the Additional
Dividend (as defined herein) per Depositary
Share. Subject to the foregoing, at any time
4
<PAGE> 6
and from time to time on or after the Initial
Redemption Date, and ending immediately prior
to the Mandatory Conversion Date, the Company
may redeem any or all of the outstanding
shares of DECS (and thereby the related
Depositary Shares). Upon any such redemption,
each holder of Depositary Shares will
receive, in exchange for each Depositary
Share so redeemed, an amount of Common Stock
having an aggregate Current Market Price on
the applicable date of determination equal to
$20.50 (the "DECS Call Price"). Each holder
of Depositary Shares will also receive an
additional cash dividend (the "Additional
Dividend") upon redemption by the Company in
an amount initially equal to $0.55 for each
share of Depositary Shares, declining ratably
after the Initial Redemption Date to $0 one
month prior to the Mandatory Conversion Date,
as set forth herein. See "Description of
DECS -- Optional Redemption" and "Description
of Depositary Shares -- Conversion and Call
Provisions". The number of shares of Common
Stock to be delivered upon redemption will be
determined by dividing the DECS Call Price by
the Current Market Price of the Common Stock
prior to the announcement of the redemption,
and the market price of the Common Stock may
vary between the date of such determination
and the subsequent delivery of such shares.
CONVERSION AT THE OPTION OF THE
HOLDER........................ At any time prior to the Mandatory Conversion
Date, unless previously redeemed, each
Depositary Share is convertible at the option
of the holder thereof into 0.953 of a share
of Common Stock (the "Optional Conversion
Rate"), equivalent to a conversion price of
$21.50 per share of Common Stock (the
"Conversion Price"), subject to adjustment as
described below (such Optional Conversion
Rate being equivalent to 47.65 shares of
Common Stock for each share of DECS). The
number of shares of Common Stock a holder
will receive upon redemption, and the value
of the shares received upon conversion, will
vary depending on the market price of the
Common Stock from time to time, all as set
forth herein. The right of holders to convert
shares of DECS called for redemption (and the
related Depositary Shares) will terminate
immediately prior to the close of business on
the redemption date. See "Description of
DECS -- Conversion at the Option of the
Holder" and "Description of Depositary
Shares -- Conversion and Call Provisions".
ENHANCED DIVIDEND YIELD,
LESS EQUITY APPRECIATION
THAN COMMON STOCK............. Dividends will accrue on the Depositary
Shares at a higher rate than the rate at
which dividends are currently paid on the
Common Stock. The opportunity for equity
appreciation afforded by an investment in the
Depositary Shares may be less than that
afforded by an investment in the
5
<PAGE> 7
Common Stock to the extent the Conversion
Price is higher than the purchase price and
the Company may, at its option, redeem the
shares of DECS (and thereby the Depositary
Shares) at any time on or after April 1,
1997, and prior to the Mandatory Conversion
Date, and may do so if, among other
circumstances, the applicable Current Market
Price of the Common Stock exceeds the DECS
Call Price plus the Additional Dividend per
Depositary Share. In such event, a holder of
a Depositary Share will receive less than one
share of Common Stock. A holder may also
surrender for conversion any Depositary
Shares called for redemption up to the close
of business on the redemption date, and a
holder that so elects to convert will receive
0.953 of a share of Common Stock per
Depositary Share. The value of Common Stock
received by a holder of a Depositary Share
may be more or less than the per share amount
paid for the Depositary Shares offered
hereby, due to market fluctuations in the
price of Common Stock. See "Description of
DECS -- Enhanced Dividend Yield, Less Equity
Appreciation than Common Stock" and
"Description of Depositary Shares".
VOTING RIGHTS................... The holders of shares of DECS shall have the
right with the holders of Common Stock to
vote in the election of Directors and upon
each other matter coming before any meeting
of the holders of Common Stock on the basis
of 0.95 of a vote for each Depositary Share
held (equivalent to 47.50 votes for each
share of DECS). On such matters, the holders
of shares of DECS and the holders of Common
Stock will vote together as one class except
as otherwise provided by law. In addition,
(i) whenever dividends on the shares of DECS
or any other series of the Company's
preferred stock (all series of which,
including the shares of DECS, hereinafter are
called the "Preferred Stock") shall be in
arrears and unpaid for six quarterly dividend
periods, and in certain other circumstances,
the holders of the shares of DECS (voting
separately as a class with holders of all
other series of outstanding Preferred Stock
upon which the voting rights have been
conferred and are exercisable) will be
entitled to vote, on the basis of one vote
for each share of DECS (equivalent to
one-fiftieth of a vote for each Depositary
Share), for the election of two Preferred
Stock Directors (as defined herein) of the
Company, these Directors to be in addition to
the number of Directors constituting the
Board of Directors immediately prior to the
accrual of such right, and (ii) the holders
of the shares of DECS will have voting rights
with respect to certain alterations of the
Company's Certificate of Incorporation and
certain other matters, voting on the same
basis or separately as a series. The owners
of Depositary Shares will be entitled to
direct the voting of the shares of DECS
represented thereby. See "Description of
DECS -- Voting Rights", "Description of
6
<PAGE> 8
Depositary Shares -- Voting of DECS" and
"Description of Capital Stock -- Common
Stock".
LIQUIDATION PREFERENCE AND
RANKING....................... The shares of DECS will rank prior to the
Common Stock as to payment of dividends and
distributions of assets upon liquidation. The
liquidation preference of each share of DECS
is an amount equal to the sum of (i)
$1,127.50, which is fifty times the
liquidation preference per Depositary Share
of $22.55 and (ii) all accrued and unpaid
dividends thereon. See "Description of
DECS -- Dividends" and "-- Liquidation
Rights" and "Description of Depositary
Shares".
REGISTRATION RIGHTS............. The Company has agreed to maintain a shelf
registration statement under the Securities
Act relating to resales of the Depositary
Shares and the Common Stock issuable upon
conversion or redemption thereof. If such
registration statement does not remain
effective within the time periods set forth
herein, the dividend rate on the Depositary
Shares will be temporarily or permanently
increased in the manner described herein.
This Prospectus is a part of the registration
statement filed pursuant to the foregoing
obligation of the Company. See "Description
of Depositary Shares -- Registration Rights".
7
<PAGE> 9
INVESTMENT CONSIDERATIONS
LEVERAGE
After giving effect to the receipt of approximately $192 million of net
proceeds from the sale of the Depositary Shares, described below in "Issuance of
Resale Securities to Selling Stockholders", the Company's consolidated
indebtedness approximates 45% of the sum of its stockholders' equity and
consolidated indebtedness. This degree of leverage increases the Company's
vulnerability to adverse general economic and health care industry conditions
and to increased competitive pressures, including pricing pressure from better
capitalized competitors.
RECENT LOSSES; REDUCTION IN STOCKHOLDERS' EQUITY
The Company reported a net loss of approximately $139 million for the
fiscal year ended December 31, 1993. This loss includes the effect of a total of
approximately $138 million ($130 million after-tax) in restructuring charges
incurred during that period. The Company also reported a net loss of
approximately $8 million for the first quarter of 1994. The Company's losses
have reduced its stockholders' equity.
RECENT DEVELOPMENTS IN THE HEALTH CARE INDUSTRY
Recent developments in the health care industry have had a significant
impact on the Company's performance. Significant uncertainty exists regarding
the impact that health care reforms proposed by the Clinton Administration or
others may have on the Company and its business. The primary trend in the health
care industry is toward cost containment. The increased use of managed care,
stricter review processes instituted by insurance companies and greater
supervision of doctors' referral patterns have resulted in a market in which
payors have greater leverage. In the context of an uncertain environment
concerning health care reform, pricing has become a more important factor in
purchasing decisions by hospitals. As a result, the Company's traditional
advantage of product superiority has been adversely impacted. This environment
has also slowed the rate of acceptance of newer techniques utilizing the
Company's products because of concerns about reimbursement. There can be no
assurance that the Company will not continue to be adversely affected by these
matters.
JUST-IN-TIME DISTRIBUTION
The Company's sales have also been affected by the shifting since early
1993 of approximately 40% of the Company's domestic product distribution toward
third-party Just-In-Time ("JIT") distribution. This new distribution system
provides hospitals with an opportunity to reduce their inventories. These
inventory reductions have taken longer than anticipated and have continued to
result in a significant loss of sales as customer inventories are brought down
toward desirable levels.
COMPETITION
The medical device industry is highly competitive, and the Company competes
with manufacturers and marketers of medical devices (including surgical stapling
instruments, minimally invasive surgery products and sutures) that have greater
financial resources than the Company, including Johnson & Johnson and its
subsidiary, Ethicon, Inc. Competition in the markets served by the Company has
in the past resulted, and may in the future result, in losses of market share
and downward pressure on product pricing. Certain of the Company's competitors,
particularly Ethicon, have engaged in deep price discounting, especially in
aggressively pursuing evaluations of their products by hospitals, as compared to
those of the Company, for trial periods of various durations. The length of
these competitive evaluations may often extend from one to six months.
Regardless of the outcome of the evaluation, the Company loses revenues during
the evaluation period. In addition, increased cost consciousness due to
uncertainty over health care reform has revived competition from reusable
instruments.
8
<PAGE> 10
REGULATION
The Company's business is subject to varying degrees of governmental
regulation in the countries in which it operates. In the United States, the
Company's products are subject to regulation as medical devices by the Food and
Drug Administration ("FDA") and other federal and state agencies. These
regulations pertain to the manufacturing, labeling, development and testing of
the Company's products as well as to the maintenance of required records. An FDA
regulation also requires prompt reporting of an event or malfunction involving a
medical device where such device caused or contributed to death or serious
injury or may do so. Federal law provides for several alternatives by which the
FDA reviews medical devices prior to their entry into the marketplace. To date
all the Company's new products have been cleared by the FDA under the most
expedited form of pre-market review. The Company, and in the Company's belief,
the rest of the industry, has generally experienced longer FDA product approval
periods in 1992 and 1993 than in prior years. Timely product approval is
important to the Company's maintaining its technological competitive advantages.
The FDA has proposed additional procedures for obtaining regulatory approvals.
However, the extent, if any, to which any such additional procedures may affect
the Company can not be determined at this time.
In other countries, the degree of government regulation affecting the
Company varies considerably, ranging from stringent testing and approval
procedures in certain locations to simple registration procedures (or no
procedures at all) in others. In general, the Company has not encountered
material delays or regulatory impediments in marketing its products
internationally. Should establishment of uniform regulations for the European
Community occur, the Company believes it will be subject to a single regulatory
scheme for all the participating countries, but it anticipates that the process
generally may be more rigorous than certain of the multiple formats currently in
place.
ABSENCE OF PUBLIC MARKET FOR DEPOSITARY SHARES
There can be no assurance as to the development or liquidity of any market
for the Depositary Shares and the DECS. The Depositary Shares are eligible for
trading in the Private Offerings, Resales and Trading through Automatic Linkage
("PORTAL") Market. If not listed on an exchange, the Depositary Shares may be
expected to trade on the over the counter market; the DECS are not expected to
be separately traded but could also be traded on the over the counter market.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The ratio of earnings to combined fixed charges and preferred stock
dividends of the Company, computed for each of the last five fiscal years, on a
pro-forma basis for the latest fiscal year, and for the quarter ended March 31,
1994, is as follows.
<TABLE>
<CAPTION>
PRO-FORMA
PRO-FORMA QUARTER QUARTER
YEAR ENDED ENDED ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, MARCH 31, MARCH 31, ------------------------------------------
1993 1994 1994 1993 1992 1991 1990 1989
------------ --------- ---------- ------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to combined
fixed charges
and preferred
stock
dividends....... (1) (2) (3) (4) 7.43 7.51 5.56 4.59
</TABLE>
The pro-forma calculation of the ratio of earnings to combined fixed
charges and preferred stock dividends assumes that the Company issued Depositary
Shares for approximately $200 million and received net proceeds from the sale of
$192 million which were used to repay long-term debt as of the beginning of the
respective periods.
9
<PAGE> 11
- ---------------
(1) Earnings are inadequate to cover combined fixed charges and preferred stock
dividends. The dollar amount of the pro-forma deficiency at December 31,
1993 was $166.7 million. If fourth quarter restructuring charges of $137.6
million were excluded from the calculation, the dollar amount of the
pro-forma deficiency would have been $29.1 million.
(2) Earnings are inadequate to cover combined fixed charges and preferred stock
dividends. The dollar amount of the pro-forma deficiency at March 31, 1994
was $10.5 million.
(3) Earnings are inadequate to cover fixed charges. The dollar amount of the
deficiency at March 31, 1994, was $5.8 million.
(4) Earnings are inadequate to cover fixed charges. The dollar amount of the
deficiency at December 31, 1993 is $146.9 million. If the restructuring
charges of $137.6 million were excluded from the calculation, the dollar
amount of the deficiency would have been $9.3 million.
USE OF PROCEEDS
The Company will receive no proceeds from the sale of the Resale Securities
by the Selling Stockholders.
ISSUANCE OF RESALE SECURITIES TO SELLING STOCKHOLDERS
On March 28, 1994 the Company issued 177,400 shares of its Series A
Convertible Preferred Stock (convertible into a maximum of 8,870,000 shares of
the Company's Common Stock), par value $5 per share, represented by 8,870,000
Depositary Shares, in an offering exempt from registration under the Securities
Act at an offering price of $22.50 per Depositary Share.
SELLING STOCKHOLDERS
The following table sets forth certain information as of June 24, 1994 with
respect to the Selling Stockholders:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK SHARES OF COMMON
BENEFICIALLY STOCK BENEFICIALLY
OWNED PRIOR TO SHARES OWNED AFTER THE
THE OFFERING(1) OFFERED HEREBY(2) OFFERING(1)(2)(3)
--------------------- ----------------- ---------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT(4) NUMBER PERCENT(4)
- -------------------------------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Fidelity Financial Trust:
Fidelity Convertible
Securities Fund............... 0 1,020,000 0
Fidelity Capital Trust: Fidelity
Value Fund.................... 0 443,500 0
Fidelity Devonshire Trust:
Fidelity Equity-Income Fund... 0 361,600 0
Fidelity Financial Trust:
Fidelity Retirement Growth
Fund.......................... 0 443,500 0
Fidelity Mount Vernon Street
Trust: Fidelity Growth Company
Fund.......................... 0 443,500 0
Fidelity Puritan Trust: Fidelity
Puritan Fund.................. 0 443,500 0
Fidelity Selected Portfolios:
Health Care Portfolio......... 0 222,000 0
Fidelity Securities Fund:
Fidelity Growth & Income
Portfolio..................... 0 443,500 0
Fidelity Trend Fund............. 0 177,000 0
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #1............ 0 8,400 0
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK SHARES OF COMMON
BENEFICIALLY STOCK BENEFICIALLY
OWNED PRIOR TO SHARES OWNED AFTER THE
THE OFFERING(1) OFFERED HEREBY(2) OFFERING(1)(2)(3)
--------------------- ----------------- ---------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT(4) NUMBER PERCENT(4)
- -------------------------------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #2............ 0 3,600 0
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #3............ 0 6,000 0
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #4............ 0 3,900 0
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #5............ 0 16,200 0
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #6............ 0 2,800 0
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #7............ 0 10,600
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #8............ 0 13,200 0
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #9............ 0 1,100 0
Fidelity Management Trust
Company, FMTC, on behalf of
Managed Account #10........... 0 16,100 0
Froley, Revy Investment Trust
Co. Account: First Interstate
Bank of Oregon as agent for
SAIF Corporation.............. 0 72,500 0
Froley, Revy Investment Co. Inc.
Account: State of Delaware
Retirement System............. 0 14,000 0
California Public Employees
Retirement System............. 381,200 215,000 381,200
Oppenheimer Equity Income
Fund.......................... 0 550,000 0
The Boston Company.............. 0 66,000 0
General Motors Salaried
Employees Pension Trust....... 0 67,200 0
General Motors Hourly-Rate
Employees Pension Trust....... 0 72,800 0
Keystone America Omega Fund,
Inc........................... 0 75,000 0
Keystone Custodian Fund, Series
K-2........................... 0 200,000 0
Keystone Custodian Fund, Series
S-3........................... 0 53,000 0
Highbridge Capital
Corporation................... 0 95,000 0
Dean Witter Convertible
Securities Trust.............. 0 88,000 0
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK SHARES OF COMMON
BENEFICIALLY STOCK BENEFICIALLY
OWNED PRIOR TO SHARES OWNED AFTER THE
THE OFFERING(1) OFFERED HEREBY(2) OFFERING(1)(2)(3)
--------------------- ----------------- ---------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT(4) NUMBER PERCENT(4)
- -------------------------------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
Bank.......0297,0000The Selected
U.S. Equity
Portfolio..................... 0 177,400 0
Sierra Trust Funds.............. 0 44,300 0
Bankers Trust Company, Cede &
Co., By: BT Services
Tennessee, Inc., as Agent
Account 102818................ 0 132,400 0
Bankers Trust Company, Cede &
Co., By: BT Services
Tennessee, Inc., as Agent
Account 102819................ 0 127,300 0
Any other holder of Resale
Securities or future
transferee from any such
holder........................ (5) 2,443,100 (5)
</TABLE>
- ---------------
(1) Information with respect to beneficial ownership is obtained from the
Selling Stockholders.
(2) Depositary Shares, and the maximum number of shares of Common Stock to be
issued on redemption or conversion of the Depositary Shares, as described
herein. The term Selling Stockholder shall be deemed to include a purchaser,
if any, from a Selling Stockholder listed above.
(3) Assumes sale of all Resale Securities offered hereby and no other purchases
or sales of Depositary Shares or Common Stock. Includes Common Stock
issuable on conversion or redemption of the Depositary Shares. See "Plan of
Distribution."
(4) No holders own or will after the offering own as much as 1% of the Company's
Common Stock.
(5) Not determinable.
The Company and the Selling Stockholders have agreed to indemnify each
other against certain civil liabilities under the Securities Act.
PLAN OF DISTRIBUTION
The Resale Securities may be sold from time to time to purchasers directly
by any of the Selling Stockholders, including sales into the market, through
brokers, dealers, or otherwise. Alternatively, the Selling Stockholders may from
time to time offer the Resale Securities through underwriters, dealers or agents
who may in certain cases receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholders or the
purchasers of the Resale Securities. The Selling Stockholders and any
underwriters, dealers or agents that participate in the distribution of the
Resale Securities may be deemed to be underwriters. The Company, however,
understands that the Selling Stockholders do not admit that they are
underwriters within the meaning of the Securities Act. The Selling Stockholders
and any such underwriters, dealers, and agents may be entitled to
indemnification against certain liabilities, including liabilities under the
Securities Act, or be entitled to contributions as to payments they may be
required to make in respect thereof.
The Company will pay all of the expenses incident to the registration of
the Resale Securities to the public, except for underwriters' discounts or
commissions, if any.
If the Resale Securities are sold through underwriters, dealers, or agents,
by certain means other than sales into the market through brokers, dealers, or
otherwise, a Prospectus Supplement will name such underwriters, dealers, or
agents and describe the arrangements therewith.
12
<PAGE> 14
DESCRIPTION OF DECS
The summary contained herein of the terms of shares of DECS, including
those terms applicable to shares of Preferred Stock, does not purport to be
complete and is subject to and qualified in its entirety by reference to all of
the provisions of the Company's Certificate of Incorporation and form of
Certificate of Designation relating to the shares of DECS (the "Certificate of
Designation"), a copy of which Certificate of Designation has been filed with
the Registration Statement of which this Prospectus is a part.
Each of the Depositary Shares represents beneficial ownership of
one-fiftieth of a share of DECS and entitles the owner to that proportion of all
the rights, preferences and privileges of the share of DECS represented thereby.
See "Description of Depositary Shares".
DIVIDENDS
Holders of record of the shares of DECS (and thereby holders of Depositary
Shares) shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, cash dividends from the date
of initial issuance of the shares of DECS at the rate of $110.00 per annum or
$27.50 per quarter (equivalent to a rate of $2.20 per annum or $0.55 per quarter
for each Depositary Share), payable quarterly in arrears on January 1, April 1,
July 1 and October 1 or, if any such date is not a business day, on the next
succeeding business day. The first dividend period will be from the date of
initial issuance of the shares of DECS to, but excluding, July 1, 1994, and will
be payable on such date. Dividends will cease to accrue on the shares of DECS on
the Mandatory Conversion Date or on the date of their earlier conversion or
redemption. Dividends will be payable to holders of record of shares of DECS as
they appear on the stock register of the Company on record dates not less than
15 nor more than 60 days preceding the payment date thereof, as shall be fixed
by the Board of Directors. Dividends payable on shares of DECS for any period
less than a full quarterly dividend period will be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days elapsed in
any period less than one month.
Dividends on shares of DECS shall accrue whether or not there are funds
legally available for the payment of such dividends and whether or not such
dividends are declared. Accrued but unpaid dividends on shares of DECS shall
cumulate as of the dividend payment date on which they first become payable, but
no interest shall accrue on accumulated but unpaid dividends on shares of DECS.
The shares of DECS will rank on a parity, both as to payment of dividends
and distribution of assets upon liquidation, with any Preferred Stock issued in
the future by the Company that by its terms ranks pari passu with the shares of
DECS.
As long as any shares of DECS are outstanding, no dividends (other than
dividends payable in shares of, or warrants, rights or options exercisable for
or convertible into shares of, any capital stock, including, without limitation,
the Common Stock, of the Company ranking junior to the shares of DECS as to the
payment of dividends and the distribution of assets upon liquidation
(collectively "Junior Stock") and cash in lieu of fractional shares in
connection with any such dividend) will be paid or declared in cash or
otherwise, nor will any other distribution be made (other than a distribution
payable in Junior Stock and cash in lieu of fractional shares in connection with
any such distribution), on any Junior Stock unless: (i) full dividends on
Preferred Stock that does not constitute Junior Stock ("Parity Preferred Stock")
have been paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such Junior Stock dividend or
distribution payment to the extent such dividends are cumulative; (ii) dividends
in full for the current quarterly dividend period have been paid, or declared
and set aside for payment, on all Parity Preferred Stock to the extent such
dividends are cumulative; (iii) the Company has paid or set aside all amounts,
if any, then or theretofore required to be paid or set aside for all purchase,
retirement, and sinking funds, if any, for any Parity Preferred Stock; and (iv)
the Company is not in default on any of its obligations to redeem any Parity
Preferred Stock.
13
<PAGE> 15
In addition, as long as any shares of DECS are outstanding, no shares of
any Junior Stock may be purchased, redeemed or otherwise acquired by the Company
or any of its subsidiaries (except in connection with a reclassification or
exchange of any Junior Stock through the issuance of other Junior Stock (and
cash in lieu of fractional shares in connection therewith) or the purchase,
redemption or other acquisition of any Junior Stock with any Junior Stock (and
cash in lieu of fractional shares in connection therewith)) nor may any funds be
set aside or made available for any sinking fund for the purchase, redemption or
acquisition of any Junior Stock unless: (i) full dividends on Parity Preferred
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating on or prior to the date of such purchase, redemption,
acquisition, setting aside or making available to the extent such dividends are
cumulative; (ii) dividends in full for the current quarterly dividend period
have been paid, or declared and set aside for payment, on all Parity Preferred
Stock to the extent such dividends are cumulative; (iii) the Company has paid or
set aside all amounts, if any, then or theretofore required to be paid or set
aside for all purchase, retirement, and sinking funds, if any, for any Parity
Preferred Stock; and (iv) the Company is not in default on any of its
obligations to redeem any Parity Preferred Stock.
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property, or Junior Stock) as may be determined
by the Board of Directors may be declared and paid on shares of any Junior Stock
from time to time and Junior Stock may be purchased, redeemed or otherwise
acquired by the Company or any of its subsidiaries, and funds may be set aside
or made available for that purpose, from time to time. In the event of the
declaration and payment of any such dividends or other distributions, the
holders of such Junior Stock will be entitled, to the exclusion of holders of
the Parity Preferred Stock, to share therein according to their respective
interests.
As long as any shares of DECS are outstanding, dividends or other
distributions may not be declared or paid on any Parity Preferred Stock (other
than dividends or other distributions payable in Junior Stock and cash in lieu
of fractional shares in connection therewith), and the Company may not purchase,
redeem or otherwise acquire any Parity Preferred Stock (except with any Junior
Stock and cash in lieu of fractional shares in connection therewith and except
with the right, subject to clause (b) of this paragraph and any similar
requirement of any other Preferred Stock, to receive accrued and unpaid
dividends), unless either: (a)(i) full dividends on Parity Preferred Stock have
been paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such Parity Preferred Stock dividend,
distribution, redemption, purchase or acquisition payment to the extent such
dividends are cumulative; (ii) dividends in full for the current quarterly
dividend period have been paid, or declared and set aside for payment, on all
Parity Preferred Stock to the extent such dividends are cumulative; (iii) the
Company has paid or set aside all amounts, if any, then or theretofore required
to be paid or set aside for all purchase, retirement, and sinking funds, if any,
for any Parity Preferred Stock; and (iv) the Company is not in default on any of
its obligations to redeem any Parity Preferred Stock; or (b) with respect to the
declaration and payment of dividends only, any such dividends are declared and
paid pro rata so that the amounts of any dividends declared and paid per share
of DECS and each other share of Parity Preferred Stock will in all cases bear to
each other the same ratio that accrued and unpaid dividends (including any
accumulation with respect to unpaid dividends for prior dividend periods, if
such dividends are cumulative) per share of DECS and such other share of Parity
Preferred Stock bear to each other.
MANDATORY CONVERSION OF DECS
Unless previously redeemed or voluntarily converted into Common Stock, as
hereinafter described, on the Mandatory Conversion Date each outstanding share
of DECS will mandatorily convert into (i) shares of Common Stock at the DECS
Common Equivalent Rate (as defined herein) in effect on such date and (ii) the
right to receive cash in an amount equal to all accrued and unpaid dividends on
such share of DECS (other than previously declared dividends payable to a holder
of record as of a prior date) to the Mandatory Conversion Date, whether or not
declared, out
14
<PAGE> 16
of funds legally available for the payment of dividends, subject to the
requirement set forth in clause (b) in the immediately preceding paragraph and
any similar requirement of any other Preferred Stock. The "DECS Common
Equivalent Rate" is initially fifty shares of Common Stock for each share of
DECS (equivalent to one share of Common Stock for each Depositary Share (the
"Common Equivalent Rate")) and is subject to adjustment as described below.
Dividends will cease to accrue on the Mandatory Conversion Date in respect of
the shares of DECS then outstanding.
Because the price of the Common Stock is subject to market fluctuations,
the value of the Common Stock that may be received by holders of shares of DECS
upon their mandatory conversion may be more or less than the amount paid for the
shares of DECS offered hereby.
OPTIONAL REDEMPTION
Shares of DECS (and thereby the Depositary Shares) are not redeemable by
the Company either (i) prior to the Initial Redemption Date or (ii) at any time
on or after the Initial Redemption Date when the Current Market Price of the
Common Stock is less than or equal to the sum of (x) the DECS Call Price and (y)
the Additional Dividend (as defined herein) per Depositary Share. Subject to the
foregoing, at any time and from time to time until immediately prior to the
Mandatory Conversion Date, the Company will have the right to redeem, in whole
or in part, the outstanding shares of DECS (and thereby the related Depositary
Shares). Upon any such redemption, the Company will deliver to the holder
thereof, in exchange for each share of DECS subject to redemption, (i) an amount
of Common Stock having an aggregate Current Market Price equal to the DECS Call
Price (the number of shares of which is equal to the DECS Call Price divided by
the Current Market Price of the Common Stock) determined as of the date which is
two trading days prior to the Notice Date (as defined herein), multiplied by the
DECS Common Equivalent Rate, (ii) all accrued and unpaid dividends thereon and
(iii) the Additional Dividend payable thereon. Dividends will cease to accrue on
the shares of DECS on the date fixed for their redemption.
The "Additional Dividend" is an additional cash dividend payable on each
share of DECS only upon redemption by the Company in an amount equal to $27.50
($0.55 per Depositary Share) on or after April 1, 1997; $20.625 ($0.4125 per
Depositary Share) on or after July 1, 1997; $13.75 ($0.275 per Depositary Share)
on or after October 1, 1997; $6.875 ($0.1375 per Depositary Share) on or after
January 1, 1998; or $0 ($0 per Depositary Share) on or after March 1, 1998. The
"Current Market Price" per share of the Common Stock on any date of
determination means the lesser of (x) the average of the closing sale prices of
the Common Stock as reported on the NYSE for the 15 consecutive trading days
ending on and including such date of determination or (y) the closing sale price
of the Common Stock as reported on the NYSE for such date of determination;
provided, however, that, with respect to any redemption of shares of DECS, if
any event that results in an adjustment of the DECS Common Equivalent Rate
occurs during the period on the first day of such 15-day period and ending on
the applicable redemption date, the Current Market Price as determined pursuant
to the foregoing will be appropriately adjusted to reflect the occurrence of
such event. The "Notice Date" with respect to any notice given by the Company in
connection with a redemption of shares of DECS means the date on which first
occurs either the public announcement of such call for redemption or the
commencement of mailing of such notice to holders of shares of DECS.
If fewer than all the outstanding shares of DECS are to be called for
redemption, shares of DECS to be called will be selected by the Company from
outstanding shares of DECS not previously called by lot or pro rata (as nearly
as may be) or by any other method determined by the Board of Directors in its
sole discretion to be equitable.
The Company will provide notice of any call for redemption of shares of
DECS to holders of record of the shares of DECS to be called for redemption not
less than 15 nor more than 60 days prior to the date fixed for redemption.
Accordingly, the earliest mailing of notice of any call for redemption of shares
of DECS will be February 1, 1997. Any such notice will be provided by mail,
15
<PAGE> 17
sent to the holders of record of the shares of DECS to be called for redemption
at such holder's address as it appears on the stock register of the Company,
first class postage paid; provided, however, that failure to give such notice or
any defect therein shall not affect the validity of the proceeding for
redemption of any shares of DECS to be redeemed except as to a holder to whom
the Company has failed to give said notice or whose notice was defective. On and
after the redemption date, all rights of the holders of the shares of DECS
called for redemption shall terminate except the right to receive the redemption
price (unless the Company defaults on the payment of the redemption price). A
public announcement of any call for redemption will be made by the Company prior
to, or at the time of, the mailing of such notice of redemption.
Each holder of shares of DECS called for redemption must surrender the
certificates evidencing such shares of DECS to the Company at the place and in
the manner designated in the notice of redemption and will thereupon be entitled
to receive certificates for shares of Common Stock and cash for any fractional
share amount.
The Depositary Shares are subject to call upon substantially identical
terms and conditions (including those as to notice to the owners of Depositary
Shares) as the shares of DECS, adjusted to reflect the fact that fifty
Depositary Shares represent one share of DECS. See "Description of Depositary
Shares -- Conversion and Call Provisions".
CONVERSION AT THE OPTION OF THE HOLDER
The shares of DECS (and thereby the Depositary Shares) are convertible, in
whole or in part, at the option of the holders thereof, at any time prior to the
Mandatory Conversion Date, unless previously redeemed, into shares of Common
Stock at a rate of 47.65 shares of Common Stock for each share of DECS (the
"DECS Optional Conversion Rate") (or a rate of 0.953 shares of Common Stock for
each Depositary Share) equivalent, for each Depositary Share, to a conversion
price of $21.50 per share of Common Stock (the "DECS Conversion Price"), subject
to adjustment as described below. The right to convert shares of DECS called for
redemption will terminate immediately prior to the close of business on any
redemption date with respect to such shares.
Conversion of shares of DECS at the option of the holder may be effected by
delivering certificates evidencing such shares of DECS, together with written
notice of conversion and proper assignment of such certificates to the Company
or in blank (and, if applicable, cash payment of an amount equal to the dividend
attributable to the current quarterly dividend period payable on such shares),
to the office of any transfer agent for shares of DECS or to any other office or
agency maintained by the Company for that purpose and otherwise in accordance
with conversion procedures established by the Company. Each optional conversion
shall be deemed to have been effected immediately prior to the close of business
on the date on which the foregoing requirements shall have been satisfied. The
conversion shall be at the DECS Optional Conversion Rate in effect at such time
on such date.
Holders of shares of DECS at the close of business on a record date for any
payment of declared dividends will be entitled to receive the dividend payable
on such shares of DECS on the corresponding dividend payment date
notwithstanding the optional conversion of such shares of DECS following such
record date and prior to such dividend payment date. However, shares of DECS
surrendered for optional conversion after the close of business on a record date
for any payment of declared dividends and before the opening of business on the
next succeeding dividend payment date must be accompanied by payment in cash of
an amount equal to the dividend attributable to the current quarterly dividend
period payable on such date (unless such shares of DECS are subject to
redemption on a redemption date subsequent to such record date and prior to or
on such dividend payment date). Except as provided above, upon any optional
conversion of shares of DECS, the Company will make no payment of or allowance
for unpaid dividends, whether or not in arrears, on such shares of DECS or
previously declared dividends or distributions on the shares of Common Stock
issued upon such conversion.
16
<PAGE> 18
The Depositary Shares may be voluntarily converted by the holders thereof
upon the same terms and conditions (including those as to notice) as the shares
of DECS represented by such Depositary Shares, adjusted to reflect the fact that
fifty Depositary Shares represent one share of DECS. See "Description of
Depositary Shares -- Conversion and Call Provisions".
ENHANCED DIVIDEND YIELD, LESS EQUITY APPRECIATION THAN COMMON STOCK
Dividends will accrue on the shares of DECS (and thereby on the Depositary
Shares) at a higher rate than the rate at which dividends are currently paid on
the Common Stock. The opportunity for equity appreciation afforded by an
investment in shares of DECS could be less than that afforded by an investment
in the Common Stock because the DECS Conversion Price could be higher than the
price of Common Stock and because the Company may, at its option, redeem the
shares of DECS at any time on or after the Initial Redemption Date and prior to
the Mandatory Conversion Date, and may do so, among other circumstances, if the
applicable Current Market Price of the Common Stock exceeds the DECS Call Price.
In such event, a holder of a share of DECS will receive fewer than fifty shares
of Common Stock (comparable to less than one share of Common Stock for each
Depositary Share) upon such redemption. A holder may also surrender for
conversion any shares of DECS called for redemption up to the close of business
on the redemption date, and a holder that so elects to convert will receive
47.65 shares of Common Stock per share of DECS (or 0.953 of a share of Common
Stock per Depositary Share). The value of shares of Common Stock received by
holders of shares of DECS upon mandatory conversion may be more or less than the
amount paid for the shares of DECS offered hereby, due to market fluctuations in
the price of the Common Stock.
As a result of these provisions, holders of shares of DECS would be
expected to realize no equity appreciation if the market price of Common Stock
is below the DECS Conversion Price, and less than all of such appreciation if
the market price of Common Stock is above the DECS Conversion Price. Holders of
shares of DECS will realize the entire decline in equity value if the market
price of the Common Stock is less than one-fiftieth of the price paid for a
share of DECS.
CONVERSION ADJUSTMENTS
The DECS Common Equivalent Rate and the DECS Optional Conversion Rate are
each subject to adjustment as appropriate in certain circumstances, including if
the Company shall (a) pay or make a dividend or other distribution with respect
to its Common Stock in shares of Common Stock, (b) issue by reclassification of
its shares of Common Stock any shares of Common Stock, (c) subdivide or split
its outstanding Common Stock into a greater number of shares, (d) combine its
outstanding Common Stock into a lesser number of shares, (e) issue certain
rights or warrants to all holders of its Common Stock, or (f) pay a dividend or
make a distribution to all holders of its Common Stock in the form of evidences
of its indebtedness, cash or other assets (including capital stock of the
Company other than Common Stock but excluding any cash dividends or
distributions, other than "Extraordinary Cash Distributions", and dividends
referred to in clause (a) above). In addition, the Company will be entitled (but
shall not be required) to make such upward adjustments in the DECS Common
Equivalent Rate and the DECS Optional Conversion Rate or the DECS Call Price as
the Company, in its sole discretion, shall determine to be advisable, in order
that any stock dividend, subdivision of stock, distribution of rights to
purchase stock or securities, or distribution of securities convertible into or
exchangeable for stock (or any transaction that could be treated as any of the
foregoing transactions pursuant to Section 305 of the Internal Revenue Code of
1986, as amended, or any successor provision) hereafter made by the Company to
its stockholders will not be taxable in whole or in part. "Extraordinary Cash
Distribution" means the portion of any cash dividend or cash distribution on the
Common Stock that, when added to all other cash dividends and cash distributions
on the Common Stock made during the immediately preceding 12-month period (other
than cash dividends and cash distributions for which a prior adjustment to the
DECS Common Equivalent Rate and the DECS Optional Rate was previously made)
exceeds, on a per share of Common Stock basis, 10 percent of the average daily
closing price of the Common Stock
17
<PAGE> 19
over such 12-month period. All adjustments to the DECS Common Equivalent Rate
and the DECS Optional Conversion Rate will be calculated to the nearest 1/100th
of a share of Common Stock. No adjustment in the DECS Common Equivalent Rate or
the DECS Optional Conversion Rate will be required unless such adjustment would
require an increase or decrease of at least one percent in the DECS Common
Equivalent Rate, provided, however, that any adjustments which, by reason of the
foregoing, are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All adjustments will be made successively.
Whenever the DECS Common Equivalent Rate and the DECS Optional Conversion
Rate are adjusted as provided in the preceding paragraph, the Company will file
with each transfer agent for the shares of DECS a certificate with respect to
such adjustment, make a prompt public announcement thereof and mail a notice to
holder of the shares of DECS providing specified information with respect to
such adjustment. At least 10 business days prior to certain specified actions
that could result in certain adjustments in the DECS Common Equivalent Rate and
the DECS Optional Conversion Rate, the Company will notify each holder of shares
of DECS concerning such proposed action.
ADJUSTMENT FOR CERTAIN CONSOLIDATIONS OR MERGERS
In case of any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which each share of Common Stock outstanding
immediately prior to the merger or consolidation remains unchanged in all
material respects), or in case of any sale or transfer to another corporation of
the property of the Company as an entirety or substantially as an entirety, or
in case of any statutory exchange of securities with another corporation (other
than in connection with a merger or acquisition), each share of DECS shall,
after consummation of such transaction, be subject to (i) conversion at the
option of the holder into the kind and amount of securities, cash, or other
property receivable upon consummation of such transaction by a holder of the
number of shares of Common Stock into which such share of DECS might have been
converted immediately prior to consummation of such transaction, (ii) conversion
on the Mandatory Conversion Date into the kind and amount of securities, cash,
or other property receivable upon consummation of such transaction by a holder
of the number of shares of Common Stock into which such share of DECS would have
been converted if the conversion on the Mandatory Conversion Date had occurred
immediately prior to the date of consummation of such transaction, plus the
right, subject to the rights of other Preferred Stock, to receive cash in an
amount equal to all accrued and unpaid dividends on such share of DECS (other
than previously declared dividends payable to a holder of record as of a prior
date), and (iii) redemption on any redemption date in exchange for the kind and
amount of securities, cash, or other property receivable upon consummation of
such transaction by a holder of the number of shares of Common Stock that would
have been issuable, using the DECS Call Price in effect on such redemption date,
upon a redemption of such share of DECS immediately prior to consummation of
such transaction, assuming that, if the Notice Date for such Redemption is not
prior to such transaction, the Notice Date had been the date of such
transaction; and assuming in each case that such holder of shares of Common
Stock failed to exercise rights of election, if any, as to the kind or amount of
securities, cash, or other property receivable upon consummation of such
transaction (provided that, if the kind or amount of securities, cash or other
property receivable upon consummation of such transaction is not the same for
each non-electing share, then the kind and amount of securities, cash or other
property receivable upon consummation of such transaction for each non-electing
share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). The kind and amount of securities into or
for which the shares of DECS shall be convertible or redeemable after
consummation of such transaction shall be subject to adjustment as described
above under the caption "Conversion Adjustments" following the date of
consummation of such transaction. The Company may not become a party to any such
transaction unless the terms thereof are consistent with the foregoing.
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FRACTIONAL SHARES
No fractional shares of Common Stock will be issued upon redemption or
conversion of shares of DECS. In lieu of any fractional share otherwise issuable
in respect of the aggregate number of shares of DECS of any holder that are
redeemed or converted on any redemption date or upon mandatory conversion or any
optional conversion, such holder shall be entitled to receive an amount in cash
equal to the same fraction of the (i) Current Market Price of the Common Stock
in the case of redemption, or (ii) Closing Price (as defined in the Certificate
of Designation) of the Common Stock determined (A) as of the fifth trading day
immediately preceding the Mandatory Conversion Date, in the case of mandatory
conversion, or (B) as of the second trading day immediately preceding the
effective date of conversion, in the case of an optional conversion by a holder.
If more than one share of DECS shall be surrendered for conversion or redemption
at one time by or for the same holder, the number of shares of Common Stock
issuable upon conversion or redemption thereof shall be computed on the basis of
the aggregate number of shares of DECS so converted or redeemed.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the Company, and subject to the rights of holders of any other
series of Preferred Stock, the holders of outstanding shares of DECS are
entitled to receive an amount equal to the per share price to investors of the
shares of DECS (equivalent to an amount equal to 50 times the per share price to
investors of each Depositary Share shown on the cover page of this Offering
Memorandum) plus accrued and unpaid dividends thereon, out of the assets of the
Company available for distribution to stockholders, before any distribution of
assets is made to holders of Junior Stock upon liquidation, dissolution or
winding up.
If upon any voluntary or involuntary liquidation, dissolution, or winding
up of the Company, the assets of the Company are insufficient to permit the
payment of the full preferential amounts payable with respect to shares of DECS
and all other series of Parity Preferred Stock, the holders of shares of DECS
and of all other series of Parity Preferred Stock will share ratably in any
distribution of assets of the Company in proportion to the full respective
preferential amounts to which they are entitled. After payment of the full
amount of the liquidating distribution to which they are entitled, the holders
of shares of DECS will not be entitled to any further participation in any
distribution of assets by the Company. A consolidation or merger of the Company
with one or more corporations or a sale or transfer of substantially all of the
assets of the Company shall not be deemed to be a liquidation, dissolution or
winding up of the Company.
VOTING RIGHTS
The holders of shares of DECS shall have the right with the holders of
Common Stock to vote in the election of Directors and upon each other matter
coming before any meeting of the holders of Common Stock on the basis of 47.50
votes for each share of DECS held (equivalent to 0.95 of a vote for each
Depositary Share). The holders of shares of DECS and the holders of Common Stock
will vote together as one class on such matters except as otherwise provided by
law or the Certificate of Incorporation of the Company.
In the event that dividends on the shares of DECS or any other series of
Preferred Stock shall be in arrears and unpaid for six quarterly dividend
periods, or of any other series of Preferred Stock shall be entitled for any
other reason to exercise voting rights, separate from the Common Stock, to elect
any Directors of the Company ("Preferred Stock Directors"), the holders of the
shares of DECS (voting separately as a class with holders of all other series of
Preferred Stock upon which like voting rights have been conferred and are
exercisable), with each share of DECS entitled to one vote (equivalent to
one-fiftieth of a vote for each Depositary Share) on this and other matters in
which Preferred Stock votes as a group, will be entitled to vote for the
election of two Preferred Stock Directors, such Directors to be in addition to
the number of Directors constituting the Board of Directors immediately prior to
the accrual of such right. Such right, when vested, shall continue until
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all dividends in arrears on the shares of DECS and such other series of
Preferred Stock shall have been paid in full and the right of any other series
of Preferred Stock to exercise voting rights, separate from the Common Stock, to
elect any Preferred Stock Directors shall terminate or have terminated, and,
when so paid and such termination occurs or has occurred, such right of the
holders of the shares of DECS shall cease. Upon any termination of the aforesaid
voting right, subject to the requirements of the Delaware corporation law and
the Certificate of Incorporation of the Company, such Preferred Stock Directors
shall cease to be Directors of the Company and shall resign.
The Company will not, without the approval of the holders of at least
66 2/3 percent of all the shares of DECS then outstanding: (i) amend, alter, or
repeal any of the provisions of the Certificate of Incorporation or the By-laws
of the Company so as to affect adversely the powers, preferences, or rights of
the holders of the shares of DECS then outstanding or reduce the minimum time
required for any notice to which only the holders of the shares of DECS then
outstanding may be entitled (an amendment of the Certificate of Incorporation to
authorize or create, or increase the authorized amount of or to issue, Junior
Stock, Preferred Stock ranking on parity with the shares of DECS or any stock of
any class ranking on parity with the shares of DECS shall be deemed not to
affect adversely the powers, preferences, or rights of the holders of the shares
of DECS); (ii) create any series of Preferred Stock ranking prior to the shares
of DECS as to payment of dividends or the distribution of assets upon
liquidation; (iii) authorize or create, or increase the authorized amount of,
any capital stock, or any security convertible into capital stock, of any class
ranking prior to the shares of DECS as to payment of dividends or the
distribution of assets upon liquidation; or (iv) merge or consolidate with or
into any other corporation, unless each holder of the shares of DECS immediately
preceding such merger or consolidation shall receive or continue to hold in the
resulting corporation the same number of shares, with substantially the same
rights and preferences, as correspond to the shares of DECS so held.
Notwithstanding the provisions summarized in the preceding paragraph,
however, no such approval described therein of the holders of the shares of DECS
shall be required if, at or prior to the time when such amendment, alteration,
or repeal is to take effect or when the authorization, creation or increase of
any such prior or parity stock or such other stock or security is to be made, or
when such consolidation or merger is to take effect, as the case may be,
provision is made for the redemption of all shares of DECS at the time
outstanding.
TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York is the transfer agent and registrar
for, and paying agent for the payment of dividends on, shares of DECS and the
Depositary Shares. First Chicago Trust Company of New York maintains a New York
drop facility.
MISCELLANEOUS
Upon issuance, the shares of DECS will be fully paid and nonassessable.
Holders of shares of DECS have no preemptive rights. The Company shall at all
times reserve and keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion or redemption of shares of DECS,
such number of shares of Common Stock as shall from time to time be issuable
upon the conversion or redemption of all the shares of DECS then outstanding.
Shares of DECS redeemed for, or converted into, Common Stock of the Company or
otherwise acquired by the Company shall resume the status of authorized and
unissued shares of Preferred Stock, undesignated as to series, and shall be
available for subsequent issuance.
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DESCRIPTION OF DEPOSITARY SHARES
The following summary of the terms and provisions of the Depositary Shares
does not purport to be complete and is subject to, and qualified in its entirety
by, the Deposit Agreement, as defined below (which contains the form of the
Depositary Receipt, as defined below).
Each Depositary Share represents one-fiftieth of a share of DECS deposited
under a Deposit Agreement dated as of March 28, 1994 (the "Deposit Agreement"),
among the Company, First Chicago Trust Company of New York, as depositary
(including any successor, the "Depositary"), and the holders from time to time
of depositary receipts executed and delivered thereunder (the "Depositary
Receipts"). Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share is entitled, proportionately, to all the rights, preferences
and privileges of the shares of DECS represented thereby (including dividend,
voting, conversion, and liquidation rights), and subject to all of the
limitations of the shares of DECS represented thereby, contained in the
Certificate of Designations and summarized under "Description of DECS". The
principal executive office of First Chicago Trust Company of New York is located
at 30 West Broadway, New York, New York 10007.
The Depositary Shares are evidenced by Depositary Receipts. Copies of the
Deposit Agreement, the form of which has been filed with the Registration
Statement of which this Prospectus is a part, are available for inspection at
the office of the Depositary listed above.
EXECUTION AND DELIVERY OF DEPOSITARY RECEIPTS
Following the issuance of the shares of DECS by the Company to the Initial
Purchaser, the shares of DECS were deposited by the Initial Purchaser, or on
their behalf, with the Depositary, which executed and delivered the Depositary
Receipts to the Initial Purchaser. Depositary Receipts will be executed and
delivered evidencing only whole Depositary Shares.
WITHDRAWAL OF DECS
Upon surrender of Depositary Receipts at the Corporate Office of the
Depositary, the owner of the Depositary Shares evidenced thereby is entitled to
delivery at such office of certificates evidencing the number of shares of DECS
(but only in whole shares of DECS) represented by such Depositary Receipts. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of DECS to be withdrawn, the Depositary will at the same time
deliver to such holder a new Depositary Receipt or Receipts evidencing such
excess number of Depositary Shares. The Company does not expect that there will
be any public trading market for the shares of DECS except as represented by the
Depositary Shares. See "Investment Considerations -- Restrictions on Transfer;
Absence of Public Market".
CONVERSION AND CALL PROVISIONS
Mandatory Conversion or Call. As described under "Description of
DECS -- Mandatory Conversion of DECS" and "-- Optional Redemption", the shares
of DECS are subject to mandatory conversion into shares of Common Stock on the
Mandatory Conversion Date, and to the right of the Company to call the shares of
DECS, at the Company's option, for redemption. The Depositary Shares are subject
to mandatory conversion or call upon substantially the same terms and conditions
(including as to notice to the owners of Depositary Shares) as the shares of
DECS, except that the number of shares of Common Stock received upon mandatory
conversion or redemption of each Depositary Share will be equal to the number of
shares of Common Stock received upon mandatory conversion or redemption of each
share of DECS divided by the DECS Common Equivalent Rate.
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If fewer than all of the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed shall be selected by lot or pro rata or by any
other equitable method determined by the Depositary to be consistent with the
method determined by the Board of Directors with respect to the shares of DECS.
If fewer than all of the Depositary Shares evidenced by a Depositary Receipt are
called for redemption, the Depositary will deliver to the holder of such
Depositary Receipt upon its surrender to the Depositary, together with the
redemption payment, a new Depositary Receipt evidencing the Depositary shares
evidenced by such prior Depositary Receipt and not called for redemption.
Conversion at the Option of the Holder. As described under "Description of
DECS -- Conversion at the Option of the Holder", the shares of DECS may be
converted, in whole or in part, into shares of Common Stock at the option of the
holders of shares of DECS at any time prior to the Mandatory Conversion Date,
unless previously redeemed. The Depositary Shares may, at the option of holders
thereof, be converted into shares of Common Stock upon the same terms and
conditions as the shares of DECS, except that the number of shares of Common
Stock received upon conversion of each Depositary Share will be equal to the
number of shares of Common Stock received upon conversion of each share of DECS
divided by the DECS Common Equivalent Rate. To effect such an optional
conversion, a holder of Depositary Shares must deliver Depositary Receipts
evidencing the Depositary Shares to be converted, together with a written notice
of conversion and a proper assignment of the Depositary Receipts to the Company
or in blank (and, if applicable, payment in cash of an amount equal to the
dividend attributable to the current quarterly dividend period payable on such
Depositary Shares), to the Depositary or its agent. Each optional conversion of
Depositary Shares shall be deemed to have been effected immediately prior to the
close of business on the date on which the foregoing requirements shall have
been satisfied. The conversion shall be at the DECS Optional Conversion Rate in
effect at such time and on such date, adjusted to reflect the fact that fifty
Depositary Shares are the equivalent of one share of DECS.
No fractional share of DECS may be converted. If only a portion of the
Depositary Shares evidenced by a Depositary Receipt is to be converted, a new
Depositary Receipt or Receipts will be issued for any Depositary Shares not
converted. No fractional shares of Common Stock will be issued upon conversion
or redemption of Depositary Shares, and, if such conversion or redemption would
otherwise result in a fractional share of Common Stock being issued, an amount
will be paid in cash as described in "Description of DECS -- Fractional Shares"
or as set forth in the Deposit Agreement.
After the date fixed for conversion or redemption, the Depositary Shares so
converted or called for redemption will no longer be deemed to be outstanding
and all rights of the holders of such Depositary Shares will cease, except the
right to receive the Common Stock and amounts payable on such conversion or
redemption and any money or other property to which the holders of such
Depositary Shares were entitled upon such conversion or redemption, upon
surrender to the Depositary of the Depositary Receipt or Receipts evidencing
such Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions in respect of the shares of DECS to the record holders of
Depositary Receipts in proportion, insofar as practicable, to the number of
Depositary Shares owned by such holders.
In the event of a distribution other than cash in respect of the shares of
DECS, the Depositary will distribute property received by it to the record
holders of Depositary Receipts in proportion, insofar as practicable, to the
number of Depositary Shares owned by such holders, unless the Depositary
determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including sale (at public or private sale) of such property and distribution of
the net proceeds from such sale to such holders.
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The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Depositary on account of
taxes.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the shares of DECS,
or (ii) the Depositary shall receive notice of any meeting at which holders of
shares of DECS are entitled to vote or of which holders of shares of DECS are
entitled to notice, or of any election on the part of the Company to call for
redemption any shares of DECS, the Depositary shall in each such instance fix a
record date (which shall be the same date as the record date for the shares of
DECS) for the determination of the holders of Depositary Receipts (x) who shall
be entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof, (y) who shall be entitled to
give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting, or (z) who shall be subject to such redemption,
subject to the provisions of the Deposit Agreement.
VOTING OF DECS
Upon receipt of notice of any meeting at which holders of shares of DECS
are entitled to vote, the Depositary will mail the information contained in such
notice of meeting to the record holders of Depositary Receipts. Each record
holder of Depositary Receipts on the record date (which will be the same date as
the record date for the shares of DECS) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the number of
shares of DECS represented by such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the number of shares of DECS
represented by such Depositary Shares in accordance with such instructions, and
the Company has agreed to take all reasonable action which may be deemed
necessary by the Depositary in order to enable the Depositary to do so. The
Depositary will abstain from voting shares of DECS to the extent it does not
receive specific written voting instructions from the holders of Depositary
Receipts representing the shares of DECS.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipts and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Depositary.
However, any amendment that imposes any fees, taxes or other charges payable by
holders of Depositary Receipts (other than taxes and other governmental charges,
fees and other expenses payable by such holders as stated under "Charges of
Depositary"), or that otherwise prejudices any substantial existing right of
holders of Depositary Receipts, will not take effect as to outstanding
Depositary Receipts until the expiration of 90 days after notice of such
amendment has been mailed to the record holders of outstanding Depositary
Receipts. Every holder of Depositary Receipts at the time any such amendment
becomes effective shall be deemed to consent and agree to such amendment and to
be bound by the Deposit Agreement, as so amended. In no event may any amendment
impair the right of any owner of Depositary Shares, subject to the conditions
specified in the Deposit Agreement, upon surrender of the Depositary Receipts
evidencing such Depositary Shares to receive shares of DECS or, upon conversion
of the shares of DECS represented by the Depositary Receipts, to receive shares
of Common Stock, and in each case any money or other property represented
thereby, except in order to comply with mandatory provisions of applicable law.
Whenever so directed by the Company, the Depositary will terminate the
Deposit Agreement after mailing notice of such termination to the record holders
of all Depositary Receipts then outstanding at least 30 days prior to the date
fixed in such notice for such termination. The Depositary may likewise terminate
the Deposit Agreement if at any time 45 days shall have expired after the
Depositary shall have delivered to the Company a written notice of its election
to resign and a successor depositary shall not have been appointed and accepted
its appointment. If any
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Depositary Receipts remain outstanding after the date of termination, the
Depositary thereafter will discontinue the transfer of Depositary Receipts, will
suspend the distribution of dividends to the holders thereof, and will not give
any further notices (other than notice of such termination) or perform any
further acts under the Deposit Agreement except as provided below and except
that the Depositary will continue (i) to collect dividends on the shares of DECS
and any other distributions with respect thereto and (ii) to deliver the shares
of DECS together with such dividends and distributions and the net proceeds of
any sales of rights, preferences, privileges or other property, without
liability for interest thereon, in exchange for Depositary Receipts surrendered.
At any time after the expiration of two years from the date of termination, the
Depositary may sell the shares of DECS then held by it at public or private
sale, at such place or places and upon such terms as it deems proper and may
thereafter hold the net proceeds of any such sale, together with any money and
other property then held by it, without liability for interest thereon, for the
pro rata benefit of the holders of Depositary Receipts which have not been
surrendered. The Company does not intend to terminate the Deposit Agreement or
to permit the resignation of the Depositary without appointing a successor
depositary. In the event the Deposit Agreement is terminated and a sufficient
number of shares of DECS remain outstanding, the Company will use its best
efforts to list the shares of DECS on the NYSE (unless the holders of a majority
of the outstanding shares of DECS shall consent to the Company not effecting
such listing).
CHARGES OF DEPOSITARY
The Company will pay all charges of the Depositary including charges in
connection with the initial deposit of the shares of DECS, the initial execution
and delivery of the Depositary Receipts, the distribution of information to the
holders of Depositary Receipts with respect to matters on which shares of DECS
are entitled to vote, withdrawals of the shares of DECS by the holders of
Depositary Receipts or redemption or conversion of the shares of DECS, except
for taxes (including transfer taxes, if any) and other governmental charges and
such other charges as are provided in the Deposit Agreement to be at the expense
of holders of Depositary Receipts or persons depositing shares of DECS.
GENERAL
The Depositary will make available for inspection by holders of Depositary
Receipts at its Corporate Office all reports and communications from the Company
that are delivered to the Depositary and made generally available to the holders
of the shares of DECS.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control from or in performing its
obligations under the Deposit Agreement.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion regarding the material United States
Federal income tax consequences under existing law of the ownership and
disposition of the shares of DECS. This discussion is intended for informational
purposes only, and does not address aspects of taxation, other than Federal
income taxation, or all tax consequences that may be relevant in the particular
circumstances of each holder (some of which, such as dealers in securities,
banks, insurance companies, tax-exempt organizations and foreign persons, may be
subject to special rules). There can be no assurance that future changes in
applicable law or administrative and judicial interpretations thereof, any of
which could have a retroactive effect, will not adversely affect the tax
consequences discussed herein or that there will not be differences of opinion
as to the interpretation of applicable law. Stock having terms closely
resembling those of the shares of DECS has not been the subject of any
regulation, ruling or judicial decision currently in effect, and there can be no
assurance that the Internal Revenue Service (the "Service") will take the
positions set forth below. The Company has not and will not seek a ruling from
the Service as to any tax matters relating to the
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shares of DECS. Persons considering the purchase of shares of DECS should
consult their tax advisors with respect to the application of the United States
Federal income tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local, or foreign taxing
jurisdiction. The following discussion relates only to shares of DECS or shares
of Common Stock received upon conversion thereof or in exchange therefor that
are held as capital assets within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code").
Dividends
Dividends paid on the shares of DECS out of the Company's current or
accumulated earnings and profits will be taxable as ordinary income and will
generally qualify for the 70 percent intercorporate dividends-received deduction
subject to the minimum holding period (generally at least 46 days) and other
applicable requirements. Under certain circumstances, a corporate holder may be
subject to the alternative minimum tax with respect to the amount of its
dividends-received deduction. As of December 31, 1993, the Company had no
accumulated earnings and profits for federal income tax purposes. There can be
no assurance that the Company's operations during the years that the DECS are
outstanding will generate the necessary amounts of income so that the
distributions with respect to the DECS will be treated as made from earnings and
profits and thereby qualify as dividends for federal income tax purposes. To the
extent the Company does not have sufficient current or accumulated earnings and
profits in the years that the DECS are outstanding, distributions made with
respect to the DECS for any such year will not constitute dividends for federal
income tax purposes and, as a result, will not be eligible for the
dividends-received deduction.
Under certain circumstances, a corporation that receives an "extraordinary
dividend", as defined in Section 1059(c) of the Code, is required to reduce its
stock basis by the non-taxed portion of such dividend. Generally, quarterly
dividends not in arrears paid to an original holder of the shares of DECS will
not constitute extraordinary dividends under Section 1059(c). In addition, under
Section 1059(c), any dividend with respect to "disqualified preferred stock" is
treated as an "extraordinary dividend". For these purposes, "disqualified
preferred stock" includes stock which is preferred as to dividends if the issue
price of such stock exceeds its liquidation rights or redemption price. It is
unclear whether the shares of the DECS will be determined to constitute
disqualified preferred stock and, thus, whether dividends distributed with
respect to the DECS will constitute extraordinary dividends.
Redemption Premium
Under certain circumstances, Section 305(c) of the Code requires that any
excess of the redemption price of preferred stock over its issue price be
includable in income, prior to receipt, as a constructive dividend. However, it
is believed that Section 305(c) does not apply to stock with terms such as those
of the shares of DECS.
Redemption or Mandatory or Optional Conversion into Common Stock
Gain or loss generally will not be recognized by a holder upon the
redemption of shares of DECS for shares of Common Stock or the conversion of
shares of DECS into shares of Common Stock if no cash is received. Income may be
recognized, however, to the extent Common Stock or cash is received in payment
of accrued and unpaid dividends or as an Additional Dividend upon a redemption
or conversion. Such income would probably be characterized as dividend income
although some uncertainty exists as to the appropriate characterization of
payments in satisfaction of undeclared accrued and unpaid dividends or as an
Additional Dividend. In addition, a holder who receives cash in lieu of a
fractional share will be treated as having received such fractional share and
having exchanged it for cash in a transaction subject to Section 302 of the Code
and related provisions. Such exchange should generally result in capital gain or
loss measured by the difference
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between the cash received for the fractional share interest and the holder's
basis in the fractional share interest.
Generally, a holder's basis in the Common Stock received upon the
redemption or conversion of the shares of DECS, other than shares of Common
Stock taxed upon receipt, will equal the adjusted tax basis of the redeemed or
converted shares of DECS (exclusive of any basis allocable to a fractional share
interest) and the holding period of such Common Stock will include the holding
period of the redeemed or converted shares of DECS.
Adjustment of Conversion Rate
Certain adjustments to the DECS Common Equivalent Rate and the DECS
Optional Conversion Rate to reflect the Company's issuance of certain rights,
warrants, evidences of indebtedness, securities or other assets to holders of
Common Stock may result in constructive distributions taxable as dividends to
the holders of the shares of DECS which may constitute (and cause other
dividends to constitute) "extraordinary dividends" to corporate holders as
described above.
Conversion of DECS After Dividend Record Date
If a holder of shares of DECS exercises such holder's right to convert
shares of DECS into shares of Common Stock after a dividend record date but
before payment of the dividend, then such holder generally will be required to
pay the Company an amount equal to the portion of such dividend attributable to
the current quarterly dividend period upon conversion, which amount would
increase the basis of the Common Stock received. The holder would recognize the
dividend payment as income.
Backup Withholding
Certain non-corporate holders may be subject to backup withholding at a
current rate of 31 percent on dividends and certain consideration received upon
the call or conversion of the shares of DECS. Generally, backup withholding
applies only when the taxpayer fails to furnish or certify a proper Taxpayer
Identification Number or when the taxpayer is notified by the Service that the
taxpayer has failed to report payments of interest and dividends properly.
Holders should consult their tax advisors regarding their qualification for
exemption from backup withholding and the procedure for obtaining any applicable
exemption.
REGISTRATION RIGHTS
The Company entered into a Registration Agreement (the "Registration
Agreement") dated March 28, 1994, with the Initial Purchaser of the Depositary
Shares, for the benefit of the holders thereof. The following summary of certain
provisions of the Registration Agreement does not purport to be complete and is
subject to, and is qualified by reference to, all the provisions of the
Registration Agreement, a copy of which has been filed with the registration
statement of which this Prospectus is a part. Such registration statement has
been filed to satisfy the obligations of the Company described below.
Pursuant to the Registration Agreement the Company agreed, for the benefit
of the holders of Depositary Shares, that it would, at its cost, (a) within 30
days after March 28, 1994, file a shelf registration statement (a "Shelf
Registration Statement") with the Commission covering resales of the Depositary
Shares and the Common Stock issuable upon conversion or redemption thereof, (b)
cause such Shelf Registration Statement to be declared effective under the
Securities Act within 90 days of March 28, 1994, and (c) maintain such Shelf
Registration Statement continuously effective under the Securities Act until
March 28, 1997 or such earlier date as of which all the Depositary Shares or the
Common Stock issuable upon conversion or redemption thereof have been sold
pursuant to such Shelf Registration Statement. If the Company fails to comply
with clause (a) above, then, at such time, the annual dividend rate will
increase by $0.057 per Depositary Share.
26
<PAGE> 28
Such increase will remain in effect until the date on which such Shelf
Registration Statement is filed, on which date the annual dividend rate will
revert to the original dividend rate plus any increase in such dividend rate
pursuant to the following sentence. If the Shelf Registration Statement is not
declared effective as provided in clause (b) above, then, at such time and on
each date that would have been the successive 30th day following such time, the
annual dividend rate (which dividend rate will be the original dividend rate
plus any increase or increases in such dividend rate pursuant to the preceding
sentence and this sentence) will increase by an additional $0.057 per Depositary
Share, provided that the dividend rate will not be increased by more than $0.114
per Depositary Share pursuant to this sentence. Such increase or increases will
remain in effect until the date on which such Shelf Registration Statement is
declared effective, on which date the annual dividend rate will revert to the
original dividend rate. Pursuant to clause (c) above, however, if the Company
fails to keep the Shelf Registration Statement continuously effective for the
period specified above, then at such time as the Shelf Registration Statement is
no longer effective and on each date thereafter that is the successive 30th day
subsequent to such time and until the earlier of (i) the date that the Shelf
Registration Statement is again declared effective, (ii) March 28, 1997 or (iii)
the date as of which all the Depositary Shares or the Common Stock issuable upon
conversion or redemption thereof are sold pursuant to the Shelf Registration
Statement, the annual dividend rate will increase by an additional $0.057 per
Depositary Share, provided that the annual dividend rate will not be increased
by more than $0.114 per Depositary Share pursuant to this sentence.
DESCRIPTION OF CAPITAL STOCK
The following summary of the terms and provisions of the Company's capital
stock does not purport to be complete and is subject to, and qualified in its
entirety by, the Certificate of Incorporation and By-laws of the Company, copies
of which are available from the Company upon request.
GENERAL
The authorized capital stock of the Company consists of 250,000,000 shares
of Common Stock and 2,000,000 shares of Preferred Stock. As of March 31, 1994,
56,389,298 shares of Common Stock were issued and outstanding and held of record
by approximately 13,800 stockholders. As of March 28, 1994, there were 177,400
shares of Preferred Stock issued and outstanding.
Directors of the Company hold office until the date of the annual meeting
for the election of directors following the annual meeting at which they were
elected and until their successors are elected. The By-laws provide that
directors can be removed from office at any time, with or without cause, by the
affirmative vote of the holders of a majority of the shares of capital stock
then entitled to vote at an election of directors, and vacancies on the Board of
Directors shall be filled by majority vote of the stockholders present at such
meeting, or by a majority of the directors then in office.
The Company's Certificate of Incorporation provides that any action
required or permitted to be taken by stockholders of the Company shall be
effected only at an annual or special meeting of the stockholders of the
Company, and no action required to be taken or that may be taken at any annual
or special meeting of stockholders of the Company may be taken without a
meeting, except by the unanimous written consent of all stockholders entitled to
vote on such action. The Company's By-laws provide that special meetings of
stockholders shall only be called by either the Chairman of the Board, the
President or any Vice-President.
The Certificate of Incorporation and the By-laws of the Company provide
that, except under certain circumstances, directors of the Company shall not be
personally liable to the Company or its stockholders for breach of fiduciary
duties as a director. That provision may not exonerate the directors from
liability under federal securities laws and has no effect on any non-monetary
remedies that may be available to the Company and its stockholders. The
Certificate of Incorpora-
27
<PAGE> 29
tion and the By-laws of the Company provide for indemnification of the officers
and directors of the Company to the fullest extent permitted by applicable law.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held of
record on all matters on which shareholders are entitled to vote. There are no
cumulative voting rights and holders of Common Stock have no preemptive rights.
All issued and outstanding shares of Common Stock are validly issued, fully paid
and non-assessable. Holders of Common Stock are entitled to such dividends as
may be declared from time to time by the Board of Directors out of funds legally
available for that purpose. Upon dissolution, holders of Common Stock are
entitled to share pro rata in the assets of the Company remaining after payment
in full of all its liabilities and obligations, including payment of the
liquidation preference, if any, of any Preferred Stock then outstanding.
The Common Stock is listed on the New York Stock Exchange, under the symbol
USS.
PREFERRED STOCK
The Board of Directors, generally without further action by the
shareholders, is authorized to issue Preferred Stock in one or more series and
to designate as to any such series the dividend rate, redemption prices,
preferences on liquidation or dissolution, conversion rights, voting rights and
any other preferences, and relative, participating, optional or other special
rights and qualifications, limitations and restrictions. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. Issuance of a new series of Preferred Stock, while providing desirable
flexibility in connection with possible acquisitions or other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or discouraging a third party from acquiring, a majority of the
outstanding voting stock of the Company.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Generally, Section 203 of the Delaware General Corporation Law prohibits a
publicly held Delaware corporation from engaging in any "business combination"
with any "interested stockholder" for a period of three years following the date
that such stockholder became an interested stockholder, unless (i) prior to such
date either the business combination or the transaction which resulted in the
stockholder being an interested stockholder is approved by the board of
directors of the corporation, (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (A) by persons
who are both directors and officers and (B) certain employee stock plans, or
(iii) on or after such date the business combination is approved by the board
and authorized at an annual or special meeting of stockholders, and not by
written consent, by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the interested stockholder. A "business
combination" includes certain mergers, consolidations, asset sales, transfers
and other transactions resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns (or within the preceding three years, did own)
15% or more of the corporation's voting stock.
TRANSFER AGENT
First Chicago Trust Company of New York is the transfer agent and registrar
for the Company's Common Stock.
28
<PAGE> 30
LEGAL MATTERS
The validity of the Securities offered hereby has been passed upon by
Donald F. Crane, Jr., Senior SEC Counsel for the Company.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from the Company's Annual Report in
Form 10-K for the year ended December 31, 1993 have been audited by Deloitte &
Touche, independent auditors, as stated in their report, which is incorporated
herein by reference, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts at accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended March 31, 1994 and 1993 which is incorporated herein by reference,
Deloitte & Touche have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche are not subject to the liability provisions of Section 11 of
the Securities Act of 1933 for their report on the unaudited interim financial
information because those reports are not "reports" or a "part" of a
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
29
<PAGE> 31
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE INITIAL PURCHASER. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE
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 ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
Prospectus Summary..................... 3
Summary Description of DECs and
Depositary Shares....................
Investment Considerations.............. 8
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends............................ 9
Use of Proceeds........................ 10
Issuance of Resale Securities to
Selling Stockholders................. 10
Selling Stockholders................... 10
Plan of Distribution................... 11
Description of DECS.................... 12
Description of Depositary Shares....... 20
Description of Capital Stock........... 27
Legal Matters.......................... 28
Experts................................ 28
</TABLE>
8,870,000 SHARES
UNITED STATES
SURGICAL CORPORATION
$2.20 DEPOSITARY SHARES
EACH REPRESENTING A ONE-FIFTIETH INTEREST
IN A SHARE OF SERIES A CONVERTIBLE PREFERRED STOCK
(DIVIDEND ENHANCED CONVERTIBLE STOCK(SM) -- DECS(SM))
COMMON STOCK
[LOGO]
PROSPECTUS
DATED JUNE 27, 1994
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses to be incurred in connection with the issuance and
distribution of the securities covered by this Registration Statement, all of
which will be paid by the Registrant, are as follows:
<TABLE>
<S> <C>
Registration Fee................................................. $ 68,972
Printing and Engraving Expenses.................................. 30,000
Accounting Fees and Expenses..................................... 8,000
Legal Fees and Expenses.......................................... 10,000
Miscellaneous.................................................... 100
---------
Total.................................................. $ 117,072
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers or former directors or officers and to
purchase insurance with respect to liability arising out of their capacity or
status as directors and officers. Such law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under a corporation's
Certificate of Incorporation, Bylaws, any agreement or otherwise.
Article Eight of the Company's Certificate of Incorporation, as amended,
provides that, to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, a director of
the Company shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director. Article XI of the Company's
By-laws provides for indemnification of officers and directors to the fullest
extent provided by law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
ITEM 16. EXHIBITS
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-3, including those incorporated herein by
reference.
II-1
<PAGE> 33
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- -------- ---------------------------------------------------------------------------------
<S> <C> <C>
4(a ) Certificate of Designations. Incorporated by reference to the Exhibits
filed with the Company's Form 10-K Annual Report for 1993. Commission
file no. 1-9776.
4(b ) Registration Rights Agreement dated March 28, 1994, between the
Company and Salomon Brothers Inc.
4(c ) Depositary Agreement dated March 28, 1994 between the Company and
First Chicago Trust Company
4(d ) Form of Certificate representing Series A Convertible Preferred Stock.
4(e ) Form of Depositary Receipt.
5 Opinion of Donald F. Crane, Jr. as to the legality of the Securities.
12 Statements of computation of ratios of earnings to fixed charges and
of earnings to combined fixed charges and preferred stock dividends.
15 Letter on Unaudited Interim Financial Information.
23(a ) Consent of Deloitte & Touche, Independent Auditors, as Experts.
23(b ) Consent of Donald F. Crane, Jr. Included in Exhibit 5 above.
24 Powers of Attorney.
</TABLE>
ITEM 17. CERTAIN UNDERTAKINGS
UNDERTAKINGS TO FILE PROSPECTUSES AS AMENDMENTS
The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, (ii) to reflect in the prospectus any
facts or events arising after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
this Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement, provided, however, that paragraphs (1)(i) and (1)(ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this Registration Statement;
(2) that for the purpose of determining any liability under the Securities Act
of 1933, as amended, each such post-effective amendment and each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, (and, where applicable, each filing of the
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934, as amended) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new
II-2
<PAGE> 34
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
UNDERTAKING WITH REGARD TO INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment no. 1 to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Norwalk, State of Connecticut, on June
24, 1994.
UNITED STATES SURGICAL CORPORATION
By /s/ THOMAS R. BREMER
---------------------------------
Thomas R. Bremer
Senior Vice President and General
Counsel
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------------------------------------- ------------------------------------ ---------------
<C> <S> <C>
* Chairman of the Board, President, June 24, 1994
- ---------------------------------------- Chief Executive Officer and Director
Leon C. Hirsch (Principal Executive Officer)
* Director June 24, 1994
- ----------------------------------------
John A Bogardus, Jr.
/s/ THOMAS R. BREMER Director June 24, 1994
- ----------------------------------------
Thomas R. Bremer
Director
- ----------------------------------------
Turi Josefsen
* Director June 24, 1994
- ----------------------------------------
Douglas L. King
Director
- ----------------------------------------
Zanvyl Krieger
Director
- ----------------------------------------
Bruce S. Lustman
* Director June 24, 1994
- ----------------------------------------
William F. May
</TABLE>
II-4
<PAGE> 36
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------------------------------------- ------------------------------------ ---------------
<C> <S> <C>
* Director June 24, 1994
- ----------------------------------------
Marianne Scipione
* Director June 24, 1994
- ----------------------------------------
Douglas T. Tansill
* Senior Vice President, Finance and June 24, 1994
- ---------------------------------------- Chief Financial Officer (Principal
Howard M. Rosenkrantz Financial Officer)
/s/ JOSEPH C. SCHERPF Vice President and Controller June 24, 1994
- ---------------------------------------- (Principal Accounting Officer)
Joseph C. Scherpf
</TABLE>
* By Power of Attorney
II-5
<PAGE> 37
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
- ------- ----------- --------
<S> <C> <C>
4(a ) Certificate of Designations. Incorporated by reference to the Exhibits
filed with the Company's Form 10-K Annual Report for 1993. Commission
file no. 1-9776.
4(b ) Registration Rights Agreement dated March 28, 1994, between the
Company and Salomon Brothers Inc.
4(c ) Depositary Agreement dated March 28, 1994 between the Company and
First Chicago Trust Company
4(d ) Form of Certificate representing Series A Convertible Preferred Stock.
4(e ) Form of Depositary Receipt.
5 Opinion of Donald F. Crane, Jr. as to the legality of the Securities.
12 Statements of computation of ratios of earnings to fixed charges and
of earnings to combined fixed charges and preferred stock dividends.
15 Letter on Unaudited Interim Financial Statements.
23(a ) Consent of Deloitte & Touche, Independent Auditors, as Experts.
23(b ) Consent of Donald F. Crane Jr. Included in Exhibit 5 above.
24 Powers of Attorney.
</TABLE>
<PAGE> 1
EXHIBIT 5
June 24, 1994
United States Surgical Corporation
150 Glover Avenue
Norwalk, Connecticut 06856
Dear Sirs:
I refer to Amendment No. 1 to the Registration Statement on Form S-3 (the
"Registration Statement") to be filed by United States Surgical Corporation, a
Delaware corporation (the "Company"), on or about the date hereof with the
Securities and Exchange Commission in connection with the registration under the
Securities Act of 1933, as amended, of 8,870,000 Depositary Shares, each
representing a one-fiftieth interest in a share of the Company's Series A
Convertible Preferred Stock, $5.00 par value (the "Series A Preferred Stock") of
177,400 shares of the Series A Preferred Stock, and of 8,870,000 shares of the
Company's common stock, par value $.10 per share (the "Common Stock"), issuable
on conversion or redemption of the Series A Preferred Stock.
I am familiar with the Certificate of Incorporation and By-laws of the
Company and have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, evidence of corporate action,
certificates and other instruments, and have made such other investigations of
law and fact, as I have deemed necessary or appropriate for the purposes of this
opinion.
Based upon the foregoing, it is my opinion that the 177,400 shares of the
Series A Preferred Stock, and the 8,870,000 shares of the Common Stock, issuable
on conversion or redemption of the Series A Preferred Stock, have been duly
authorized and are or, when issued will be, validly issued, fully paid and
nonassessable.
I hereby consent to the filing of this opinion in Amendment No. 1 to the
Registration Statement referred to above.
Very truly yours,
Donald F. Crane, Jr.
Senior SEC Counsel
<PAGE> 1
EXHIBIT 12
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
PRO-FORMA
PRO-FORMA QUARTER QUARTER
YEAR ENDED ENDED ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, MARCH 31, MARCH 31, --------------------------------------------------------
1993 1994 1994 1993 1992 1991 1990 1989
-------------- ------------ ------------ ---------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Determination of earnings:
Income (Loss) before
provision for income
taxes.................... $ (127,200) $ (2,856) $ (5,400) $ (137,400) $ 192,900 $ 130,300 $ 66,200 $ 43,700
Fixed charges.............. 19,700 6,201 8,745 29,900 22,600 16,900 12,800 10,000
-------------- ------------ ------------ ---------- --------- --------- -------- --------
Total earnings as
defined............. (107,500) 3,345 3,345 (107,500) 215,500 147,200 79,000 53,700
-------------- ------------ ------------ ---------- --------- --------- -------- --------
Fixed charges and other:
Interest expense........... 8,300(1) 3,956(1) 6,500 18,500 14,700 12,000 9,800 7,800
Interest portion of rent
expense.................. 11,400 2,245 2,245 11,400 7,900 4,900 3,000 2,200
-------------- ------------ ------------ ---------- --------- --------- -------- --------
Fixed charges............ 19,700 6,201 8,745 29,900 22,600 16,900 12,800 10,000
Capitalized interest....... 9,500 102 102 9,500 6,400 2,700 1,400 1,700
-------------- ------------ ------------ ---------- --------- --------- -------- --------
Total fixed charges and
capitalized
interest............ 29,200 6,303 8,847 $ 39,400 $ 29,000 $ 19,600 $ 14,200 $ 11,700
========= ======== ======== ======= =======
Preferred stock
dividends(2)............. 30,000 7,500 308
-------------- ------------ ------------
Combined fixed charges and
preferred stock
dividends.................. $ 59,200 $ 13,803 $ 9,155
============ ========== ==========
Ratio of Earnings to
Fixed Charges.............. N.M.(3) 7.4 7.5 5.6 4.6
Ratio of Earnings to Combined
Fixed Charges and Preferred
Stock Dividends............ N.M.(6) N.M.(5) N.M.(4)
</TABLE>
The ratio of earnings to fixed charges and to combined fixed charges and
preferred stock dividends is computed by dividing the sum of earnings before a
provision for income taxes and fixed charges (excluding capitalized interest) by
total fixed charges and capitalized interest or by the sum of total fixed
charges and capitalized interest and preferred stock dividends. Total fixed
charges and capitalized interest includes all interest (including capitalized
interest) and the interest factor of all rentals, assumed to be one-third of
consolidated rent expenses.
(1) Pro-forma interest expense assumes that the net proceeds of approximately
$192 million from the issuance of preferred stock were received at the
beginning of the respective periods and were used to repay bank loans with
an average interest rate of 5.3%.
(2) Using the same assumptions in (1) above, preferred stock dividends have been
increased to an amount representing the pretax earnings which would be
required to cover such dividend requirements, assuming a statutory tax rate
of 35%.
(3) Earnings are inadequate to cover fixed charges. The dollar amount of the
deficiency at December 31, 1993 is $146.9 million. If the restructuring
charges of $137.6 million were excluded from the calculation, the dollar
amount of the deficiency would have been $9.3 million.
(4) Earnings are inadequate to cover fixed charges. The dollar amount of the
deficiency at March 31, 1994 was $5.8 million.
(5) Earnings are inadequate to cover combined fixed charges and preferred stock
dividends. The dollar amount of the pro-forma deficiency at March 31, 1994
was $10.5 million.
(6) Earnings are inadequate to cover combined fixed charges and preferred stock
dividends. The dollar amount of the pro-forma deficiency at December 31,
1993 was $166.7 million. If the restructuring charges of $137.6 million were
excluded from the calculation, the dollar amount of the pro-forma deficiency
would have been $29.1 million.
<PAGE> 1
EXHIBIT 15
June 23, 1994
United States Surgical Corporation
150 Glover Avenue
Norwalk, CT 06856
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of United States Surgical Corporation and subsidiaries for
the three-month periods ended March 31, 1994 and 1993 as indicated in our report
dated April 22, 1994; because we did not perform an audit, we expressed no
opinion on that information.
We are aware that our report referred to above, which was included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 is being
incorporated by reference in this Registration Statement No. 33-53297.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE
Stamford, Connecticut
<PAGE> 1
EXHIBIT 23(A)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 33-53297 of United States Surgical Corporation on
Form S-3 of our report dated February 1, 1994 except as to Notes H, K and L, as
to which the date is March 28, 1994, appearing in the Annual Report on Form 10-K
of United States Surgical Corporation for the year ended December 31, 1993 and
to the reference to us under the heading "Experts" in the Prospectus, which is
part of such Registration Statement.
DELOITTE & TOUCHE
Stamford, CT
June 23, 1994
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of UNITED STATES SURGICAL CORPORATION, a Delaware corporation (the
"Corporation"), in connection with the filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended (the "Act") a Registration Statement on Form S-3 with respect
to the registration under the Act of 8,870,000 Depositary Shares, each
representing a one-fiftieth interest in a share of the Company's Series A
Convertible Preferred Stock, $5.00 par value, of 177,400 shares of the Series A
Preferred Stock, and of 8,870,000 shares of the Company's common stock, par
value $.10 per share, issuable on conversion or redemption of the Series A
Preferred Stock, hereby constitutes and appoints Thomas R. Bremer and Howard M.
Rosenkrantz such undersigned's true and lawful attorneys-in-fact and agents, and
each of them with full power to act without the other as such undersigned's true
and lawful attorney-in-fact and agent, for and in the name, place and stead of
such undersigned, in any and all capacities, to sign said Registration Statement
and any and all future amendments thereto and to file said Registration
Statement and each such future amendment, with all exhibits thereto, and any and
all other documents in connection therewith, with the Securities and Exchange
Commission, hereby granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as such undersigned might or could do in person, hereby
ratifying and confirming all the said attorneys-in-fact and agents, or either of
them, may lawfully do or cause to be done by virtue hereof.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
this 26th day of April, 1994.
<TABLE>
<S> <C>
/s/ LEON C. HIRSCH /s/ DOUGLAS L. KING
- ------------------------------------------ ------------------------------------------
Leon C. Hirsch Douglas L. King
Chairman of the Board, President, Director
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ BRUCE S. LUSTMAN /s/ WILLIAM F. MAY
- ------------------------------------------ ------------------------------------------
Bruce S. Lustman William F. May
Director Director
/s/ TURI JOSEFSEN /s/ MARIANNE SCIPIONE
- ------------------------------------------ ------------------------------------------
Turi Josefsen Marianne Scipione
Director Director
/s/ JOHN A. BOGARDUS, JR. /s/ DOUGLAS T. TANSILL
- ------------------------------------------ ------------------------------------------
John A. Bogardus, Jr. Douglas T. Tansill
Director Director
/s/ THOMAS R. BREMER /s/ HOWARD M. ROSENKRANTZ
- ------------------------------------------ ------------------------------------------
Thomas R. Bremer Howard M. Rosenkrantz
Director Senior Vice President, Finance,
Chief Financial Officer
(Principal Financial Officer)
</TABLE>
