<PAGE> 1
FILED PURSUANT TO RULE 424(B)(2)
REGISTRATION NO. 333-43071
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 7, 1998)
$800,000,000
Rockwell International Corporation
$350,000,000 6.15% NOTES DUE JANUARY 15, 2008
$250,000,000 6.70% DEBENTURES DUE JANUARY 15, 2028
$200,000,000 5.20% DEBENTURES DUE JANUARY 15, 2098
------------------------
Interest payable January 15 and July 15
------------------------
THE 6.15% NOTES DUE JANUARY 15, 2008 (THE 6.15% NOTES), THE 6.70% DEBENTURES DUE
JANUARY 15, 2028 (THE 6.70% DEBENTURES) AND THE 5.20% DEBENTURES DUE JANUARY 15,
2098 (THE 5.20% DEBENTURES) WILL BE REDEEMABLE PRIOR TO MATURITY, AS A WHOLE AT
ANY TIME OR IN PART FROM TIME TO TIME, AT THE OPTION OF ROCKWELL INTERNATIONAL
CORPORATION, A DELAWARE CORPORATION (THE COMPANY), AT A REDEMPTION PRICE EQUAL
TO THE GREATER OF (I) 100% OF THE PRINCIPAL AMOUNT THEREOF, OR THE ACCRETED
VALUE (AS DEFINED HEREIN) IN THE CASE OF THE 5.20% DEBENTURES, AND (II) THE SUM
OF THE PRESENT VALUES OF THE REMAINING SCHEDULED PAYMENTS (AS DEFINED HEREIN)
DISCOUNTED TO THE REDEMPTION DATE ON A SEMIANNUAL BASIS AT THE TREASURY RATE (AS
DEFINED HEREIN) PLUS 10 BASIS POINTS IN THE CASE OF THE 6.15% NOTES, 12.5 BASIS
POINTS IN THE CASE OF THE 6.70% DEBENTURES AND 12.5 BASIS POINTS IN THE CASE OF
THE 5.20% DEBENTURES, TOGETHER, IN EACH CASE, WITH ACCRUED INTEREST TO THE DATE
OF REDEMPTION. UPON THE OCCURRENCE OF A TAX EVENT (AS DEFINED HEREIN), THE
COMPANY WILL HAVE THE RIGHT (X) TO SHORTEN THE MATURITY OF THE 5.20% DEBENTURES
TO THE MINIMUM EXTENT REQUIRED SO THAT THE INTEREST PAID, OR ORIGINAL ISSUE
DISCOUNT ACCRUED, ON THE 5.20% DEBENTURES (OR, AT THE OPTION OF THE COMPANY,
BOTH) WILL BE DEDUCTIBLE FOR UNITED STATES FEDERAL INCOME TAX PURPOSES AND (Y)
UNDER CERTAIN CIRCUMSTANCES TO REDEEM THE 5.20% DEBENTURES IN WHOLE (BUT NOT IN
PART) AT A REDEMPTION PRICE EQUAL TO THE GREATER OF (I) 100% OF THE ACCRETED
VALUE AND (II) THE SUM OF THE PRESENT VALUES OF THE REMAINING SCHEDULED PAYMENTS
DISCOUNTED TO THE REDEMPTION DATE ON A SEMIANNUAL BASIS AT THE TREASURY RATE
PLUS 20 BASIS POINTS, TOGETHER, IN EITHER CASE, WITH ACCRUED INTEREST TO THE
DATE OF REDEMPTION. SEE "DESCRIPTION OF THE SECURITIES -- CONDITIONAL RIGHT TO
SHORTEN MATURITY
OF THE 5.20% DEBENTURES" AND "-- OPTIONAL REDEMPTION".
THE 6.15% NOTES, THE 6.70% DEBENTURES AND THE 5.20% DEBENTURES (COLLECTIVELY,
THE SECURITIES) WILL BE REPRESENTED BY ONE OR MORE GLOBAL SECURITIES REGISTERED
IN THE NAME OF A NOMINEE OF THE DEPOSITORY TRUST COMPANY, AS DEPOSITARY (THE
DEPOSITARY OR DTC). BENEFICIAL INTERESTS IN THE SECURITIES WILL BE SHOWN ON, AND
TRANSFERS THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY THE
DEPOSITARY AND ITS PARTICIPANTS. EXCEPT AS DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, SECURITIES IN DEFINITIVE FORM WILL
NOT BE ISSUED. THE SECURITIES WILL TRADE IN THE DEPOSITARY'S SAME-DAY FUNDS
SETTLEMENT SYSTEM. ALL PAYMENTS OF PRINCIPAL AND INTEREST ON GLOBAL SECURITIES
WILL BE MADE BY THE COMPANY IN IMMEDIATELY AVAILABLE FUNDS. SEE "DESCRIPTION OF
THE SECURITIES -- BOOK-ENTRY SYSTEM".
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
6.15% NOTES -- PRICE 100% AND ACCRUED INTEREST, IF ANY
6.70% DEBENTURES -- PRICE 100% AND ACCRUED INTEREST, IF ANY
5.20% DEBENTURES -- PRICE 75.387% AND ACCRUED INTEREST, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Per 6.15% Note............................ 100.000% .650% 99.350%
Total................................... $350,000,000 $2,275,000 $347,725,000
Per 6.70% Debenture....................... 100.000% .875% 99.125%
Total................................... $250,000,000 $2,187,500 $247,812,500
Per 5.20% Debenture....................... 75.387% .7539% 74.6331%
Total................................... $150,774,000 $1,507,800 $149,266,200
</TABLE>
- ------------
(1) Plus accrued interest, if any, from January 26, 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company estimated to be
$975,000.
------------------------
The Securities are offered, subject to prior sale, when, as and if accepted
by the several Underwriters and subject to approval of certain legal matters by
Dewey Ballantine LLP, counsel for the Underwriters. It is expected that delivery
of the Securities will be made on or about January 26, 1998 through the
book-entry facilities of DTC against payment therefor in immediately available
funds.
------------------------
MORGAN STANLEY DEAN WITTER
J.P. MORGAN & CO.
SBC WARBURG DILLON READ INC.
January 21, 1998
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICES OF THE SECURITIES.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SECURITIES IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING".
NO PERSON IS AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS OR ANY DEALER
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. NEITHER
THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR ANY
SALE MADE HEREUNDER DOES NOT IMPLY THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE ON WHICH SUCH
INFORMATION IS GIVEN.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Recent Developments................................................................... S-3
Use of Proceeds....................................................................... S-4
Description of the Securities......................................................... S-4
United States Federal Income Taxation................................................. S-8
Underwriting.......................................................................... S-10
PROSPECTUS
Documents Incorporated by Reference................................................... 2
Available Information................................................................. 2
The Company........................................................................... 3
Use of Proceeds....................................................................... 3
Selected Financial Information........................................................ 4
Plan of Distribution.................................................................. 5
Description of Debt Securities........................................................ 6
Description of Capital Stock.......................................................... 16
Legal Matters......................................................................... 20
Experts............................................................................... 20
</TABLE>
S-2
<PAGE> 3
RECENT DEVELOPMENTS
On January 20, 1998, the Company announced its earnings for its first
fiscal quarter ended December 31, 1997. The Company's press release making such
announcement is made a part of the Company's Current Report on Form 8-K dated
January 20, 1998 (the January 1998 Form 8-K), which is incorporated herein by
reference. The following selected consolidated financial data in respect of the
Company's continuing operations have been excerpted or derived from, and should
be read in conjunction with, the financial and other information and data
contained in the January 1998 Form 8-K. Information as of December 31, 1997 and
1996 and for the three-month periods then ended is unaudited, but in the opinion
of management of the Company, contains all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the results of
operations for such interim periods. The results of operations for the
three-month period ended December 31, 1997 are not necessarily indicative of the
results that may be expected for the fiscal year ending September 30, 1998. See
"Selected Financial Information" in the accompanying Prospectus.
<TABLE>
<CAPTION>
QUARTER ENDED
DECEMBER 31,
-------------------
1997 1996
-------- --------
(UNAUDITED)
(IN MILLIONS,
EXCEPT
PER SHARE
AND RATIO AMOUNTS)
<S> <C> <C>
INCOME STATEMENT DATA:
Sales:
Automation.......................................................... $ 1,139 $ 1,061
Avionics & Communications........................................... 426 374
Semiconductor Systems............................................... 414 418
-------- --------
Total.......................................................... $ 1,979 $ 1,853
======== ========
Operating earnings:
Automation.......................................................... $ 144 $ 131
Avionics & Communications........................................... 74 59
Semiconductor Systems............................................... 43 81
Purchased research & development (1)................................ (103) --
-------- --------
Total.......................................................... $ 158 $ 271
======== ========
Interest expense....................................................... $ 4 $ 4
======== ========
Income from continuing operations...................................... $ 89 $ 154
======== ========
Basic earnings per share:
Continuing operations before purchased research & development....... $ .74 $ .70
Purchased research & development(1)................................. (.31) --
-------- --------
Continuing operations............................................... $ .43 $ .70
======== ========
Cash dividends per share............................................... $ .26 $ .29
======== ========
Average outstanding shares............................................. 204.8 218.7
======== ========
BALANCE SHEET DATA: (at end of period)
Working Capital........................................................ $ 1,485 $ 2,700
Total Assets........................................................... 7,904 8,596
Long-Term Debt......................................................... 157 156
Shareowners' Equity.................................................... 4,600 5,477
RATIO OF EARNINGS TO FIXED CHARGES(2).................................... 7.4
</TABLE>
- ------------
(1) Purchased research and development relates to the acquisition of an Avionics
& Communications business in the first quarter of 1998.
(2) In computing the ratio of earnings to fixed charges, earnings are defined as
income from continuing operations before income taxes, adjusted for minority
interest income or loss of subsidiaries, undistributed earnings of
affiliates, and fixed charges exclusive of capitalized interest. Fixed
charges consist of interest on borrowings and that portion of rentals deemed
representative of the interest factor.
S-3
<PAGE> 4
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
Securities offered hereby will be applied to repay approximately $380 million
aggregate principal amount of commercial paper notes of the Company, which on
January 21, 1998 had interest rates ranging from 5.25% to 5.75%, and the balance
will be added to the Company's general funds which will be available for general
corporate purposes, including the Company's stock repurchase program. Pending
application of the funds, the Company will use the net proceeds of the
Securities for short-term investments.
DESCRIPTION OF THE SECURITIES
The 6.15% Notes, the 6.70% Debentures and the 5.20% Debentures offered
hereby each constitutes a single series of Debt Securities described in the
accompanying Prospectus and will be limited to $350,000,000, $250,000,000 and
$200,000,000 aggregate principal amount, respectively, and will be issued only
in registered form in denominations of $1,000 and any integral multiple thereof.
Reference should be made to the accompanying Prospectus for a detailed summary
of additional provisions of the Securities and of the Indenture under which the
Securities are issued. The Chase Manhattan Bank (successor to Mellon Bank, N.A.)
is the Trustee under the Indenture.
INTEREST
The Securities will bear interest at the respective rates per annum set
forth on the cover page of this Prospectus Supplement, in each case from January
26, 1998. Interest on the 6.15% Notes, the 6.70% Debentures and the 5.20%
Debentures will be payable semiannually on January 15 and July 15 of each year,
beginning July 15, 1998, to the persons in whose names the 6.15% Notes, the
6.70% Debentures and the 5.20% Debentures are registered at the close of
business on January 1 or July 1, as the case may be, preceding such January 15
or July 15.
CONDITIONAL RIGHT TO SHORTEN MATURITY OF THE 5.20% DEBENTURES
The Company intends to deduct interest on the 5.20% Debentures for United
States federal income tax purposes. However, there have been proposed tax law
changes over the past year that, among other things, would have prohibited an
issuer from deducting interest on debt instruments with a maturity of more than
40 years. While none of these proposals has become law, there can be no
assurance that similar legislation affecting the Company's ability to deduct
interest on the 5.20% Debentures will not be enacted in the future or that any
such legislation would not have a retroactive effective date.
Upon the occurrence of a Tax Event (as defined below), the Company will
have the right to shorten the maturity of the 5.20% Debentures to the minimum
extent required, in the opinion of nationally recognized independent tax
counsel, such that, after the shortening of the maturity, interest paid, or
original issue discount accrued, on the 5.20% Debentures (or, at the option of
the Company, both) will be deductible for United States federal income tax
purposes or, if such counsel is unable to opine definitively as to such minimum
period, the minimum extent so required as determined in good faith by the Board
of Directors of the Company, after receipt of an opinion of such counsel
regarding the applicable legal standards. There can be no assurance that the
Company would not exercise its right to shorten the maturity of the 5.20%
Debentures upon the occurrence of such a Tax Event or as to the period by which
such maturity would be shortened. In the event that the Company elects to
exercise its right to shorten the maturity of the 5.20% Debentures on the
occurrence of a Tax Event, the Company will mail a notice of shortened maturity
to each holder of the 5.20% Debentures by first-class mail not more than 60 days
after the occurrence of such Tax Event, stating the new maturity date of the
5.20% Debentures (the New Maturity Date). Such notice shall be effective
immediately upon mailing. In addition, in the event that the maturity of the
5.20% Debentures is shortened to the minimum extent required, the principal
amount of the 5.20% Debentures shall change to the New Redemption Amount. The
New Redemption Amount will be an amount equal to the Accreted Value (as defined
below), which will be determined as if the New Maturity Date were the Specified
Date (as defined below).
S-4
<PAGE> 5
The Company believes that the 5.20% Debentures should constitute
indebtedness for United States federal income tax purposes under current law
and, in that case, an exercise of its right to shorten the maturity of the 5.20%
Debentures would not be a taxable event to holders for such purposes.
Prospective investors should be aware, however, that the Company's exercise of
its right to shorten the maturity of the 5.20% Debentures will be a taxable
event to holders for United States federal income tax purposes if the 5.20%
Debentures are treated as equity for United States federal income tax purposes
before the maturity is shortened and the 5.20% Debentures of shortened maturity
are treated as debt (or, in certain circumstances, are treated as a specified
type of preferred equity) for such purposes.
"Tax Event" means that the Company shall have received an opinion of
nationally recognized independent tax counsel to the effect that, as a result of
(a) any amendment to, clarification of or change (including any announced
prospective amendment, clarification or change) in any law, or any regulation
thereunder, of the United States, (b) any judicial decision, official
administrative pronouncement, ruling (including the public release of any
technical advice memorandum or other private letter ruling), regulatory
procedure, notice or announcement, including any notice or announcement of
intent to adopt or promulgate any ruling, regulatory procedure or regulation
(any of the foregoing, an Administrative or Judicial Action), or (c) any
amendment to, clarification of or change in any official position with respect
to, or any interpretation of (including any position taken in any Internal
Revenue Service audit or similar proceeding, in each event, involving the
Company), an Administrative or Judicial Action or a law or regulation of the
United States that differs from the theretofore generally accepted position or
interpretation, in each case, occurring or first publicly released on or after
January 21, 1998, there is more than an insubstantial increase in the risk that
interest paid by the Company, or original issue discount accrued, on the 5.20%
Debentures is not, or will not be, deductible, in whole or in part, by the
Company for United States federal income tax purposes.
OPTIONAL REDEMPTION
Each of the 6.15% Notes, the 6.70% Debentures and the 5.20% Debentures will
be redeemable as a whole at any time or in part from time to time, at the option
of the Company, on not less than 30 or more than 60 days' notice mailed to
holders thereof, at a redemption price equal to the greater of (i) 100% of the
principal amount thereof, or the Accreted Value in the case of the 5.20%
Debentures, and (ii) the sum of the present values of the Remaining Scheduled
Payments (as defined below), discounted to the redemption date on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate (as defined below) plus 10 basis points in the case of the 6.15%
Notes, 12.5 basis points in the case of the 6.70% Debentures and 12.5 basis
points in the case of the 5.20% Debentures, together, in each case, with accrued
interest on the principal amount at maturity being redeemed to the date of
redemption.
In addition, if a Tax Event occurs and in the opinion of nationally
recognized independent tax counsel, there would, notwithstanding any shortening
of the maturity of the 5.20% Debentures, be more than an insubstantial risk that
interest paid by the Company, or original issue discount accrued, on the 5.20%
Debentures is not, or will not be, deductible, in whole or in part, by the
Company for United States federal income tax purposes, the Company will have the
right, within 90 days following the occurrence of such Tax Event, to redeem the
5.20% Debentures in whole (but not in part), on not less than 30 or more than 60
days' notice mailed to holders of the 5.20% Debentures, at a redemption price
equal to the greater of (i) 100% of the Accreted Value and (ii) the sum of the
present values of the Remaining Scheduled Payments, discounted to the redemption
date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 20 basis points, together, in either case,
with accrued interest on the principal amount at maturity being redeemed to the
date of redemption.
"Accreted Value" as of any date (the Specified Date) means the sum of the
present values of the Remaining Scheduled Payments in respect of the 5.20%
Debentures, discounted to the Specified Date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
6.90% per annum, which was the initial yield to maturity of the 5.20% Debentures
based on the initial public offering price of the 5.20% Debentures set forth on
the cover of this Prospectus Supplement.
"Comparable Treasury Issue" means the United States Treasury Security
selected by an Independent Investment Banker that would be utilized, at the time
of selection and in accordance with customary financial
S-5
<PAGE> 6
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the 6.15% Notes, the 6.70% Debentures or the
5.20% Debentures, as the case may be. "Independent Investment Banker" means one
of the Reference Treasury Dealers appointed by the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, the average of
the Reference Treasury Dealer Quotations for such redemption date. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer as of 3:30 p.m., New York City time, on the
third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated, J.P. Morgan Securities Inc. and SBC Warburg Dillon Read Inc. and
their respective successors; provided, however, that if any of the foregoing
shall cease to be a primary U.S. Government securities dealer in New York City
(a Primary Treasury Dealer), the Company shall substitute therefor another
nationally recognized investment banking firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each Security to be
redeemed, the remaining scheduled payments of the principal thereof and interest
thereon that would be due after the related redemption date but for such
redemption; provided, however, that if such redemption date is not an interest
payment date with respect to such Security, the amount of the next succeeding
scheduled interest payment thereon will be reduced by the amount of interest
accrued thereon to such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
On and after the redemption date, interest will cease to accrue on the
Securities or any portion thereof called for redemption. On or before any
redemption date, the Company shall deposit with a paying agent (or the Trustee)
money sufficient to pay the redemption price of and accrued interest on the
Securities to be redeemed on such date. If less than all the Securities of any
series are to be redeemed, the Securities to be redeemed shall be selected by
the Trustee by such method as the Trustee shall deem fair and appropriate.
DEFEASANCE
The provisions of the Indenture relating to defeasance described under
"Description of Debt Securities -- Defeasance and Covenant Defeasance" in the
accompanying Prospectus apply to each of the 6.15% Notes, the 6.70% Debentures
and the 5.20% Debentures.
BOOK-ENTRY SYSTEM
The Depository Trust Company (the Depositary or DTC) will act as securities
depositary for the Securities. The Securities will be issued as fully registered
securities registered in the name of Cede & Co. (the Depositary's partnership
nominee). One or more fully registered global certificates representing the
Securities (the Global Securities) will be issued for each series of the
Securities, in the aggregate principal amount of each such series, and will be
deposited with the Depositary. The provisions set forth under "Description of
Debt Securities -- Global Securities" in the accompanying Prospectus will be
applicable to the Securities.
S-6
<PAGE> 7
The following is based on information furnished by the Depositary.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary holds securities that its
participants (Participants) deposit with the Depositary. The Depositary also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct participants
(Direct Participants) include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The Depositary
is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depositary's system is also available
to others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly (Indirect Participants). The rules applicable to
the Depositary and its Participants are on file with the Securities and Exchange
Commission.
Purchases of Securities under the Depositary's system must be made by or
through Direct Participants, which will receive a credit for such Securities on
the Depositary's records. The ownership interest of each actual purchaser of
each Security represented by a Global Security (Beneficial Owner) is in turn to
be recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participants through which such Beneficial Owners
entered into the transaction. Transfers of ownership interests in any Global
Security representing Securities are to be accomplished by entries made on the
books of Participants acting on behalf of Beneficial Owners. Beneficial Owners
of any Global Security representing Securities will not receive Securities in
definitive form representing their ownership interests therein, except in the
event that use of the book-entry system for such Securities is discontinued or
upon the occurrence of certain other events described herein.
To facilitate subsequent transfers, all Global Securities representing
Securities which are deposited with the Depositary are registered in the name of
the Depositary's partnership nominee, Cede & Co. The deposit of Global
Securities with the Depositary and their registration in the name of Cede & Co.
effect no change in beneficial ownership. The Depositary has no knowledge of the
actual Beneficial Owners of the Global Securities representing the Securities;
the Depositary's records reflect only the identity of the Direct Participants to
whose accounts such Securities are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
the Global Securities representing the Securities. Under its usual procedures,
the Depositary mails an omnibus proxy (an Omnibus Proxy) to the Company as soon
as possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts
the Securities are credited on the applicable record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Global Securities representing the
Securities will be made to Cede & Co., as nominee of the Depositary. The
Depositary's practice is to credit Direct Participants' accounts on the
applicable payment date in accordance with their respective holdings shown on
the Depositary's records unless the Depositary has reason to believe that it
will not receive payment on such date. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the account of customers in bearer form or
registered in "street name", and will
S-7
<PAGE> 8
be the responsibility of such Participants and not of the Depositary, the
Trustee or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest to Cede &
Co. is the responsibility of the Company or the Trustee, disbursement of such
payments to Direct Participants shall be the responsibility of the Depositary,
and disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants. Neither the Company nor the
Trustee will have any responsibility or liability for the disbursements of
payments in respect of ownership interests in the Securities by the Depositary
or the Direct or Indirect Participants or for maintaining or reviewing any
records of the Depositary or the Direct or Indirect Participants relating to
ownership interests in the Securities or the disbursement of payments in respect
thereof.
The Depositary may discontinue providing its services as securities
depositary with respect to the Securities at any time by giving reasonable
notice to the Company or the Trustee. Under such circumstances, and in the event
that a successor securities depositary is not obtained, Securities in definitive
form are required to be printed and delivered. The Company may decide to
discontinue use of a system of book-entry transfers through the Depositary (or a
successor securities depositary). In that event, Securities in definitive form
will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable, but is subject to any changes to the arrangements
between the Company and the Depositary and any changes to such procedures that
may be instituted unilaterally by the Depositary.
GENERAL
Other than the protections which may otherwise be afforded holders of the
Securities as a result of the operation of the covenants described under
"Covenants" in the accompanying Prospectus, there are no covenants or other
provisions which may afford holders of the 6.15% Notes, the 6.70% Debentures or
the 5.20% Debentures protection in the event of a leveraged buyout or other
highly leveraged transaction involving the Company or any similar occurrence.
UNITED STATES FEDERAL INCOME TAXATION
In the opinion of Chadbourne & Parke LLP, counsel to the Company, the
following summary accurately describes the principal United States federal
income tax consequences of ownership and disposition of the 5.20% Debentures to
initial United States Holders (as defined below) purchasing 5.20% Debentures at
the "issue price" (as defined below).
This summary is based on the Internal Revenue Code of 1986, as amended to
the date hereof (the Code), administrative pronouncements, judicial decisions
and existing and proposed Treasury Regulations, changes to any of which
subsequent to the date of this Prospectus Supplement may affect the tax
consequences described herein, possibly on a retroactive basis. This summary
discusses only 5.20% Debentures held as capital assets within the meaning of
Section 1221 of the Code. It does not discuss all of the tax consequences that
may be relevant to a United States Holder in light of its particular
circumstances or to United States Holders subject to special rules, such as
financial institutions, insurance companies, dealers in securities or foreign
currencies, or United States Holders whose functional currency (as defined in
Section 985 of the Code) is not the U.S. dollar. Persons considering the
purchase of 5.20% Debentures should consult their tax advisors with regard 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.
As used herein, the term "United States Holder" means a beneficial owner of
a 5.20% Debenture that is, for United States federal income tax purposes, (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or of any
political subdivision thereof or therein (other than a partnership that is not
treated as a United States person under any applicable Treasury Regulations
which may be issued) or (iii) an estate or trust the income of which is subject
to United States federal income taxation regardless of its source.
S-8
<PAGE> 9
PAYMENTS OF INTEREST
Interest paid on a 5.20% Debenture will generally be taxable to a United
States Holder as ordinary interest income at the time it accrues or is received
in accordance with the United States Holder's method of accounting for United
States federal income tax purposes. Under the Treasury Regulations (the OID
Regulations) governing indebtedness issued with original issue discount (OID), a
debenture will not be considered as having been issued with OID if the
difference between its stated redemption price at maturity and its issue price
is less than a de minimis amount (i.e., 1/4 of 1 percent of the principal amount
multiplied by the number of complete years to maturity from the issue date). For
this purpose, the issue price of the 5.20% Debenture is the first price to the
public at which a substantial amount of the 5.20% Debentures is sold for money
(which is expected to be the initial public offering price indicated on the
cover of this Prospectus Supplement), and the stated redemption price at
maturity of the 5.20% Debenture is its principal amount. If the difference
between the stated redemption price at maturity and the issue price of the 5.20%
Debenture is less than the de minimis amount, the 5.20% Debenture will not be
considered as having been issued with OID under the OID Regulations. United
States Holders of the 5.20% Debentures will generally include the de minimis OID
in income, as capital gain, as principal payments are made on the 5.20%
Debentures. As an alternative, a United States Holder may also make an election
to include in gross income all interest that accrues on a 5.20% Debenture
(including de minimis OID) in accordance with a constant yield method based on
the compounding of interest. On the other hand, if the OID on the 5.20%
Debentures is more than de minimis, a United States Holder would be required to
include the OID in income for United States federal income tax purposes as it
accrues, in accordance with a constant yield method based on a compounding of
interest and in advance of the receipt of the cash payments attributable to such
income.
SALE, EXCHANGE OR RETIREMENT OF THE 5.20% DEBENTURES
Upon the sale, exchange or retirement of a 5.20% Debenture, a United States
Holder will generally recognize capital gain or loss equal to the difference
between the amount realized on the sale, exchange or retirement and such
Holder's adjusted tax basis in the 5.20% Debenture. For these purposes, the
amount realized does not include any amount attributable to accrued interest on
the 5.20% Debenture. Amounts attributable to accrued interest are treated as
interest as described under "Payments of Interest" above. A United States
Holder's adjusted tax basis in a 5.20% Debenture will generally equal the cost
of the 5.20% Debenture to such Holder, increased by any OID previously included
in income by the Holder with respect to such 5.20% Debenture (including any de
minimis OID included in income pursuant to an election described above under
"Payments of Interest").
BACKUP WITHHOLDING AND INFORMATION REPORTING
Certain noncorporate United States Holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium and interest on,
and the proceeds of disposition of, a 5.20% Debenture. Backup withholding will
apply only if the Holder (i) fails to furnish its Taxpayer Identification Number
(TIN) which, for an individual, would be the social security number of such
individual, (ii) furnishes an incorrect TIN, (iii) is notified by the Internal
Revenue Service that it has failed to report properly payments of interest and
dividends or (iv) under certain circumstances, fails to certify, under penalty
of perjury, that it has furnished a correct TIN and has not been notified by the
Internal Revenue Service that it is subject to backup withholding for failure to
report interest and dividend payments. United States Holders should consult
their tax advisors regarding their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such Holder's United States federal
income tax liability and may entitle such Holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.
S-9
<PAGE> 10
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally and not jointly agreed to
purchase, the respective amounts of the Securities set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
UNDERWRITER 6.15% NOTES 6.70% DEBENTURES 5.20% DEBENTURES
---------------------------------- ------------ ---------------- ----------------
<S> <C> <C> <C>
Morgan Stanley & Co.
Incorporated.................... $117,000,000 $83,400,000 $67,000,000
J.P. Morgan Securities Inc. ...... 116,500,000 83,300,000 66,500,000
SBC Warburg Dillon Read Inc. ..... 116,500,000 83,300,000 66,500,000
------------ ---------------- ----------------
Totals.................. $350,000,000 $250,000,000 $200,000,000
=========== ============= =============
</TABLE>
The Underwriting Agreement provides that the obligation of the Underwriters
to pay for and accept delivery of the Securities is subject to the approval of
certain legal matters by their counsel and to certain other conditions. Under
the terms and conditions of the Underwriting Agreement, the Underwriters are
committed to take and pay for all of the Securities if any are taken.
The Company has been advised by the Underwriters that they initially
propose to offer the Securities in part directly to purchasers at the respective
initial public offering prices set forth on the cover page of this Prospectus
Supplement and in part to certain securities dealers at such prices less a
concession of .40% of the principal amount of the 6.15% Notes, .50% of the
principal amount of the 6.70% Debentures and .45% of the principal amount of the
5.20% Debentures. The Underwriters may allow, and such dealers may reallow, a
concession not to exceed .25% of the principal amount of the 6.15% Notes, .25%
of the principal amount of the 6.70% Debentures and .25% of the principal amount
of the 5.20% Debentures to certain brokers and dealers. After the initial
offering of the Securities, the offering prices and other selling terms may from
time to time be varied by the Underwriters.
There is no public trading market for the 6.15% Notes, the 6.70% Debentures
or the 5.20% Debentures and the Company does not intend to apply for listing of
the Securities on any national securities exchange or for quotation of the
Securities on any automated dealer quotation system. The Company has been
advised by the Underwriters that they presently intend to make a market in the
Securities after the consummation of the offering contemplated hereby, although
they are under no obligation to do so and may discontinue any market-making
activities at any time without any notice. No assurance can be given as to the
liquidity of the trading market for any of the Securities or that an active
public market for any of the Securities will develop. If an active public
trading market for any of the Securities does not develop, the market price and
liquidity of such Securities may be adversely affected. If any of the Securities
are traded, they may trade at a discount from their initial offering prices,
depending on prevailing interest rates, the market for similar securities, the
performance of the Company and certain other factors.
In order to facilitate the offering of the Securities, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the prices
of the Securities. Specifically, the Underwriters may overallot in connection
with the offering, creating a short position in the Securities for their own
account. In addition, to cover allotments or to stabilize the price of the
Securities, the Underwriters may bid for, and purchase the Securities in the
open market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an underwriter or dealer for distributing the Securities in the
offering if the syndicate repurchases previously distributed Securities in
transactions to cover syndicate short positions in stabilization transactions or
otherwise. Any of these activities may stabilize or maintain market prices of
the Securities above independent market levels. The Underwriters are not
required to engage in these activities and may end any of these activities at
any time.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, and will be required to contribute to
payments which the Underwriters may be required to make in respect thereof.
From time to time certain Underwriters and their affiliates have provided,
and continue to provide, investment banking and commercial banking services to
the Company.
S-10
<PAGE> 11
PROSPECTUS
ROCKWELL INTERNATIONAL CORPORATION
DEBT SECURITIES
------------------------
Rockwell International Corporation, a Delaware corporation (the Company),
intends to offer from time to time its debt securities of one or more series
(the Debt Securities) in an aggregate principal amount (or net proceeds, in the
case of Debt Securities issued at an original issue discount) of up to
$1,000,000,000 or the equivalent thereof in one or more foreign or composite
currencies, on terms to be determined at the time of sale. The Debt Securities
may be issued as convertible Debt Securities which, unless previously redeemed,
repaid or otherwise purchased or acquired, will be convertible, at any time
during a specified conversion period, into shares of Common Stock, par value $1
per share (the Common Stock), of the Company. The specific designation,
aggregate principal amount, authorized denominations, purchase price, maturity,
rate (or manner of calculation thereof) and time of payment of any interest, any
redemption terms, any conversion terms, the currency or composite currency in
which the Debt Securities or any interest thereon shall be payable or other
specific terms and any listing on a securities exchange of the series of Debt
Securities in respect of which this Prospectus is being delivered (the Offered
Debt Securities) are set forth in the accompanying Prospectus Supplement,
together with the terms of offering of the Offered Debt Securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The Debt Securities will be sold directly, through agents designated from
time to time or through underwriters or dealers. See "Plan of Distribution". If
any agents of the Company or any underwriters are involved in the sale of the
Offered Debt Securities in respect of which this Prospectus is being delivered,
the names of such agents or underwriters and any applicable commissions or
discounts are set forth in the Prospectus Supplement. The net proceeds to the
Company from such sale are also set forth in the Prospectus Supplement.
------------------------
THE DATE OF THIS PROSPECTUS IS JANUARY 7, 1998.
<PAGE> 12
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which are on file (File No. 1-12383) with the
Securities and Exchange Commission (the Commission), are incorporated herein by
reference and made a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997;
(b) The Company's Current Report on Form 8-K dated October 10, 1997;
and
(c) The description of the Common Stock and the Company's Preferred
Share Purchase Rights (the Rights) which is incorporated in the Company's
Registration Statement on Form 8-A dated October 30, 1996 by reference to
the material under the caption "Description of New Rockwell Capital Stock"
on pages 105-115 of the Company's Proxy Statement-Prospectus dated October
29, 1996 constituting a part of the Company's Registration Statement on
Form S-4 (Registration No. 333-14969).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act),
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Debt Securities hereunder shall be deemed to be incorporated
herein by reference and shall be a part hereof from the date of the filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes that statement. Any such
statement so modified or superseded shall not constitute a part of this
Prospectus, except as so modified or superseded.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, on the written
or oral request of such person, a copy of any or all of the information
incorporated by reference in the Registration Statement of which this Prospectus
is a part (not including exhibits to such information unless such exhibits are
specifically incorporated by reference into such information). Such request
should be directed to Mr. A. Lee Shull, Jr., Vice President, Investor Relations,
Rockwell International Corporation, 625 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3123 (telephone number (412) 565-7436).
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information relating to its business, financial condition and other matters with
the Commission. This Prospectus contains information concerning the Company but
does not contain all of the information set forth in the Registration Statement
of which this Prospectus is a part and exhibits thereto, or amendments thereto,
which the Company has filed or may file with the Commission under the Securities
Act of 1933, as amended (the Securities Act). Such reports, proxy statements,
Registration Statement and exhibits and other information filed by the Company
can be inspected and copied at the public reference facilities of the Commission
at the Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the following Regional Offices of the Commission: 7 World Trade Center,
Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may
also be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
also maintains a World Wide Web site that contains reports, proxy and
information statements and other information regarding registrants (including
the Company) that file electronically with the Commission (http://www.sec.gov).
The Common Stock is listed on the New York and Pacific Stock Exchanges.
Reports, proxy statements and other information concerning the Company can be
inspected at such exchanges.
------------------------
2
<PAGE> 13
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBT SECURITIES.
SPECIFICALLY, UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING, AND
MAY BID FOR, AND PURCHASE, DEBT SECURITIES IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION".
THE COMPANY
The Company is a global electronics company with leadership positions in
automation, avionics and communications and semiconductor systems. The Company
was incorporated in 1996 and is the successor to the former Rockwell
International Corporation as the result of a tax-free reorganization completed
on December 6, 1996, pursuant to which the Company divested its former Aerospace
and Defense businesses to The Boeing Company. The predecessor corporation was
incorporated in 1928. On September 30, 1997, the Company completed the spin-off
of its automotive component systems business into an independent, separately
traded, publicly held company named Meritor Automotive, Inc. As used herein the
term "the Company" includes subsidiaries and predecessors unless the context
indicates otherwise.
The Company's business segments are engaged in research, development and
manufacture of electronics products as follows:
Automation -- industrial automation equipment and systems, including control
logic, sensors, human-machine interface devices, motors, power and
mechanical devices and software products.
Avionics & Communications -- avionics products and systems and related
communications technologies primarily used in commercial and military
aircraft and defense electronic systems for command, control, communications
and intelligence.
Semiconductor Systems -- system-level semiconductor chipset solutions for
personal communications electronics markets such as personal computers,
personal imaging devices, wireless communications products, network access
devices and digital information and entertainment products, as well as
electronic commerce products for call center systems and personalized
electronic commerce applications.
The Company has its principal executive offices at 600 Anton Boulevard,
Suite 700, Costa Mesa, California 92626-7147 (telephone number (714) 424-4565).
USE OF PROCEEDS
Except as may otherwise be set forth in the Prospectus Supplement, the net
proceeds to be received by the Company from the sale of the Debt Securities
offered hereby will be added to the Company's general funds which will be
available for general corporate purposes. Pending application of the funds, the
Company will use the net proceeds of the Debt Securities for short-term
investments.
3
<PAGE> 14
SELECTED FINANCIAL INFORMATION
The following selected consolidated financial data in respect of the
Company's continuing operations have been excerpted or derived from, and should
be read in conjunction with, the consolidated financial statements and other
information and data contained in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1997.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
--------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales:
Automation.................................. $4,494 $4,165 $3,590 $2,085 $1,716
Avionics & Communications................... 1,689 1,470 1,461 1,409 1,396
Semiconductor Systems....................... 1,579 1,593 875 691 530
Divested business(1)........................ -- -- 11 8 15
------ ------ ------ ------ ------
Total............................... $7,762 $7,228 $5,937 $4,193 $3,657
====== ====== ====== ====== ======
Operating earnings:
Automation.................................. $ 598 $ 537 $ 481 $ 265 $ 193
Avionics & Communications................... 253 166 182 183 220
Semiconductor Systems....................... 231 330 113 98 57
Purchased research and development(2)....... (53) (121) -- -- --
Restructuring charge(3)..................... -- (76) -- -- --
Divested business(1)........................ -- -- (31) (9) (4)
------ ------ ------ ------ ------
Total............................... $1,029 $ 836 $ 745 $ 537 $ 466
====== ====== ====== ====== ======
Interest expense.............................. $ 27 $ 22 $ 14 $ 5 $ 5
====== ====== ====== ====== ======
Income from continuing operations(4).......... $ 586 $ 451 $ 368 $ 285 $ 240
====== ====== ====== ====== ======
Earnings per share from continuing
operations(4)............................... $ 2.74 $ 2.07 $ 1.69 $ 1.29 $ 1.09
====== ====== ====== ====== ======
Cash dividends per share...................... $ 1.16 $ 1.16 $ 1.08 $ 1.02 $ 0.96
====== ====== ====== ====== ======
Average Outstanding Shares.................... 213.8 217.6 217.2 220.5 219.8
====== ====== ====== ====== ======
BALANCE SHEET DATA: (at end of period)
Working Capital............................. $1,714 $1,474 $1,426 $2,232 $2,080
Total Assets................................ 7,971 8,976 8,160 5,539 5,310
Long-Term Debt.............................. 156 156 167 17 11
Shareowners' Equity......................... 4,811 4,256 3,782 3,356 2,956
RATIO OF EARNINGS TO FIXED CHARGES(5)......... 11.1 9.8 10.3 11.3 10.0
</TABLE>
- ---------------
(1) The divested business is the Semiconductor Systems Local Area Networking
product line.
(2) In 1997, purchased research and development of $30 million and $23 million
relates to the acquisition of a Semiconductor Systems business and the
remaining interest in an Automation software business, respectively. In
1996, purchased research and development relates to the acquisition of a
Semiconductor Systems business.
(3) The 1996 restructuring charge relates to the business segments as follows:
Automation, $11 million; Avionics & Communications, $50 million; and
Corporate, $15 million.
(4) Includes special charges of $42 million, or 20 cents per share, in 1997 and
$121 million, or 56 cents per share, in 1996 relating to the write-off of
purchased research and development in connection with acquisitions.
(5) In computing the ratio of earnings to fixed charges, earnings are defined as
income from continuing operations before income taxes, adjusted for minority
interest income or loss of subsidiaries, undistributed earnings of
affiliates, and fixed charges exclusive of capitalized interest. Fixed
charges consist of interest on borrowings and that portion of rentals deemed
representative of the interest factor.
4
<PAGE> 15
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to a limited number of purchasers or to a
single purchaser; or (iii) through agents. The Prospectus Supplement with
respect to the Offered Debt Securities sets forth the terms of the offering of
the Offered Debt Securities, including the name or names of any underwriters and
the respective amounts of the Offered Debt Securities underwritten or purchased
by each of them, the purchase price of the Offered Debt Securities and the
proceeds to the Company from such sale, any discounts, commissions or other
items constituting compensation from the Company, any initial public offering
price and any discounts, commissions or concessions allowed or reallowed or paid
to dealers and any securities exchanges on which the Offered Debt Securities may
be listed.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The Debt
Securities may be either offered to the public through underwriting syndicates
represented by managing underwriters, or directly by underwriters. Unless
otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase the Offered Debt Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all the
Offered Debt Securities if any are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
In connection with an offering of Debt Securities, underwriters may engage
in transactions that stabilize, maintain or otherwise affect the price of the
Debt Securities. Specifically, underwriters may over-allot in connection with
the offering, creating a syndicate short position. In addition, underwriters may
bid for, and purchase, Debt Securities in the open market to cover syndicate
short positions or to stabilize the price of the Debt Securities. The
underwriting syndicate may also reclaim selling concessions allowed for
distributing the Debt Securities in the offering if the syndicate repurchases
previously distributed Debt Securities in syndicate covering transactions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Debt Securities above independent market
levels. Underwriters are not required to engage in these activities, and may end
any of these activities at any time.
Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Offered Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain purchasers to
purchase Offered Debt Securities from the Company at the public offering price
set forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the Prospectus
Supplement, and the Prospectus Supplement will set forth the commission payable
for solicitation of such contracts and the date or dates in the future for
delivery of the Offered Debt Securities pursuant to such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for the Company in the ordinary course of business.
5
<PAGE> 16
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (the Indenture)
dated as of December 1, 1996 between the Company and The Chase Manhattan Bank
(successor to Mellon Bank, N.A.), as trustee (the Trustee). Copies of the
Indenture may be obtained from the Commission in the manner set forth above
under "Available Information". Certain provisions of the Indenture are
summarized below. Such summaries are subject to, and are qualified by reference
to, all provisions of the Indenture, including the definitions therein of
certain terms. Numerical references in parentheses below are to sections of the
Indenture. Whenever particular provisions or sections of the Indenture or terms
defined therein are referred to herein, such provisions, sections or definitions
are incorporated by reference as a part of the statements made, and the
statements are qualified by such reference. Unless otherwise indicated,
capitalized terms used herein that are defined in the Indenture shall have the
meanings ascribed to such terms in the Indenture.
The description below sets forth certain general terms and provisions of
the Debt Securities. The specific terms of the Offered Debt Securities, as well
as any modifications of or additions to the general terms of the Debt Securities
set forth below that may be applicable in the case of the Offered Debt
Securities, are described in the Prospectus Supplement. Accordingly, for a
description of the terms of the Offered Debt Securities, reference must be made
to both the Prospectus Supplement and the description of the Debt Securities set
forth in this Prospectus.
GENERAL
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued thereunder up
to the aggregate principal amount which may be authorized from time to time by
the Company in one or more series. Under the Indenture, the Company has the
ability to issue Debt Securities with terms different from those of Debt
Securities previously issued thereunder, and without the consent of the holders
thereof, to issue additional amounts of a series of Debt Securities (with
different dates for payments, different rates of interest and in a different
Currency or Currencies). Reference is made to the Prospectus Supplement for the
following terms of the Offered Debt Securities, as applicable: (1) the title of
the Offered Debt Securities; (2) any limit on the aggregate principal amount of
the Offered Debt Securities and any limit on the aggregate principal amount of
Debt Securities of such series; (3) if other than Dollars, the Currency or
Currencies in which the Offered Debt Securities are to be denominated, the
manner in which the Dollar equivalent of the principal amount is to be
determined upon original issuance and if any payment of principal of (or
premium, if any) or interest, if any, on or any other amount in respect of the
Offered Debt Securities will be payable other than in Dollars, the Currency or
Currencies in which such payment shall be payable; (4) the date or dates, or the
method by which such date or dates will be determined or extended, on which the
principal of (and premium, if any, on) the Offered Debt Securities will be
payable; (5) the rate or rates, or the method of determination thereof, at which
the Offered Debt Securities shall bear interest, if any, the date or dates from
which such interest shall accrue or the method by which such date or dates shall
be determined, the date or dates on which such interest shall be payable and for
any Registered Securities the Regular Record Dates, if any, for such interest
payment dates, or the method by which such date or dates shall be determined,
and the basis on which any interest shall be calculated if other than on the
basis of a 360-day year of twelve 30-day months; (6) the place or places where
principal of (and premium, if any) and interest, if any, on the Offered Debt
Securities may be payable, where any Registered Securities may be surrendered
for registration of transfer and where Offered Debt Securities may be exchanged
and notices and demands may be served or published; (7) the period or periods
within which, the price or prices at which, the Foreign Currency or Foreign
Currencies, if any, in which and the other terms and conditions upon which the
Offered Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (8) the obligation, if any, of the Company to redeem or purchase
the Offered Debt Securities pursuant to any sinking fund or analogous provisions
or at the option of a holder thereof and the period or periods within which, the
price or prices at which, the Foreign Currency or Foreign Currencies, if any, in
which, and the other terms and conditions upon which Offered Debt Securities
shall be redeemed or purchased, in whole or in part, pursuant to such
obligation; (9) the denomination of any Registered Security (if other than
$1,000 or any integral multiple thereof) and of any Bearer Security (if other
than $10,000 or any integral multiple thereof); (10) the
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<PAGE> 17
portion of the principal amount of the Offered Debt Securities, if other than
the principal amount thereof, payable upon acceleration of Maturity thereof or
the method by which such portion shall be determined; (11) whether Offered Debt
Securities are to be Registered Securities, Bearer Securities or both, are to be
issuable with or without coupons or both, and the terms upon which Bearer
Securities may be exchanged for Registered Securities, if other than in the
manner provided in the Indenture, and, in the case of Bearer Securities, the
date as of which such Bearer Securities shall be dated (if other than the date
of original issuance of the first security of like tenor and term to be issued);
(12) whether Offered Debt Securities are to be issued in whole or in part in the
form of a Global Security, and in such case the Depositary, whether such global
form is temporary or permanent, whether beneficial owners of interests in any
Permanent Global Security may exchange such interests for Debt Securities of
such series in certificated form and of like tenor of any authorized form and
denomination and the circumstances under which any such exchanges may occur, if
other than in the manner provided in the Indenture, and any applicable Exchange
Date; (13) whether any additional amounts will be payable by the Company on the
Offered Debt Securities in respect of any tax, assessment or governmental charge
and, if so, whether the Company will have the option to redeem the Offered Debt
Securities rather than pay such additional amounts (and the terms and conditions
of any such option); (14) if the amount of payments of principal of (and
premium, if any) or interest, if any, on the Offered Debt Securities may be
determined with reference to an index, the manner in which such amounts shall be
determined; (15) the person to whom any interest on any Registered Security
shall be payable, if other than the person in whose name such Registered
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date, the manner in which, or person to whom, any
interest on any Bearer Security will be payable, if other than upon presentation
and surrender of the coupons appertaining thereto as they mature, and the extent
to which any interest payable on an Interest Payment Date on any temporary
Global Security will be paid if other than in the manner provided in the
Indenture; (16) any Events of Default or covenants applicable to the Offered
Debt Securities if other than as set forth in the Indenture; (17) the
application, if any, of the defeasance or covenant defeasance provisions of the
Indenture to the Offered Debt Securities; (18) the designation of the initial
Exchange Rate Agent, if applicable; (19) the terms and conditions upon which the
Offered Debt Securities will be convertible into or exchangeable for Common
Stock, if applicable; (20) if other than the Trustee, the identity of the
trustee, Authenticating Agent, Security Registrar and/or Paying Agent; and (21)
any other terms of the Offered Debt Securities. (Section 3.01).
Additional provisions of the Indenture, such as interest rate reset and
extension provisions, may be made applicable to the Offered Debt Securities, as
described in the Prospectus Supplement.
If any series of Debt Securities is sold for, is payable in or is
denominated in one or more Foreign Currencies, applicable restrictions,
elections, tax consequences, specific terms and other information with respect
to such series of Debt Securities and such Foreign Currency or Foreign
Currencies shall be set forth in the Prospectus Supplement relating thereto.
If the Debt Securities are being issued as original issue discount
securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) to be sold at a substantial discount below the
stated principal amount, the United States federal income tax consequences and
other considerations applicable to such original issue discount securities will
be described in the Prospectus Supplement relating thereto.
The Debt Securities will be unsecured and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company, unless otherwise
indicated in the applicable Prospectus Supplement. Other than the protections
which may otherwise be afforded holders of Debt Securities as a result of the
operation of the covenants described under "Covenants" below or as may be made
applicable to the Offered Debt Securities as described in the Prospectus
Supplement, there are no covenants or other provisions which may afford holders
of Debt Securities protection in the event of a leveraged buyout or other highly
leveraged transaction involving the Company or any similar occurrence.
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FORM, DENOMINATIONS, REGISTRATION, TRANSFER AND EXCHANGE
Debt Securities of a series may be issuable solely as Registered
Securities, solely as Bearer Securities or as both Registered Securities and
Bearer Securities. Unless otherwise provided in the applicable Prospectus
Supplement, Registered Securities denominated in Dollars (other than Registered
Securities in global form, which may be in any denomination) are issuable in
denominations of $1,000 and any integral multiple thereof and Bearer Securities
denominated in Dollars (other than Bearer Securities in global form, which may
be in any denomination) are issuable in denominations of $10,000 and any
integral multiple thereof. The Indenture provides that Debt Securities of a
series may be issuable in global form. See "Global Securities" below. Unless
otherwise indicated in the applicable Prospectus Supplement, Bearer Securities
(other than Global Securities) will have interest coupons attached. (Sections
2.01 and 3.02).
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations, of
like aggregate principal amount, tenor and terms. In addition, if Debt
Securities of any series are issuable as both Registered Securities and Bearer
Securities, at the option of the holder, but subject to applicable laws, upon
request confirmed in writing and subject to the terms of the Indenture, Bearer
Securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such series will be exchangeable into Registered
Securities of the same series of any authorized denominations and of like
aggregate principal amount, tenor and terms. Bearer Securities surrendered in
exchange for Registered Securities of the same series between the close of
business on a Regular Record Date or a Special Record Date and the relevant date
for payment of interest shall be surrendered without the coupon relating to such
date for payment of interest, and interest will not be payable in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the holder of such coupon when due in accordance with the terms
of the Indenture. Unless otherwise specified in the applicable Prospectus
Supplement, Bearer Securities will not otherwise be issued in exchange for
Registered Securities. (Section 3.05).
In connection with its original issuance, no Bearer Security shall be
mailed or otherwise delivered to any location in the United States (as defined
below under "Limitations on Issuance of Bearer Securities") and, unless
otherwise specified in the applicable Prospectus Supplement, a Bearer Security
may be delivered in connection with its original issuance only if the person
entitled to receive such Bearer Security furnishes written certification, in the
form required by the Indenture.
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (duly
endorsed or accompanied by a satisfactory written instrument of transfer), at
the office of the Security Registrar or at the office of any transfer agent
designated by the Company for such purpose with respect to such series of Debt
Securities, without service charge and upon payment of any taxes and other
governmental charges. (Section 3.05). If the Prospectus Supplement refers to any
transfer agent (in addition to the Security Registrar) initially designated by
the Company with respect to any series of Debt Securities, the Company may at
any time rescind the designation of any such transfer agent or approve a change
in the location through which any such transfer agent (or Security Registrar)
acts, except that, if Debt Securities of a series are issuable as Registered
Securities, the Company will be required to maintain a transfer agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as Bearer Securities, the Company will be required to maintain (in
addition to the Security Registrar) a transfer agent in a Place of Payment for
such series located outside the United States. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities. (Section 10.02).
In the event of any redemption, the Company shall not be required to (i)
issue, register the transfer of or exchange Debt Securities of any series during
a period of 15 days before any selection of Debt Securities of that series to be
redeemed and ending at the close of business on (A) if Debt Securities of the
series are issuable only as Registered Securities, the day of mailing of the
relevant notice of redemption and (B) if Debt Securities of the series are
issuable as Bearer Securities, the day of the first publication of the relevant
notice of redemption or, if Debt Securities of the series are also issuable as
Registered Securities and there is no publication, the mailing of the relevant
notice of redemption; (ii) register the transfer of or exchange any Registered
Security so selected for redemption in whole or in part, except the unredeemed
portion of any
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<PAGE> 19
Registered Security being redeemed in part; or (iii) exchange any Bearer
Security selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of like tenor and terms of that series,
provided that such Registered Security shall be simultaneously surrendered for
redemption. (Section 3.05).
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a Depositary identified in the Prospectus Supplement relating to such series
and registered in the name of the Depositary or the Depositary's nominee. Global
Securities may be issued in fully registered or bearer form and may be issued in
either temporary or permanent form.
The Company anticipates that the following provisions will generally apply
to depository arrangements. The specific terms of the depository arrangement
with respect to a series of Debt Securities and whether all or any part of
Offered Debt Securities will be issued in the form of one or more Global
Securities will be described in the Prospectus Supplement relating to such
series.
Unless and until it is exchanged in whole or in part for the individual
Debt Securities represented thereby, a Global Security may not be transferred
except as a whole between the Depositary for such Global Security and its
nominee or by the Depositary or any nominee to a successor of the Depositary or
a nominee of such successor.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary (Participants). Such accounts shall be designated
by the underwriters, dealers or agents with respect to such Debt Securities or
by the Company if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a Global Security will be limited
to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the applicable Depositary or its nominee (with respect to interests of
Participants) and records of Participants (with respect to interests of persons
who hold through Participants). The laws of some states require that certain
purchasers of securities take physical delivery of securities in definitive
form. Such limits and such laws may impair the ability to own, pledge or
transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to have any of the individual Debt Securities of
the series represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of any such Debt
Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. None of the Company, the Trustee, any Paying
Agent or the Security Registrar for such Debt Securities or any agent,
underwriter or dealer through which such Debt Securities are offered or sold
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company expects that the Depositary for a series of Debt Securities or
its nominee, upon receipt of any payment of principal (or premium, if any) or
interest, if any, in respect of a permanent Global Security representing any of
such Debt Securities, immediately will credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security for such Debt Securities as shown
on the records of such Depositary or its nominee. The Company also
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<PAGE> 20
expects that payments by Participants to owners of beneficial interests in such
Global Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name".
Such payments will be the responsibility of such Participants.
If a Depositary for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depository and a successor depository is not
appointed by the Company within 90 days, the Company will issue individual Debt
Securities of such series to Participants in exchange for the Global Security
representing such series of Debt Securities. In addition, the Company may, at
any time and in its sole discretion, subject to any limitations described in the
Prospectus Supplement relating to such Debt Securities, determine not to have
any Debt Securities of such series represented by one or more Global Securities
and, in such event, will issue individual Debt Securities of such series to
Participants in exchange for the Global Security or Securities representing such
series of Debt Securities. (Section 3.05).
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, in
compliance with United States federal tax laws and regulations, Bearer
Securities (including Debt Securities in global form) may not be offered, sold,
resold or delivered in connection with their original issuance in the United
States or to United States persons (each as defined below) other than to a
Qualifying Branch of a United States Financial Institution (as defined below) or
a United States person acquiring Bearer Securities through a Qualifying Branch
of a United States Financial Institution and any underwriters, agents and
dealers participating in the offering of Debt Securities must agree that they
will not offer any Bearer Securities for sale or resale in the United States or
to United States persons (other than a Qualifying Branch of a United States
Financial Institution or a United States person acquiring Bearer Securities
through a Qualifying Branch of a United States Financial Institution) or deliver
Bearer Securities within the United States. In addition, any such underwriters,
agents and dealers must agree to send confirmations to each purchaser of a
Bearer Security confirming that such purchaser represents that it is not a
United States person or is a Qualifying Branch of a United States Financial
Institution and, if such person is a dealer, that it will send similar
confirmations to purchasers from it. The term "Qualifying Branch of a United
States Financial Institution" means a branch located outside the United States
of a United States securities clearing organization, bank or other financial
institution listed under Treasury Regulation Section 1.165-12(c)(1)(v) that
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the United States Internal Revenue Code of 1986, as amended (the Code), and the
regulations thereunder.
Bearer Securities and any coupons appertaining thereto will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code." Under Sections 165(j) and 1287(a) of the Code, holders
that are United States persons, with certain exceptions, will not be entitled to
deduct any loss on Bearer Securities and must treat as ordinary income any gain
realized on the sale or other disposition (including the receipt of principal)
of Bearer Securities.
The term "United States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision thereof, and
an estate or trust the income of which is subject to United States federal
income taxation regardless of its source, and the term "United States" means the
United States of America (including the states and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction.
PAYMENT AND PAYING AGENTS
Unless otherwise provided in the applicable Prospectus Supplement, the
Place of Payment for a series of Debt Securities issuable solely as Registered
Securities will be New York, New York and the Company has initially designated
an office of the Trustee for this purpose. Notwithstanding the foregoing, at the
option of
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the Company, interest, if any, may be paid on Registered Securities by (i) check
mailed to the address of the person entitled thereto as such person's address
appears in the Security Register or (ii) transfer to an account located in the
United States maintained by the person entitled thereto as specified in the
Security Register. (Sections 3.07, 10.01 and 10.02). Unless otherwise provided
in the applicable Prospectus Supplement, payment of any installment of interest
on Registered Securities will be made to the person in whose name such
Registered Security is registered at the close of business on the Regular Record
Date for such interest payment. (Section 3.07).
If Debt Securities of a series are issuable as Bearer Securities, unless
otherwise provided in the applicable Prospectus Supplement, the Company will be
required to maintain an office or agency outside the United States at which,
subject to any applicable laws and regulations, the principal of (and premium,
if any) and interest, if any, on such series will be payable; provided that, if
required in connection with any listing of such Debt Securities on The Stock
Exchange of the United Kingdom and the Republic of Ireland, the Luxembourg Stock
Exchange or any other stock exchange located outside the United States, the
Company will maintain an office or agency for such Debt Securities in London or
Luxembourg or any city located outside the United States required by such stock
exchange. (Section 10.02). The initial locations of such offices and agencies
will be specified in the applicable Prospectus Supplement. Unless otherwise
provided in the applicable Prospectus Supplement, payment of principal of (and
premium, if any) and interest, if any, on Bearer Securities may be made, at the
holder's option, by (i) check in the Currency designated by the Bearer Security
presented or mailed to an address outside the United States or (ii) transfer to
an account in such Currency maintained by the person entitled thereto with a
bank located outside the United States. (Sections 3.07 and 10.02). Unless
otherwise provided in the applicable Prospectus Supplement, payment of
installments of interest on any Bearer Securities on or before Maturity will be
made only against surrender of coupons for such interest installments as they
severally mature. (Section 10.01). Unless otherwise provided in the applicable
Prospectus Supplement, no payment with respect to any Bearer Security will be
made at any office or agency of the Company in the United States or by check
mailed to an address in the United States or by transfer to an account
maintained with a bank located in the United States. Notwithstanding the
foregoing, payments of principal of (and premium, if any) and interest, if any,
on Bearer Securities payable in Dollars may be made at an office of the
Company's Paying Agent in the United States if (but only if) payment of the full
amount thereof in Dollars at all offices outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions and the
Trustee has received an Opinion of Counsel that such payment within the United
States is legal. (Sections 3.07 and 10.02).
The Company may from time to time designate additional offices or agencies
for payment with respect to any Debt Securities, approve a change in the
location of any such office or agency and, except as provided above, rescind the
designation of any such office or agency.
Unless otherwise provided in the applicable Prospectus Supplement, all
payments of principal of (and premium, if any) and interest, if any, on any Debt
Security that is payable in a Currency other than Dollars will be made in
Dollars in the event that such Currency (i) ceases to be used both by the
government of the country that issued the Currency and by a central bank or
other public institution of or within the international banking community for
the settlement of transactions, (ii) is the ECU and ceases to be used both
within the European Monetary System and for the settlement of transactions by
public institutions of or within the European Communities or (iii) is any
Currency unit (or composite Currency) other than the ECU and ceases to be used
for the purposes for which it was established. (Section 3.10).
All moneys deposited with the Trustee or any Paying Agent or held for the
payment of principal of (or premium, if any) or interest, if any, on any Debt
Security or any coupon appertaining thereto that remains unclaimed at the end of
two years after such principal, premium or interest shall have become due and
payable will, at the request of the Company, be repaid to the Company and the
holder of such Debt Security or any coupon appertaining thereto will thereafter
look only to the Company for payment thereof. (Section 10.03).
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CONVERTIBLE DEBT SECURITIES
The terms and conditions upon which any convertible Debt Securities of a
series may be converted into shares of Common Stock, including the initial
conversion price or rate and the conversion period, and other provisions
applicable thereto, will be set forth in the Prospectus Supplement relating
thereto. See "Description of Capital Stock".
CERTAIN DEFINITIONS
"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary. "Unrestricted Subsidiary" means any Subsidiary
designated as such from time to time by the Company. (Section 1.01). Subject to
various limitations, the Company may from time to time designate any Restricted
Subsidiary as an Unrestricted Subsidiary and any Unrestricted Subsidiary as a
Restricted Subsidiary. (Section 10.07). Unrestricted Subsidiaries will not be
restricted by the various provisions of the Indenture applicable to Restricted
Subsidiaries, and the debt of Unrestricted Subsidiaries will not be consolidated
with that of the Company and its Restricted Subsidiaries in calculating
Consolidated Funded Debt under the Indenture.
"Secured Debt" means indebtedness for money borrowed (other than
indebtedness among the Company and Restricted Subsidiaries), which is secured by
a mortgage or other lien on any Principal Property of the Company or a
Restricted Subsidiary or a pledge, lien or other security interest on the stock
or indebtedness of a Restricted Subsidiary. (Section 1.01).
"Funded Debt" means (a) indebtedness for money borrowed having a maturity
of more than 12 months, (b) certain obligations in respect of lease rentals and
(c) the higher of the par value or liquidation value of preferred stock of a
Restricted Subsidiary that is not owned by the Company or a Wholly-owned
Restricted Subsidiary, but, in the case of the Company, does not include certain
debt subordinate to the Debt Securities. (Section 1.01).
"Principal Property" includes any real property (including buildings and
other improvements) of the Company or any Restricted Subsidiary, owned at the
date of the Indenture or thereafter acquired (other than any pollution control
facility, cogeneration facility or small power production facility acquired
after the date of the Indenture), which (i) has a book value in excess of 5% of
Shareowners' Equity and (ii) in the opinion of the Board of Directors is of
material importance to the total business conducted by the Company and its
Restricted Subsidiaries as a whole. (Section 1.01).
"Sale and Lease-Back Transaction" means, subject to certain exceptions,
sales or transfers of any Principal Property owned by the Company or any
Restricted Subsidiary which has been in full operation for more than 180 days
prior to such sale or transfer, where the Company or such Restricted Subsidiary
has the intention of leasing back such property for more than 36 months but
discontinuing the use of such property on or before the expiration of the term
of such lease. (Section 10.06).
"Shareowners' Equity" means, at any date of computation, the aggregate of
capital stock, capital surplus and earned surplus, after deducting the cost of
shares of capital stock of the Company held in its treasury, of the Company and
its Restricted Subsidiaries, as consolidated and determined in accordance with
generally accepted accounting principles. (Section 1.01).
COVENANTS
Limitations on Liens. The Company and its Restricted Subsidiaries are
prohibited from creating, incurring, assuming or suffering to exist any Secured
Debt without equally and ratably securing the outstanding Debt Securities. The
foregoing restrictions are not applicable to (i) Secured Debt existing at the
date of the Indenture; (ii) liens on property acquired or constructed after the
date of the Indenture by the Company or a Restricted Subsidiary and created
contemporaneously with, or within twelve months after, such acquisition or the
completion of such construction to secure all or any part of the purchase price
of such property or the cost of such construction; (iii) mortgages on property
of the Company or a Restricted Subsidiary created within twelve months of
completion of construction of a new plant or plants on such property to secure
all or part of the cost of such construction; (iv) liens on property existing at
the time such property is acquired; (v) liens on stock acquired after the date
of the Indenture by the Company or a
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Restricted Subsidiary if the aggregate cost thereof does not exceed 10% of
Shareowner's Equity; (vi) liens securing indebtedness of a successor corporation
to the Company to the extent permitted by the Indenture; (vii) liens securing
indebtedness of a Restricted Subsidiary outstanding at the time it became a
Restricted Subsidiary; (viii) liens securing indebtedness of any person
outstanding at the time it is merged with or substantially all its properties
are acquired by the Company or any Restricted Subsidiary; (ix) liens on property
or on the outstanding shares or indebtedness of a corporation existing at the
time such corporation becomes a Restricted Subsidiary; (x) liens created,
incurred or assumed in connection with an industrial revenue bond, pollution
control bond or similar financing arrangement between the Company or any
Restricted Subsidiary and any Federal, state or municipal government or other
governmental body or agency; (xi) extensions, renewals or replacements of the
foregoing permitted liens to the extent of the original amounts thereof; (xii)
liens in connection with government and certain other contracts; (xiii) certain
liens in connection with taxes or legal proceedings; (xiv) certain other liens
not related to the borrowing of money; and (xv) liens in connection with Sale
and Lease-Back Transactions as described under "Limitations on Sale and
Lease-Back". (Section 10.05).
In addition, the Company and its Restricted Subsidiaries may have Secured
Debt not otherwise permitted without equally and ratably securing the
outstanding Debt Securities if the sum of (a) the amount of such Secured Debt
plus (b) the aggregate value of Sale and Lease-Back Transactions (subject to
certain exceptions) described below, does not exceed 10% of Shareowners' Equity.
(Section 10.05).
Limitations on Sale and Lease-Back. Sale and Lease-Back Transactions are
prohibited unless (a) the Company or its Restricted Subsidiaries would be
entitled to incur Secured Debt equal to the amount realizable upon such sale or
transfer secured by a mortgage on the property to be leased without equally and
ratably securing the outstanding Debt Securities; or (b) an amount equal to the
greater of net proceeds of the sale or fair value of the property sold as
determined by the Board of Directors is applied within 180 days of any such
transaction (i) to the retirement of Consolidated Funded Debt or indebtedness of
the Company or a Restricted Subsidiary that was Funded Debt at the time it was
created or (ii) to the purchase of other Principal Property having a value at
least equal to the greater of such amounts; or (c) the Sale and Lease-Back
Transaction involved was an industrial revenue bond, pollution control bond or
similar financing arrangement between the Company or any Restricted Subsidiary
and any Federal, state, municipal government or other governmental body or
agency. (Section 10.06).
Certain Limitations on Merger of the Company. The Company may consolidate
with or merge into any other corporation, or convey or transfer its properties
and assets substantially as an entirety to any other Person, provided certain
specified conditions are met. (Sections 8.01 and 8.02). If, upon any
consolidation or merger of the Company with or into any other corporation or
upon any conveyance or transfer of its properties and assets substantially as an
entirety to any other Person, any Principal Property of the Company or a
Restricted Subsidiary would thereupon become subject to any mortgage, security
interest, pledge, lien or encumbrance not otherwise permitted under the
Indenture, the Company will, prior to such transaction, secure the outstanding
Debt Securities, equally and ratably with any other indebtedness of the Company
then entitled to be so secured, by a direct lien on such Principal Property and
certain other properties. (Section 8.03). The successor corporation formed by
any consolidation or merger, or any conveyance or transfer of the properties and
assets of the Company substantially as an entirety, shall succeed to and be
substituted for the Company under the Indenture and thereafter the Company shall
be relieved of all obligations and covenants under the Indenture, the Debt
Securities and any coupons. (Section 8.02).
DEFEASANCE AND COVENANT DEFEASANCE
Defeasance. The Indenture provides as to any series of Debt Securities to
which the provisions described in this paragraph are made applicable, that the
Company will be discharged from any and all obligations in respect of the Debt
Securities of such series (except for certain obligations to register the
transfer and exchange of such Debt Securities, to replace mutilated, destroyed,
lost or stolen Debt Securities, to compensate, reimburse and indemnify the
Trustee, to maintain an office or agency with respect to the Debt Securities and
to hold moneys for payment in trust) upon irrevocable deposit with the Trustee,
in trust, of money or U.S. government securities (as described in the Indenture)
or a combination thereof, which through
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the payment of interest and principal in respect thereof in accordance with
their terms will provide money in an amount sufficient to pay and discharge (i)
the principal of (and premium, if any) and each installment of principal of (and
premium, if any) and interest, if any, on such Debt Securities on the Stated
Maturity of such principal or installment of principal or interest, if any, and
(ii) any mandatory sinking fund payments or analogous payments applicable to
Debt Securities of such series on the day on which such payments are due and
payable in accordance with the terms of the Indenture and such Debt Securities.
Such a trust may only be established if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel (as specified in the Indenture)
to the effect that the holders of such Debt Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to Federal income tax on
the same amount and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred. Such
opinion must refer to or be based upon a ruling of the Internal Revenue Service
or a change in applicable Federal income tax law occurring after the date of the
Indenture. In the event of any such deposit and discharge, the holders of such
Debt Securities would thereafter be entitled to look only to such trust fund for
payment of principal of (and premium, if any) and interest, if any, on the Debt
Securities. (Section 4.03).
Covenant Defeasance. The Indenture provides as to any series of Debt
Securities to which the provisions described in this paragraph are made
applicable, that (i) the Company may omit to comply with the covenants contained
in Sections 10.05 (Limitations on Liens), 10.06 (Limitations on Sale and Lease-
Back) and 10.07 (Limitations on Change in Subsidiary Status) of the Indenture
and (ii) such noncompliance shall not be deemed to be an Event of Default under
the Indenture and the Debt Securities upon irrevocable deposit with the Trustee,
in trust, of money or U.S. government securities or a combination thereof, which
through the payment of interest and principal in respect thereof in accordance
with their terms will provide money in an amount sufficient to pay and discharge
(x) the principal of (and premium, if any) and each installment of principal of
(and premium, if any) and interest, if any, on such Debt Securities on the
Stated Maturity of such principal or installment of principal or interest, if
any, and (y) any mandatory sinking fund payments or analogous payments
applicable to Debt Securities of such series on the day on which such payments
are due and payable in accordance with the terms of the Indenture and such Debt
Securities. Such a trust may be established only if, among other things, the
Company has delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the holders of such Debt Securities will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit and defeasance of certain obligations and will be subject to
Federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred. The obligations of the Company under the Indenture and Debt Securities
other than with respect to the covenants referred to above and the Events of
Default other than the Event of Default referred to above shall remain in full
force and effect. (Section 10.09).
The Prospectus Supplement will state if any defeasance provision will apply
to the Debt Securities.
MODIFICATION OF INDENTURE AND WAIVER OF CERTAIN COVENANTS
With the consent of the holders of at least a majority in principal amount
of the outstanding Debt Securities of each series affected, the Trustee and the
Company may execute a supplemental indenture to change the Indenture or modify
the rights of the holders of Debt Securities of any such series, but, without
the consent of the holder of each outstanding Debt Security so affected, a
supplemental indenture may not, among other things, (i) change the maturity of
principal or interest, if any, on any Debt Security, or reduce the principal
amount thereof or the rate of interest, if any, thereon or any premium payable
on redemption, or (ii) reduce the aforesaid percentage of holders of Debt
Securities of such series whose consent shall be required to authorize any such
supplemental indenture. (Section 9.02).
The holders of a majority in principal amount of the Debt Securities of any
series at the time outstanding may waive compliance by the Company with certain
covenants in the Indenture with respect to Debt Securities of such series.
(Section 10.08).
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The Indenture provides that in determining whether the holders of the
requisite principal amount of the Debt Securities of a series then outstanding
have given any request, demand, authorization, direction, notice, consent or
waiver thereunder or whether a quorum is present at a meeting of holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security that
will be deemed to be outstanding will be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof, (ii) the principal amount of a Security
denominated in one or more Foreign Currencies shall be deemed to be the Dollar
equivalent, determined on the date of original issuance of such Security, of the
principal amount thereof (or, in the case of an Original Issue Discount Security
or Indexed Security, the Dollar equivalent on the original issuance date of such
Security of the principal amount determined as provided in (i) above or (iii)
below), (iii) the principal amount of any Indexed Security that will be deemed
outstanding will be equal to the principal face amount of such Indexed Security
at original issuance unless otherwise provided with respect to such Security
pursuant to the Indenture, and (iv) Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such obligor
will be disregarded and deemed not to be outstanding. (Section 1.01).
The Indenture contains provisions for convening meetings of the holders of
Debt Securities of a series if Debt Securities of that series are issuable as
Bearer Securities. (Section 13.01). A meeting may be called at any time by the
Trustee for such Debt Securities, and also, upon request, by the Company or the
holders of at least 10% in principal amount of the outstanding Debt Securities
of such series, in any such case upon notice given as provided in the Indenture.
(Section 13.02). Except for any consent that must be given by the holder of each
Debt Security affected thereby, as described above, any resolution presented at
a meeting or adjourned meeting duly reconvened at which a quorum is present may
be adopted by the affirmative vote of the holders of a majority in principal
amount of the outstanding Debt Securities of that series; provided, however,
that any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action that may be made, given or
taken by the holders of a specified percentage in principal amount of Debt
Securities of a series may be adopted at a meeting or adjourned meeting duly
reconvened at which a quorum is present by the affirmative vote of the holders
of such specified percentage in principal amount of the outstanding Debt
Securities of that series. Any resolution passed or decision taken at any
meeting of holders of Debt Securities of any series duly held in accordance with
the Indenture will be binding on all holders of Debt Securities of that series.
The quorum at any meeting called to adopt a resolution, and at any reconvened
meeting, will be persons holding or representing a majority in principal amount
of the outstanding Debt Securities of a series; provided, however, that if any
action is to be taken at such meeting with respect to a consent or waiver which
may be given by the holders of not less than a specified percentage, which is
greater than a majority, in principal amount of the outstanding Debt Securities
of a series, the persons holding or representing such specified percentage in
principal amount of the Debt Securities of such series will constitute a quorum.
(Section 13.04).
DEFAULTS AND CERTAIN RIGHTS ON DEFAULT
An Event of Default with respect to any series of Debt Securities is
defined as being any of the following events and such other events as may be
established for the Debt Securities of such series: default for 30 days in
payment of any interest on the Debt Securities of such series; default in
payment of principal of (and premium, if any, on) the Debt Securities of such
series at Maturity; default for 5 days in payment of any sinking fund payment
with respect to Debt Securities of such series; default for 90 days after notice
in performance of any other covenant in the Indenture; or certain events of
bankruptcy, insolvency, receivership or reorganization relating to the Company.
An Event of Default with respect to Debt Securities of a particular series does
not necessarily constitute an Event of Default with respect to any other series.
The Company will be required to deliver to the Trustee annually a written
statement as to the fulfillment of its obligations under the Indenture. In case
an Event of Default should occur and be continuing with respect to any series of
Debt Securities, the Trustee or the holders of at least 25% in principal amount
of the Debt Securities of such series then outstanding may declare the principal
of all the Debt Securities of such series to be due and payable. Such
declaration may, under certain circumstances, be rescinded by the holders of a
majority in principal amount of the Debt Securities of such series at the time
outstanding. (Sections 5.01, 5.02 and 10.04).
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Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
shall be under no obligation to exercise any of the rights or powers under the
Indenture at the request or direction of any of the holders of Debt Securities,
unless such holders of Debt Securities shall have offered to the Trustee
reasonable security or indemnity. Subject to such provisions for indemnification
and certain limitations contained in the Indenture, the holders of a majority in
principal amount of the Debt Securities of any series at the time outstanding
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to Debt Securities of such series.
The holders of a majority in principal amount of the Debt Securities of any
series at the time outstanding may, in certain cases, waive any past default
with respect to Debt Securities of such series except a default in payment of
principal of, or premium, if any, or interest on any of the Debt Securities of
such series. (Sections 5.12, 5.13 and 6.03).
GOVERNING LAW
The Indenture and the Debt Securities and any coupons appertaining thereto
will be governed by and construed in accordance with the laws of the State of
New York. (Section 1.12).
CONCERNING THE TRUSTEE
The Trustee is one of a number of banks with which the Company maintains
ordinary banking relationships and with which the Company maintains credit
facilities.
DESCRIPTION OF CAPITAL STOCK
The following description of the capital stock of the Company, as amended
or superseded by the applicable Prospectus Supplement, includes a summary of
certain provisions of the Company's Restated Certificate of Incorporation, as
amended (the Certificate of Incorporation), and its By-Laws (the By-Laws). Such
description is subject to the detailed provisions of, and is qualified by
reference to, the Certificate of Incorporation and the By-Laws, copies of which
have been filed as exhibits to the Registration Statement of which this
Prospectus is a part.
GENERAL
The Company is authorized to issue (i) 1,000,000,000 shares of Common Stock
and (ii) 25,000,000 shares of Preferred Stock, without par value (Preferred
Stock), of which 2,500,000 shares have been designated as Series A Junior
Participating Preferred Stock (Junior Preferred Stock) for issuance in
connection with the exercise of the Rights. See "Rights Plan".
The Certificate of Incorporation authorizes the Board of Directors to
establish one or more series of Preferred Stock and to determine, with respect
to any series of Preferred Stock, the terms and rights of such series. The
authorized shares of Preferred Stock, as well as Common Stock, will be available
for issuance without further action by the Company's shareowners, unless such
action is required by applicable law or the rules of any stock exchange or
automated quotation system on which the Company's securities may be listed or
traded. If the approval of the Company's shareowners is not so required, the
Board of Directors may determine not to seek shareowner approval.
Certain of the provisions described under this section entitled
"Description of Capital Stock" could have the effect of discouraging
transactions that might lead to a change of control of the Company.
COMMON STOCK
Holders of Common Stock will be entitled to such dividends as may be
declared by the Board of Directors out of any funds of the Company legally
available therefor. Dividends may not be paid on Common Stock unless all accrued
dividends on Preferred Stock, if any, have been paid or set aside. In the event
of any liquidation, dissolution or winding up of the Company, the holders of
Common Stock will be entitled to share pro rata in the assets remaining after
payment to creditors and after payment of the liquidation preference plus
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any unpaid dividends to holders of any outstanding Preferred Stock, if any. Each
holder of Common Stock will be entitled to one vote for each such share
outstanding in such holder's name. No holder of Common Stock will be entitled to
cumulate such holder's votes in voting for directors. The Certificate of
Incorporation provides that, unless otherwise determined by the Board of
Directors, no holder of Common Stock will, as such holder, have any right to
purchase or subscribe for any stock of any class which the Company may issue or
sell.
The transfer agent and registrar for shares of Common Stock is ChaseMellon
Shareholder Services, L.L.C.
CERTAIN PROVISIONS IN THE CERTIFICATE OF INCORPORATION AND BY-LAWS
Pursuant to the Certificate of Incorporation, the number of directors will
be fixed by the Board of Directors. The directors (other than those elected by
the holders of any series of Preferred Stock or any other series or class of
stock) will be divided into three classes, each class to consist as nearly as
possible of one-third of the directors. Directors elected by shareowners at an
Annual Meeting of Shareowners will be elected by a plurality of all votes cast
at such annual meeting. The term of the successors of each such class of
directors expires three years from the year of election.
The Certificate of Incorporation contains a provision (the Fair Price
Provision) pursuant to which a Business Combination (as defined in the
Certificate of Incorporation) between the Company or a subsidiary of the Company
and an Interested Shareowner (as defined in the Certificate of Incorporation)
requires approval by the affirmative vote of the holders of not less than 80
percent of the voting power of all the outstanding capital stock of the Company
entitled to vote generally in the election of directors (the Voting Power),
voting together as a single class, unless the Business Combination is approved
by at least two-thirds of the Continuing Directors (as defined in the
Certificate of Incorporation) or certain fair price criteria and procedural
requirements specified in the Fair Price Provision are met. If either the
requisite Board of Directors approval or the fair price criteria and procedural
requirements were met, the Business Combination would be subject to the voting
requirements otherwise applicable under the Delaware General Corporation Law
(DGCL), which for most types of Business Combinations currently would be the
affirmative vote of the holders of a majority of the outstanding shares of stock
of the Company entitled to vote thereon. Any amendment or repeal of the Fair
Price Provision, or the adoption of provisions inconsistent therewith, must be
approved by the affirmative vote of the holders of not less than 80 percent of
the Voting Power, voting together as a single class, unless such amendment,
repeal or adoption were approved by at least two-thirds of the Continuing
Directors, in which case the provisions of the DGCL would require the
affirmative vote of the holders of a majority of the outstanding shares of the
Company's stock entitled to vote thereon.
The Certificate of Incorporation and the By-Laws provide that a special
meeting of shareowners may be called only by a resolution adopted by a majority
of the entire Board of Directors. Shareowners are not permitted to call, or to
require that the Board of Directors call, a special meeting of shareowners. In
addition, the Certificate of Incorporation provides that any action taken by the
shareowners of the Company must be effected at an annual or special meeting of
shareowners and may not be taken by written consent in lieu of a meeting. The
By-Laws also establish an advance notice procedure for shareowners to nominate
candidates for election as directors or to bring other business before meetings
of shareowners of the Company.
The Certificate of Incorporation provides that the affirmative vote of at
least 80 percent of the Voting Power, voting together as a single class, would
be required to (i) amend or repeal the provisions of the Certificate of
Incorporation with respect to (A) the election of directors, (B) the right to
call a special shareowners' meeting and (C) the right to act by written consent,
(ii) adopt any provision inconsistent with such provisions and (iii) amend or
repeal the provisions of the Certificate of Incorporation with respect to
amendments to the Certificate of Incorporation or the By-Laws. In addition, the
Certificate of Incorporation provides that the Board of Directors may make,
alter, amend and repeal the by-laws of the Company and that the amendment or
repeal by shareowners of any by-laws of the Company would require the
affirmative vote of at least 80 percent of the Voting Power, voting together as
a single class.
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RIGHTS PLAN
Each outstanding share of Common Stock also evidences one Right. Unless
otherwise specified in the Prospectus Supplement applicable to any convertible
Debt Securities, as long as Rights are associated with the Common Stock, the
Company currently intends to deliver one Right with each new share of Common
Stock issued, including shares issued upon conversion of such Debt Securities,
prior to the expiration or earlier redemption or exchange of the Rights, so that
all such shares of Common Stock will have associated Rights. Each Right will
entitle the registered holder to purchase from the Company one one-hundredth of
a share of Junior Preferred Stock, at $250 (the Purchase Price), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the Rights Agreement) dated as of November 30, 1996 between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent. The
following summary of certain terms of the Rights is qualified by reference to
the Rights Agreement, which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an Acquiring Person)
has acquired beneficial ownership of 20% or more of the outstanding Common Stock
or (ii) 10 business days (or such later date as may be determined by the Board
of Directors prior to such time as any person or group becomes an Acquiring
Person) following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of the outstanding
Common Stock (the earlier of such dates being called the Rights Distribution
Date), the Rights will be evidenced by Common Stock certificates.
The Rights Agreement provides that, until the Rights Distribution Date (or
until the earlier redemption or expiration of the Rights), (i) the Rights will
be transferred with and only with the Common Stock, (ii) certificates
representing Common Stock will contain a notation incorporating the terms of the
Rights by reference and (iii) the surrender for transfer of any certificates
representing Common Stock will also constitute the surrender of the Rights
associated therewith. As soon as practicable following the Rights Distribution
Date, separate certificates evidencing the Rights (Right Certificates) will be
mailed to holders of record of the Common Stock as of the close of business on
the Rights Distribution Date and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Rights Distribution Date. The
Rights will expire on December 6, 2006 (the Final Expiration Date), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed by
the Company, in each case, as described below.
The Purchase Price payable, and the number of shares of Junior Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Junior Preferred Stock, (ii) upon the grant to holders of shares of Junior
Preferred Stock of certain rights or warrants to subscribe for or purchase
shares of Junior Preferred Stock at a price, or securities convertible into
shares of Junior Preferred Stock with a conversion price, less than the then
current market price of the shares of Junior Preferred Stock or (iii) upon the
distribution to holders of shares of Junior Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in shares of Junior Preferred
Stock) or of subscription rights or warrants (other than those referred to
above). The number of outstanding Rights and the number of one one-hundredths of
a share of Junior Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Rights Distribution Date.
Shares of Junior Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. The Junior Preferred Stock will rank junior to all
series of any other class of Preferred Stock with respect to payments of
dividends and distribution of assets. Each share of Junior Preferred Stock will
be entitled to a minimum preferential quarterly dividend payment of $1 per share
but will be entitled to an aggregate dividend of 100 times the dividend declared
per share of Common Stock whenever such dividend is declared. In the
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event of liquidation, the holders of the Junior Preferred Stock will be entitled
to a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 100 times the payment made per share of
Common Stock. Each share of Junior Preferred Stock will have 100 votes, voting
together with the Common Stock. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged, each share of
Junior Preferred Stock will be entitled to receive 100 times the amount received
per share of Common Stock. These rights are protected by customary antidilution
provisions.
Because of the nature of the Junior Preferred Stock's dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a share of
Junior Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
In the event that, at any time after a person has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power is sold,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any person
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter have the right to receive upon
exercise, in lieu of shares of Junior Preferred Stock, that number of shares of
Common Stock having a market value of two times the exercise price of the Right.
At any time after any person or group of affiliated or associated persons
becomes an Acquiring Person, and prior to the acquisition by such person or
group of 50% or more of the outstanding shares of Common Stock, the Board of
Directors may exchange the Rights for Common Stock or Junior Preferred Stock
(other than Rights owned by such person or group, which will have become void
after such person became an Acquiring Person), in whole or in part, at an
exchange ratio of one share of Common Stock, or one one-hundredth of a share of
Junior Preferred Stock (or of a share of another series of Preferred Stock
having equivalent rights, preferences and privileges), per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Junior Preferred Stock will be
issued (other than fractions which are integral multiples of one one-hundredth
of a share of Junior Preferred Stock, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Junior Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Common Stock, the Board of Directors may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the Redemption Price). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors may determine, in its sole discretion.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price. The terms of the Rights may be amended by the Board of
Directors without the consent of the holders of the Rights, including an
amendment to decrease the threshold at which a person becomes an Acquiring
Person from 20% to not less than 10%, except that from and after such time as
any person becomes an Acquiring Person no such amendment may adversely affect
the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareowner of the Company including, without limitation, the right
to vote or to receive dividends.
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LEGAL MATTERS
The legality of the Debt Securities offered hereby has been passed upon for
the Company by Chadbourne & Parke LLP, 30 Rockefeller Plaza, New York, New York
10112, and if the Debt Securities are being distributed in an underwritten
offering, the legality of such Debt Securities will be passed upon for the
underwriters by Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New
York 10019-6092.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended September 30, 1997 have been audited by
Deloitte & Touche LLP, 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 in auditing and
accounting.
------------------------
NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED TO GIVE 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. 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 OR THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY BY
ANYONE IN ANY STATE 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.
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