<PAGE>
FILED PURSUANT TO RULE 424(B)3
FILE NO. 333-85653
PROSPECTUS
$450,000,000
[CERIDIAN LOGO]
EXCHANGE OFFER
FOR ALL OUTSTANDING
7.25% SENIOR NOTES DUE 2004
- ------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON WEDNESDAY, OCTOBER 20, 1999, UNLESS WE EXTEND IT.
- ------------------------------------------------------------------------------
TERMS OF THE EXCHANGE OFFER
-------------------
- - We are offering to exchange registered 7.25% Senior Notes due 2004 for all
of the old unregistered 7.25% Senior Notes due 2004.
- - The terms of the new notes will be identical in all material respects to
the terms of the old notes, except that the registration rights and related
liquidated damages provisions, and the transfer restrictions applicable to
the old notes will not be applicable to the new notes.
- - Subject to the satisfaction or waiver of specified conditions, we will
exchange the new notes for all old notes that are validly tendered and not
withdrawn prior to the expiration of the exchange offer.
- - The Bank of New York is serving as the exchange agent. If you wish to
tender your old notes, you must complete, execute and deliver, among other
things, a letter of transmittal to the exchange agent no later than 5:00
p.m., New York City time, on the expiration date.
- - You may withdraw tenders of old notes at any time prior to the expiration
of the exchange offer.
- - Any outstanding notes not validly tendered will remain subject to existing
transfer restrictions.
- - The exchange of old notes for new notes pursuant to the exchange offer will
not be a taxable event for United States federal income tax purposes. See
"Material United States Federal Income Tax Considerations."
- - We will not receive any proceeds from the exchange offer.
- - The new notes will not be listed on any securities exchange or included in
any automated quotation system.
- - The new notes will have the same financial terms and covenants as the old
notes, and will be subject to the same business and financial risks.
- - SEE "RISK FACTORS" ON PAGE 14 OF THIS PROSPECTUS FOR A DISCUSSION OF RISKS
THAT YOU SHOULD CONSIDER BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
-------------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
-------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------
This prospectus is dated September 20, 1999
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TABLE OF CONTENTS
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PAGE
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Documents Incorporated by Reference............... i
Where You Can Find More Information............... ii
Prospectus Summary................................ 1
Risk Factors...................................... 14
Forward-Looking Statements........................ 20
Use of Proceeds................................... 20
Capitalization.................................... 21
Selected Historical Consolidated and
Pro Forma Financial Data...................... 22
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PAGE
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<S> <C>
The Exchange Offer................................ 24
Description of New Notes.......................... 36
Material United States Federal
Income Tax Considerations...................... 52
Plan of Distribution.............................. 54
Legal Matters..................................... 56
Experts........................................... 56
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" certain documents, which
means that we can disclose important information to you by referring you to
those documents. The information in the documents incorporated by reference is
considered to be part of this prospectus, except to the extent that this
prospectus updates or supersedes the information. We incorporate by reference
the documents listed below which we have previously filed with the SEC (SEC file
no. 1-1969):
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998, including the portions incorporated by reference from our 1998
Annual Report to Stockholders and Proxy Statement in connection with
our 1999 annual meeting of stockholders;
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999 and June 30, 1999; and
- Our Current Report on Form 8-K as filed with the SEC on June 21, 1999,
as amended and filed with the SEC on August 20, 1999.
We also incorporate by reference the consolidated financial statements of
ABR Information Services, Inc., the company we acquired in June 1999, contained
in the following documents previously filed by ABR with the SEC (SEC file no.
0-24132):
- ABR's Annual Report on Form 10-K for the fiscal year ended July 31,
1998, including the portions incorporated by reference from ABR's
Proxy Statement in connection with ABR's 1998 annual meeting of
stockholders; and
- ABR's Quarterly Report on Form 10-Q for the quarters ended October 31,
1998, January 31, 1999 and April 30, 1999.
We also incorporate by reference the information contained in all other
documents we file with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act after the date of this prospectus. The information will be
considered part of this prospectus from the date the document is filed and will
supplement or amend the information contained in this prospectus.
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We will provide you, at no charge, a copy of the documents we
incorporate by reference in this prospectus. TO OBTAIN TIMELY DELIVERY,
REQUESTS FOR COPIES SHOULD BE MADE NO LATER THAN WEDNESDAY, OCTOBER 13, 1999
(FIVE BUSINESS DAYS BEFORE THE EXPIRATION OF THE OFFER). To request a copy of
any or all of these documents, you should write or telephone us at the
following address and telephone number:
Ceridian Corporation
8100 34th Avenue South
Bloomington, Minnesota 55425-1640
Attention: Stockholder Services Department
Telephone: (612) 853-8100
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements, and other
documents with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. The Exchange Act file number for our SEC filings is
1-1969. Our SEC filings made electronically through the SEC's EDGAR system are
available to the public at the SEC's website at HTTP://WWW.SEC.GOV. You may also
read and copy any document we file with the SEC at the following SEC public
reference rooms:
Judiciary Plaza Citicorp Center 7 World Trade Center
450 Fifth Street, N.W. 500 West Madison Street Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60621 New York, New York 10048
You may obtain information regarding the operation of the SEC's public
reference rooms by calling the SEC at 1-800-SEC-0330.
In addition, because our common stock is listed on the New York Stock
Exchange, you may read our reports, proxy statements, and other documents at the
offices of the New York Stock Exchange at 20 Broad Street, New York, New York
10005.
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act, and the rules and regulations promulgated under the Securities
Act, with respect to the new notes offered for exchange under this prospectus.
This prospectus, which constitutes part of the registration statement, does not
contain all of the information set forth in the registration statement and the
attached exhibits and schedules. The statements contained in this prospectus as
to the contents of any contract, agreement or other document that is filed as an
exhibit to the registration statement are not necessarily complete. Accordingly,
each such statement is qualified in all respects by reference to the full text
of such contract, agreement or document filed as an exhibit to the registration
statement or otherwise filed with the SEC.
--------------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS THE INFORMATION CONTAINED ELSEWHERE IN OR
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. BECAUSE THIS IS ONLY A SUMMARY,
IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. FOR A
MORE COMPLETE UNDERSTANDING OF THIS EXCHANGE OFFER, WE ENCOURAGE YOU TO READ
THIS ENTIRE PROSPECTUS AND THE DOCUMENTS TO WHICH WE REFER YOU.
IN THIS PROSPECTUS, "CERIDIAN," "COMPANY," "WE," "OUR," AND "US" REFER TO
CERIDIAN CORPORATION AND OUR SUBSIDIARIES.
CERIDIAN
We operate exclusively in the information services industry. We provide
products and services to customers in the human resources, transportation and
media information markets through our Human Resource Services businesses
("HRS"), Comdata subsidiary and Arbitron division. These businesses collect,
manage and analyze data and process transactions on behalf of customers, report
information resulting from such activities to customers, and provide customers
with related software applications and services.
The following table sets forth our total revenue and the percentage revenue
for each of our business segments for the periods shown:
CERIDIAN REVENUE BY BUSINESS SEGMENT
[GRAPH]
- - SOLD TO FIRST DATA CORPORATION IN JANUARY 1998 IN EXCHANGE FOR NTS
TRANSPORTATION SERVICES BUSINESSS AND CASH.
PERCENTAGE AMOUNTS MAY NOT TOTAL DUE TO ROUNDING.
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HUMAN RESOURCE SERVICES
The businesses comprising HRS offer a broad range of services and software
designed to help employers more effectively manage their work forces and
information that is integral to human resource processes. HRS' human resource
management products and services include:
- payroll processing services and software;
- tax filing services;
- human resource information software;
- benefits administration software;
- time and attendance solutions;
- recruiting and skills management software;
- employee assistance and work-life programs; and
- training.
These products and services are provided in the United States, Canada and
the United Kingdom through Ceridian Employer Services, Ceridian Performance
Partners, Centrefile and Usertech. HRS' revenue for the years 1998, 1997 and
1996 was as follows:
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1998 1997 1996
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$700.3 million $578.6 million $490.3 million
</TABLE>
Payroll processing and tax filing services accounted for about 86% of HRS' 1998
revenue, with about 80% of 1998 payroll processing and tax filing revenue
derived from the United States.
PAYROLL PROCESSING AND TAX FILING SERVICES. Payroll processing in the
United States consists primarily of preparing and furnishing employee payroll
checks, direct deposit advices and supporting journals and summaries. We also
supply quarterly and annual social security, Medicare, and federal, state and
local income tax withholding reports required to be filed by employers and
employees. Payroll tax filing consists primarily of collecting funds for
federal, state and local employment taxes from customers based on payroll
information provided by the customers, remitting funds collected to the
appropriate taxing authorities, filing applicable returns, and handling related
regulatory correspondence and amendments.
Revenue from payroll tax filing services in the United States also includes
investment income earned by us from tax filing deposits temporarily held pending
remittance to taxing authorities on behalf of our customers. We hold such
customer deposits in a fiduciary capacity in a tax filing trust. The trust
invests primarily in high quality collateralized short-term investments, top
tier commercial paper, U.S. Treasury and Agency securities, AAA rated
asset-backed securities and corporate securities rated A3/A- or better. The
duration of investments is carefully managed to meet the liquidity needs of the
trust. About 62% of 1998 tax filing revenue was attributable to such investment
income. Due to the significance of this investment income, HRS' quarterly
revenue and profitability fluctuate as a result of changes in interest rates and
in the amount of tax filing deposits held.
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SOURCE 500. In 1998, we introduced our Source 500 product, a fully
integrated human resource information system ("HRIS"), payroll, benefits,
recruiting and employee self-service solution. Because of the importance of
being able to integrate our payroll processing and tax filing systems with other
systems and applications utilized by customers and potential customers,
particularly third-party HRIS applications, we have also developed interfaces to
exchange employee-related information between our payroll system and the HRIS
systems of major software vendors.
INTERNATIONAL OPERATIONS. In recent years, we have expanded our payroll
processing and HRIS software businesses outside of the United States through
acquisitions. Approximately 17% of HRS' 1998 revenue was obtained from customers
outside of the United States. Our Centrefile Limited subsidiary provides
mainframe-based payroll processing services and HRIS software in the United
Kingdom. As a result of the acquisition of the payroll processing business of
The Toronto-Dominion Bank and the Comcheq payroll processing business of the
Canadian Imperial Bank of Commerce in 1998, we handle payroll as well as tax
filing funds for our Canadian customers. Revenue from our payroll processing
services in Canada also includes investment income received from temporarily
holding payroll and payroll tax amounts in a Canadian trust. We earn income from
the trust and charge fees for services similar to those provided in the U.S.
About 32% of the 1998 revenue of these Canadian businesses was attributable to
such investment income.
PERFORMANCE PARTNERS. HRS also includes businesses that provide a variety
of employee assistance, work-life balance, management support and training
products and services. Ceridian Performance Partners provides services to help
organizations address workplace effectiveness issues and improve employee
recruitment, retention and productivity and reduce absenteeism.
COMDATA
Our Comdata subsidiary provides transaction processing and decision support
services to the transportation industry, primarily trucking companies, truck
stops and truck drivers, in both the long haul and local markets in the United
States. These services primarily involve the use of a proprietary funds transfer
card which facilitates truck driver transactions and provides transaction
control and trip information for trucking firms. Additionally, Comdata provides
assistance in obtaining regulatory permits and other compliance services, driver
relations services, local fueling services and discounted telecommunications
services in its markets. Comdata's revenue from products and services provided
to the transportation industry for the years 1998, 1997 and 1996 was as follows:
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1998 1997 1996
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$261.5 million $197.8 million $173.7 million
</TABLE>
Comdata's revenue for 1998 includes revenue from the operations of First
Data Corporation's NTS transportation services business that Comdata acquired in
1998. Comdata's revenue for all periods shown excludes revenue from Comdata's
gaming services business which was sold to First Data in exchange for the NTS
transportation services business.
THE COMCHEK(-Registered Trademark-) CARD. Comdata's funds transfer
system, most commonly initiated through the use of Comdata's proprietary
Comchek card, is designed to enable truck drivers to obtain funding for
purchases and cash advances at truck stops and other locations en route to
their destination. Drivers may use the Comchek card to purchase fuel, lodging
and other approved items, obtain cash advances from ATM machines or through
the use of Comchek drafts, make long distance phone calls and make direct
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deposits of pay, settlements (for non-employee owner-operators) or trip
advances to personal bank accounts. Use of the Comchek card allows the
trucking company customer greater control over its expenses by allowing it to
set limits on the use of the cards, such as by designating locations where
the cards may be used, the frequency with which they may be used, phone
numbers which may be called and the amount of authorized use. Use of a
Comchek card also enables Comdata to capture and provide transaction and
trip-related information to trucking company customers (usually within 24
hours after the completion of a given trip). This information greatly
enhances a customer's ability to track and plan fuel purchases and other trip
expenses and settle with drivers.
ARBITRON
Arbitron provides media and marketing information (primarily radio audience
measurement) to broadcasters, advertising agencies, and advertisers and, through
a joint venture, newspapers and magazine publishers and TV broadcasters.
Arbitron also provides software applications that give customers access to
Arbitron's database and, through a joint venture, measurement data concerning
consumer retail behavior and media usage. Arbitron's revenue for the years 1998,
1997 and 1996 was as follows:
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<CAPTION>
1998 1997 1996
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<S> <C> <C>
$194.5 million $165.2 million $153.1 million
</TABLE>
RADIO AUDIENCE MEASUREMENT. Arbitron is a leading provider of radio
audience measurement information in the United States. Arbitron estimates
audience size and demographics in the United States for local radio stations,
and reports this and related data to its customers. This information is used by
radio stations to price and sell advertising time and by advertising agencies
and large corporate advertisers in purchasing advertising time. Arbitron also
provides software applications that give customers access to Arbitron's
database, and enable them to more effectively analyze and understand that
information and develop target marketing strategies. Arbitron is also developing
applications to link information provided by Arbitron's database with
information from other databases (such as product purchasing behavior) to enable
customers to further refine sales strategies and compete more effectively for
advertising dollars. The radio audience measurement service and related software
sales represented 80% of Arbitron's 1998 revenue.
INTERNATIONAL OPERATIONS AND OTHER SERVICES. Through Continental Research,
a United Kingdom-based company that Arbitron acquired in 1997, Arbitron provides
media, advertising, financial and telecommunications research services in the
United Kingdom and Europe. As a result of Arbitron's purchase of the radio
station, advertiser/agency and international assets of Tapscan, Inc. in 1998,
Arbitron provides software applications for broadcasters, advertising agencies
and advertisers that help customers analyze ratings data and make marketing
decisions. Arbitron is also developing a passive, personalized electronic
measurement device to record broadcast listening or viewing for purposes of
audience measurement and verification that advertisements have been broadcast.
RECENT ABR ACQUISITION
CASH TENDER OFFER AND MERGER
On April 30, 1999, we entered into a merger agreement to acquire ABR
Information Services, Inc. The transaction was structured as a cash tender offer
by one of our wholly owned subsidiaries for all the outstanding voting common
stock of ABR at $25.50 per share, net to the sellers in cash, followed by a
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merger of our wholly owned subsidiary into ABR. Approximately 28,271,063 ABR
shares were validly tendered and not withdrawn and purchased by our wholly owned
subsidiary pursuant to the tender offer. As a result, immediately after the
tender offer we beneficially owned approximately 98.3% of the total number of
the then outstanding shares of voting common stock of ABR. On July 22, 1999, our
wholly owned subsidiary effected the cash merger with ABR, after which ABR
became one of our wholly owned subsidiaries and the remaining shares of ABR not
owned by our wholly owned subsidiary were exchanged for $25.50 per share in
cash.
The total amount of cash we used to acquire all of the shares of ABR, in
both the tender offer and the merger, plus pay transaction costs, was
approximately $751.0 million. Financing for the tender offer was provided
through a combination of existing cash balances, borrowings under our domestic
credit agreement and a short-term unsecured term loan. We repaid the short-term
loan in full with the net proceeds from the sale of the old notes and existing
cash balances. Financing for the merger was provided through a combination of
existing cash balances and borrowings under our domestic credit agreement. See
"Use of Proceeds."
SERVICES PROVIDED BY CERIDIAN BENEFITS SERVICES
After the merger, we began to refer to ABR and its subsidiaries under the
name "Ceridian Benefits Services." Ceridian Benefits Services is a leading
provider of comprehensive benefits administration, payroll and human resource
services to employers seeking to outsource these functions. Ceridian Benefits
Services provides services in three key areas:
- employee health and welfare administration services;
- qualified plan administration services; and
- integrated payroll and human resource administration services,
including tax deposit services and integrated human resource
solutions.
All services are offered on either an "a la carte" or a total outsourcing
basis, allowing customers to outsource certain benefits administration tasks
which they find too costly or burdensome to perform in-house, or to outsource
the entire benefits administration function.
HEALTH AND WELFARE ADMINISTRATION SERVICES. Ceridian Benefits Services'
employee health and welfare administration services include portability (I.E.,
COBRA (the "Consolidated Omnibus Budget Reconciliation Act"), HIPAA (the "Health
Insurance Portability and Accountability Act of 1996") or state-mandated
continuation coverage) compliance services and administration services for
benefits provided to active employees, such as open enrollment, employee
enrollment and eligibility, and flexible spending account administration.
Ceridian Benefits Services provides administration services for benefits
provided to retired and inactive employees, including retiree healthcare,
disability, surviving dependent, family leave and severance benefits. Ceridian
Benefits Services provides its portability services through the trade name
CobraServe(-Registered Trademark-).
QUALIFIED PLAN ADMINISTRATION SERVICES. Ceridian Benefits Services'
qualified plan administration services include 401(k) plan administration,
profit sharing administration, defined benefit plan administration, ESOP
administration and Qualified Domestic Relations Order administration.
INTEGRATED PAYROLL AND HUMAN RESOURCE ADMINISTRATION SERVICES. Ceridian
Benefits Services' integrated payroll and human resource administration
services include tax deposit services and integrated human resource solutions
and are provided through the trade name PayAmerica(-Registered Trademark-).
We are in the process of operationally transferring this portion of Ceridian
Benefits Services business to HRS.
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SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
<TABLE>
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Old Notes................................. On June 10, 1999, we sold in a private transaction the old notes, which consist of
$450,000,000 aggregate principal amount of our 7.25% Senior Notes due 2004, to Banc
of America Securities LLC, Chase Securities Inc., BNY Capital Markets, Inc., TD
Securities (USA) Inc. and U.S. Bancorp Piper Jaffray Inc., the initial purchasers.
The initial purchasers then sold the old notes to institutional investors.
Simultaneously with the initial sale of the old notes, we entered into a registration
rights agreement with the initial purchasers in which we agreed, among other things,
to deliver this prospectus to you and to complete an exchange offer for the old
notes. See "Exchange Offer--Purpose of Exchange Offer."
The Exchange Offer........................ We are offering to exchange up to $450,000,000 aggregate principal amount of our
7.25% Senior Notes due 2004 which have been registered under the Securities Act for a
like aggregate principal amount of the old notes.
The terms of the new notes are identical in all material respects to the terms of the
old notes, except that the registration rights and related liquidated damages
provisions, and the transfer restrictions applicable to the old notes are not
applicable to the new notes.
Old notes may be tendered only in $1,000 increments. Subject to the satisfaction or
waiver of specified conditions, we will exchange the new notes for all old notes that
are validly tendered and not withdrawn prior to the expiration of the exchange offer.
We will cause the exchange to be effected promptly after the expiration of the
exchange offer.
UPON COMPLETION OF THE EXCHANGE OFFER, THERE MAY BE NO MARKET FOR THE OLD NOTES, AND
IF YOU FAILED TO EXCHANGE THE OLD NOTES, YOU MAY HAVE DIFFICULTY SELLING THEM.
Resales of the New Notes.................. Based on interpretations by the staff of the SEC, we believe that the new notes
issued in the exchange offer may be offered for resale, resold or otherwise
transferred by you, without compliance with the registration and prospectus delivery
requirements of the Securities Act, if you:
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- acquire the new notes in the
ordinary course of your
business;
- are not engaging in and do not
intend to engage in a
distribution of the new notes;
- do not have an arrangement or
understanding with any person
to participate in a distribution
of the new notes;
- are not an affiliate of us
within the meaning of Rule 405
under the Securities Act; and
- are not a broker-dealer that
acquired the old notes directly
from us.
If any of these conditions is not satisfied and you transfer any new notes without
delivering a proper prospectus or without qualifying for a registration exemption,
you may incur liability under the Securities Act.
In addition, if you are a broker-dealer seeking to receive new notes for your own
account in exchange for old notes that you acquired as a result of market-making or
other trading activities, you must acknowledge that you will deliver this prospectus
in connection with any offer to resell, resale or other transfer of the new notes
that you receive in the exchange offer. See "Plan of Distribution."
Expiration Date........................... The exchange offer will expire at 5:00 p.m., New York City time, on October 20, 1999,
unless we extend it.
Withdrawal................................ You may withdraw the tender of your old notes at any time prior to the expiration of
the exchange offer. We will return to you any of your old notes that are not accepted
for exchange for any reason, without expense to you, promptly after the expiration or
termination of the exchange offer.
Consequences of Failing to Exchange Your
Old Notes.............................. The exchange offer satisfies our obligations and your rights under the registration
rights agreement. After the exchange offer is completed, you will not be entitled to
any registration rights with respect to your old notes.
Therefore, if you do not exchange your old notes, you will not be able to reoffer,
resell or otherwise dispose of your old notes unless:
- you comply with the registration
and prospectus delivery
requirements of the Securities
Act; or
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- you qualify for an exemption
from such Securities Act
requirements.
Interest on the New Notes and the
Old Notes.............................. The new notes will bear interest at the rate of 7.25% per annum from the most recent
date to which interest has been paid on the old notes or, if no interest has been
paid on the old notes, from June 10, 1999. Such interest will be payable
semi-annually on each June 1 and December 1, commencing December 1, 1999. No interest
will be paid on the old notes following their acceptance for exchange. See
"Description of New Notes."
Conditions to the Exchange Offer.......... The exchange offer is subject to various conditions. We reserve the right to
terminate or amend the exchange offer at any time before the expiration date if
various specified events occur. The exchange offer is not conditioned upon any
minimum principal amount of outstanding old notes being tendered. See "The Exchange
Offer--Conditions to the Exchange Offer."
Exchange Agent............................ The Bank of New York is serving as exchange agent for the exchange offer. All
executed letters of transmittal should be directed to the exchange agent at the
following address:
By Mail: 101 Barclay Street, Floor 7E, New York, NY 10286, Attn: Noriko Miyazaki,
Reorganization Section
By Hand or Overnight Courier: 101 Barclay Street, Corporate Trust Services Window,
Ground Level, New York, NY 10286, Attn: Noriko Miyazaki, Reorganization Section
Questions and requests for assistance should be directed to the exchange agent at
(212) 815-6333.
Procedures for Tendering Old Notes........ If you wish to tender your old notes, you must cause the following to be transmitted
to and received by the exchange agent no later than 5:00 p.m., New York City time, on
the expiration date:
- a confirmation of the book-entry
transfer of the tendered old
notes into the exchange agent's
account at The Depository Trust
Company;
- a properly completed and duly
executed letter of transmittal
in the form accompanying this
prospectus (with any required
signature guarantees) or, at the
option of the tendering holder
in the case of a book-
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entry tender, an agent's message in
lieu of such letter of
transmittal; and
- any other documents required by
the letter of transmittal.
Guaranteed Delivery Procedures............ If you wish to tender your old notes and you cannot cause the old notes or any other
required documents to be transmitted to and received by the exchange agent before
5:00 p.m., New York City time, on the expiration date, you may tender your old notes
according to the guaranteed delivery procedures described in this prospectus under
the heading "The Exchange Offer--Guaranteed Delivery Procedures."
Special Procedures for Beneficial Owners.. If you are the beneficial owner of old notes that are registered in the name of your
broker, dealer, commercial bank, trust company, or other nominee, and you wish to
participate in the exchange offer, you should promptly contact the person in whose
name your outstanding old notes are registered and instruct that person to tender
your old notes on your behalf. See "The Exchange Offer--Procedures for Tendering."
Representations of Tendering Holders...... By tendering old notes pursuant to the exchange offer, you will, in addition to other
customary representations, represent to us that you:
- are acquiring the new notes in
the ordinary course of business;
- are not engaging in or you do
not intend to engage in a
distribution of the new notes;
- have no arrangement or
understanding with any person
to participate in a distribution
of the new notes;
- are not an affiliate of us, or
if you are an affiliate, you
will comply with the
registration and prospectus
delivery requirements of the
Securities Act; and
- are not a broker-dealer
tendering old notes acquired
directly from us.
Acceptance of Old Notes and Delivery of
New Notes.............................. Subject to the satisfaction or waiver of the conditions to the exchange offer, we
will accept for exchange any and all old notes that are properly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on the expiration date. We will
cause the exchange to be effected promptly after the expiration of the exchange offer.
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Material United States Federal Income Tax
Considerations......................... The exchange of old notes for new notes pursuant to the exchange offer generally will
not be a taxable event for United States federal income tax purposes. See "Material
United States Federal Income Tax Considerations."
Appraisal or Dissenters' Rights........... You will have no appraisal or dissenters' rights in connection with the exchange
offer.
Use of Proceeds........................... We will not receive any proceeds from the issuance of new notes pursuant to the
exchange offer. We will pay all expenses incident to the exchange offer.
</TABLE>
SUMMARY OF THE TERMS OF THE NEW NOTES
The terms of the new notes will be identical in all material respects to
the terms of the old notes, except that the registration rights and related
liquidated damages provisions, and the transfer restrictions applicable to the
old notes are not applicable to the new notes. The new notes will evidence the
same debt as the old notes. The new notes and the old notes will be governed by
the same indenture. For more complete information about the new notes, see the
"Description of New Notes" section of this prospectus.
<TABLE>
<S> <C>
Issuer.................................... Ceridian Corporation
Aggregate Amount.......................... $450.0 million principal amount of 7.25% Senior Notes due 2004.
Maturity.................................. The new notes will mature on June 1, 2004.
Interest Rate............................. The new notes will bear interest at the rate of 7.25% per annum.
Interest Payment Dates.................... We will pay interest on the new notes semi-annually on June 1 and December 1,
beginning December 1, 1999.
Optional Redemption....................... We may redeem all or part of the new notes at our option, on at least 30 days'
notice, at the redemption prices stated in "Description of New Notes--Optional
Redemption," plus any accrued and unpaid interest to the date fixed for redemption.
Ranking................................... The new notes will be general unsecured obligations of ours. The new notes will rank
PARI PASSU in right of payment with all of our other unsubordinated indebtedness and
senior in right of payment to all of our future subordinated indebtedness. The new
notes will not be guaranteed by any of our subsidiaries. The new notes will
effectively be subordinated to (1) any of our secured indebtedness to the extent of
the assets securing that
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indebtedness, and (2) all indebtedness for money borrowed and other liabilities
of our subsidiaries. As of June 30, 1999, we had approximately $0.2 million of
secured debt, $49.3 million of subsidiary debt and $649.1 million of total
consolidated indebtedness.
Certain Covenants......................... The indenture governing the new notes contains covenants that, among other things,
restrict our ability to:
- incur certain liens;
- enter into certain affiliate
transactions;
- merge, consolidate or sell
assets; and
- engage in sale and leaseback
transactions.
See "Description of New Notes-- Certain Covenants."
Events of Default......................... The indenture describes the circumstances that constitute events of default with
respect to the new notes. See "Description of New Notes--Events of Default."
Use of Proceeds........................... We will not receive any proceeds from the exchange offer. For a description of the
use of proceeds from the offering of the old notes, see "Use of Proceeds."
Form of the New Notes..................... The new notes will be represented by one or more permanent global securities in
registered form deposited with The Bank of New York, as custodian, for the benefit of
The Depository Trust Company. You will not receive notes in registered form unless
one of the events set forth under the heading "Description of New Notes--Book-Entry,
Delivery and Form" occurs. Instead, beneficial interests in the new notes will be
shown on, and transfers of these interests will be effected only through, records
maintained in book-entry form by The Depository Trust Company with respect to its
participants.
Absence of a Public Market for the
New Notes.............................. There has been no public market for the old notes, and no active public market for
the new notes is currently anticipated. We do not intend to apply for a listing of
the new notes on any securities exchange or inclusion in any automated quotation
system. We cannot make any assurances regarding the liquidity of the market for the
new notes, the ability of holders to sell their new notes or the price at which
holders may sell their new notes. See "Plan of Distribution."
Trustee................................... The Bank of New York is serving as the trustee under the indenture.
</TABLE>
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<PAGE>
SUMMARY HISTORICAL CONSOLIDATED AND PRO FORMA FINANCIAL DATA
We derived the following summary historical consolidated statements of
operations data and consolidated balance sheet data from both our audited and
unaudited consolidated financial statements and related notes. Our consolidated
statements of operations data for the six month periods ended June 30, 1999 and
1998 and consolidated balance sheet data at June 30, 1999 include all
adjustments, consisting only of normal recurring adjustments, which management
considers necessary for a fair presentation of results for these unaudited
periods. The results of operations for the six month period ended June 30, 1999
are not necessarily indicative of the results of operations that may be expected
for the full fiscal year 1999.
Pro forma financial data based on continuing operations for the year ended
December 31, 1998 and the six month period ended June 30, 1999, appearing below,
include the results of operations of ABR and adjustments to reflect our
acquisition of ABR as described in our Current Report on Form 8-K as amended and
filed with the SEC on August 20, 1999.
You should read the summary historical consolidated and pro forma
financial data presented below in conjunction with the "Management's
Discussion and Analysis of Financial Condition and Results of Operations",
our consolidated financial statements with related notes and other financial
information contained or incorporated by reference in our Annual Report on
Form 10-K for the year ended December 31, 1998, our Quarterly Report on Form
10-Q for the quarter ended June 30, 1999 and our Current Report on Form 8-K
as filed with the SEC on June 21, 1999, as amended and filed with the SEC on
August 20, 1999, which we incorporate by reference in this prospectus. See
"Documents Incorporated By Reference."
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------------------------------- --------------------------
PRO FORMA PRO FORMA
1998 1998 1997 1996 1995 1994 1999 1999 1998
------- ---- ---- ---- ---- ---- ---- ---- ----
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Revenue............................ $1,245.5 $1,162.1 $1,074.8 $942.6 $823.5 $691.5 $701.7 $643.6 $566.4
Costs and Expenses:
Cost of revenue.................. 598.8 551.5 527.6 456.9 400.2 338.2 327.3 296.1 263.9
Selling, general and
administrative................. 352.1 316.0 308.0 285.1 260.4 230.0 206.6 186.1 159.8
Research and development......... 77.8 77.8 59.6 52.5 38.2 28.5 37.1 37.1 37.7
Other expense (income) (1)....... 15.0 (6.8) 309.3 0.2 32.5 (3.2) 1.7 1.7 1.8
------- ----- ------- ----- ------ ----- ------ ----- -----
Total costs and expenses...... 1,043.7 938.5 1,204.5 794.7 731.3 593.5 572.7 521.0 463.2
------- ----- ------- ----- ------ ----- ------ ----- -----
Earnings (loss) before interest 201.8 223.6 (129.7) 147.9 92.2 98.0 129.0 122.6 103.2
and taxes........................
Interest income.................. 11.1 10.4 2.3 3.0 8.0 8.7 3.3 3.8 5.2
Interest expense................. (47.2) (4.3) (11.2) (9.7) (29.5) (30.6) (25.6) (4.1) (2.2)
------- ----- ------- ----- ------ ----- ------ ----- -----
Earnings (loss) before income taxes 165.7 229.7 (138.6) 141.2 70.7 76.1 106.7 122.3 106.2
Income tax provision (benefit) (2). 53.4 65.3 (174.0) 5.7 11.5 11.5 42.8 44.8 39.1
------- ----- ------- ----- ------ ----- ------ ----- -----
Earnings from continuing operations $112.3 164.4 35.4 135.5 59.2 64.6 $ 63.9 77.5 67.1
------- ------
------- ------
Discontinued operations:
Gain on sale (3)................. 25.4 386.3 -- -- -- -- --
Earnings from operations (4)..... -- 50.7 46.4 38.3 33.1 -- --
Extraordinary loss................. -- -- -- (38.9) -- -- --
----- ------- ----- ------ ----- ----- -----
Net earnings ...................... $189.8 472.4 $181.9 $58.6 $97.7 $ 77.5 $ 67.1
----- ------- ----- ------ ----- ----- -----
----- ------- ----- ------ ----- ----- -----
Basic earnings per share:
Continuing operations............ $0.78 $1.14 $0.23 $0.90 $0.35 $0.39 $0.44 $0.54 $0.46
Net earnings..................... $1.32 $3.01 $1.24 $0.34 $0.64 $0.54 $0.46
Diluted earnings per share:
Continuing operations............ $0.76 $1.11 $0.22 $0.84 $0.37 $0.41 $0.43 $0.52 $0.45
Net earnings..................... $1.29 $2.96 $1.12 $0.37 $0.63 $0.52 $0.45
Shares used in calculations
(in thousands):
Basic............................ 144,070 144,070 156,835 135,841 132,269 131,650 144,338 144,338 144,521
Diluted.......................... 147,597 147,597 159,481 161,938 159,473 156,021 148,981 148,981 147,930
OTHER FINANCIAL DATA:
EBITDA (5)......................... $296.8 $265.6 $236.3 $201.7 $171.2 $129.2 $175.2 $154.8 $128.1
Ratio of earnings to fixed charges
(6).............................. 3.74x 15.01x -- 9.04x 3.61x 3.49x 4.35x 13.01x 13.67x
Earnings to fixed charges
deficiency (6)................... -- -- $77.1 -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER
JUNE 30, 31,
1999 1998
--------- ---------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA (7):
Working capital.................................................................... $ 187.8 $ 197.0
Total assets....................................................................... 2,089.5 1,289.7
Long-term obligations, less current portion........................................ 648.9 54.2
Total stockholders' equity......................................................... 760.0 650.6
</TABLE>
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(1) Includes 1998 unusual gains of $9.2 million related primarily to the sale
of land not used in the business, 1997 unusual losses of $307.6 million
related to the termination of a software development project, asset
write-offs, contract cancellations and certain legal and administrative
proceedings involving us, and 1995 pooling expenses of $29.7 million. Pro
forma amounts also include ABR unusual losses related to write-offs of
$11.0 million of purchased in-process research and development in April
1998 and $13.8 million of software development costs in October 1998.
(2) Includes a 1997 income tax benefit of $175.0 million related to a reduction
in the valuation allowance for the future utilization of our remaining net
operating losses and other future tax deductions.
(3) Represents gain, adjusted in 1998, from the December 1997 sale of Computing
Devices International.
(4) Represents earnings from operations of Computing Devices International
prior to its sale.
(5) EBITDA represents income from continuing operations before interest expense
and income, income taxes and unusual gains and losses plus depreciation and
amortization. EBITDA is included herein because we believe that certain
investors find it to be a useful tool for measuring our ability to service
our debt; however, EBITDA does not represent cash flow from operations, as
defined by generally accepted accounting principles, and should not be
considered as a substitute for net income as an indicator of our operating
performance or for cash flow as a measure of liquidity. Our determination
and presentation of non-GAAP measures of financial performance, such as
EBITDA, may not be comparable to similarly titled measures reported by
other companies.
(6) The ratio of earnings to fixed charges is computed by dividing fixed
charges into income before income taxes plus fixed charges. Fixed charges
consist of interest (whether expensed or capitalized), amortization of
financing costs and the estimated interest component of rent expense. In
1997, the aggregate increase in earnings or decrease in fixed charges
required to bring the ratio to 1.00 was $77.1 million.
(7) On June 7, 1999, we purchased 98.3% of the outstanding shares of ABR, which
shares had been validly tendered and not withdrawn, and soon completed a
series of financing transactions related to the acquisition. The acquired
assets and liabilities and the financing transactions are included in our
consolidated balance sheet as of June 30, 1999, which appears in this
report. Therefore, no pro forma balance sheet is included in this report.
GENERAL
Our principal executive offices are located at 8100 34th Avenue South,
Minneapolis, Minnesota 55425. Our telephone number is (612) 853-8100. Our
website address is http://www.ceridian.com. The information in our website is
not incorporated by reference.
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RISK FACTORS
THE NEW NOTES, LIKE THE OLD NOTES, ENTAIL RISK. IN DECIDING WHETHER TO
PARTICIPATE IN THE EXCHANGE OFFER, YOU SHOULD CONSIDER THE RISKS ASSOCIATED WITH
THE NATURE OF OUR BUSINESS AND THE RISK FACTORS RELATING TO THE EXCHANGE OFFER
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING FACTORS BEFORE MAKING A DECISION TO EXCHANGE
YOUR OLD NOTES FOR NEW NOTES. THE RISK FACTORS DESCRIBED BELOW ARE NOT
NECESSARILY EXHAUSTIVE, AND WE ENCOURAGE YOU TO PERFORM YOUR OWN INVESTIGATION
WITH RESPECT TO THE NEW NOTES AND OUR COMPANY.
IF YOU FAIL TO EXCHANGE YOUR OLD NOTES, YOU MAY BE UNABLE TO SELL THEM.
Because we did not register the old notes under the Securities Act or any
state securities laws, nor do we intend to after the exchange offer, the old
notes may only be transferred in limited circumstances under the securities
laws. If the holders of the old notes do not exchange their notes in the
exchange offer, they lose their right to have their old notes registered under
the Securities Act, subject to certain limitations. A holder of old notes after
the exchange offer may be unable to sell its old notes.
THERE IS NO PUBLIC MARKET FOR THE NEW NOTES, SO YOU MAY BE UNABLE TO SELL THEM.
The new notes are new securities for which there is currently no market.
Consequently, the new notes will be relatively illiquid, and you may be unable
to sell them. We do not intend to apply for listing of the new notes on any
securities exchange or for the inclusion of the new notes in any automated
quotation system. Accordingly, we cannot assure you that a liquid market for the
new notes will develop.
YOU MUST TENDER THE OLD NOTES IN ACCORDANCE WITH PROPER PROCEDURES IN ORDER TO
ENSURE THE EXCHANGE WILL OCCUR.
The exchange of the old notes for the new notes can only occur if the
proper procedures, as detailed in this prospectus, are followed. The new notes
will be issued in exchange for the old notes only after timely receipt by the
exchange agent of the old notes or a book-entry confirmation, a properly
completed and executed letter of transmittal (or an agent's message in lieu
thereof) and all other required documentation. If you want to tender your old
notes in exchange for new notes, you should allow sufficient time to ensure
timely delivery. Neither the exchange agent nor us is under any duty to give you
notification of defects or irregularities with respect to tenders of old notes
for exchange. Old notes that are not tendered will continue to be subject to the
existing transfer restrictions. In addition, if you are an affiliate of us or
you tender the old notes in the exchange offer in order to participate in a
distribution of the new notes, you will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. For additional information, please refer
to the sections entitled "The Exchange Offer" and "Plan of Distribution" later
in this prospectus.
IF A MARKET DEVELOPS FOR THE NEW NOTES, THE NOTES MIGHT TRADE AT VOLATILE
PRICES.
If a market develops for the new notes, the notes might trade at prices
higher or lower than their initial offering price. The trading price would
depend on many factors, such as prevailing interest rates, the market for
similar securities, general economic conditions and our financial condition,
performance and prospects.
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<PAGE>
OUR INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND MAKE IT MORE
DIFFICULT FOR US TO FULFILL OUR OBLIGATIONS UNDER THE NEW NOTES.
At June 30, 1999, we had $649.1 million of total consolidated indebtedness,
$450.0 million of such total consolidated indebtedness is represented by the old
notes that are subject to this exchange offer.
Our indebtedness could have important consequences to you. For example, it
could:
- increase our vulnerability to general adverse economic and industry
conditions;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund acquisitions, working capital,
capital expenditures and other general corporate purposes;
- limit, along with the financial and other restrictive covenants in our
indebtedness, our ability to borrow a significant amount of additional
funds;
- limit, along with the financial and other restrictive covenants in our
indebtedness, our flexibility in planning for, or reacting to, changes
in our business and the industry in which we operate; and
- place us at a competitive disadvantage compared to our competitors
that have less debt.
We may be able to incur additional indebtedness in the future which could
intensify the risks listed above that we will face. In addition, our Canadian
subsidiary is prohibited by its credit agreements from paying any dividends or
redeeming its capital stock which limits our ability to upstream cash from our
Canadian subsidiary to make payments on the new notes or other non-Canadian
indebtedness.
ALTHOUGH YOUR NEW NOTES WILL BE REFERRED TO AS "SENIOR NOTES," THEY WILL
EFFECTIVELY BE SUBORDINATED TO OUR SECURED DEBT AND THE DEBT OF OUR
SUBSIDIARIES.
The new notes will be unsecured and therefore will effectively be
subordinated to any secured debt we may incur to the extent of the value of the
assets securing such debt and to all indebtedness for money borrowed and other
liabilities of our subsidiaries. In the event of a bankruptcy or similar
proceeding involving us, our assets which serve as collateral will be available
to satisfy the obligations under any secured debt before any payments are made
on the new notes. We, and our creditors, may access the assets of our
subsidiaries only after adequate provision is made for the payment of our
subsidiaries' debts and liabilities. As of June 30, 1999, we had approximately
$0.2 million of secured debt, $49.3 million of subsidiary debt and $649.1
million of total consolidated indebtedness.
FAILURE TO SUCCESSFULLY INTEGRATE CERIDIAN BENEFIT SERVICES INTO OUR OPERATIONS
COULD HARM OUR BUSINESS.
On April 30, 1999, we entered into a merger agreement to acquire ABR
Information Services, Inc. The transaction was structured as a cash tender offer
by one of our wholly owned subsidiaries for all the outstanding voting common
stock of ABR at $25.50 per share, net to the sellers in cash, followed by a
merger of our wholly owned subsidiary into ABR. The cash tender offer was
completed in June 1999, and the merger of our wholly owned subsidiary into ABR,
resulting in ABR becoming one of our wholly owned subsidiaries, was completed in
July 1999. After the merger, we began to refer to ABR and its subsidiaries under
the name "Ceridian Benefit Services." There can be no assurance that the
Ceridian Benefit Services' businesses will be integrated successfully into our
operations or prove profitable.
15
<PAGE>
WE MAY MAKE ACQUISITIONS THAT COULD SUBJECT US TO A NUMBER OF OPERATIONAL
RISKS.
We expect that we will continue to make acquisitions of, investments in and
strategic alliances with complementary businesses, products and technologies to
enable us to add products and services for our core customer base and for
adjacent markets, and to expand each of our businesses geographically. However,
implementation of this strategy entails a number of risks, including:
- inaccurate assessment of undisclosed liabilities;
- entry into markets in which we may have limited or no experience;
- diversion of management's attention from our core businesses;
- potential loss of key employees or customers of the acquired
businesses;
- additional year 2000 compliance efforts;
- difficulties in assimilating the operations and products of an
acquired business or in realizing projected efficiencies and cost
savings; and
- increase in our indebtedness and a limitation in our ability to access
additional capital when needed.
Integration of acquisitions, and obtaining anticipated revenue synergies or cost
reductions, are also a risk in many acquisitions.
CHANGES IN GOVERNMENTAL REGULATION REGARDING PAYROLL AND TAX REMITTANCES AND
DECREASES IN INTEREST RATES ON INVESTMENT INCOME FROM CUSTOMER DEPOSITS
NEGATIVELY AFFECTS OUR REVENUE.
Our payroll and tax filing business in the United States and Canada derives
significant revenue and earnings from the investment of customer deposits
temporarily held pending remittance to tax filing authorities or the customer's
employees. We accept this investment income in lieu of fees that we would
otherwise charge these customers. During 1998, the average yield was 5.81%.
Changes in governmental regulation on the timing of remittances may reduce the
period of time we are allowed to hold such remittances and may adversely affect
our revenue and earnings from this source although we would seek to require
customers who permit us to retain earnings on their deposits to pay us the fees
we otherwise impose.
In addition, changes in interest rates will affect our revenue and earnings
from this source and are also difficult to predict and could be significant. We
have sought to lessen the impact of interest rate decreases by entering into a
series of interest rate collar transactions. These interest rate collar
transactions provide that if the interest rate we receive on such investments
falls below a specified level, the other party must pay us an amount to make up
the difference between what we would have received had the rates not fallen
below such level and what we actually received. In addition, the transactions
provide that if the interest rate we receive on such investments exceeds a
specified level, we must pay the other party the amount of such excess. As of
June 30, 1999, we had approximately $1.2 billion of such transactions
outstanding with six different parties all of which had debt ratings of Aa3/AA-
or higher. There can be no assurance as to the terms on which we will be able to
obtain collars in the future, or to what extent any decrease in investment
income would be offset by the use of such collars.
FAILURE TO RETAIN CUSTOMERS COULD ADVERSELY AFFECT OUR PROFITABILITY AND
OPERATING RESULTS.
Customer retention is an important factor in the amount and predictability
of revenue and profits in each of our businesses. Customer retention is
dependent on a number of factors, including customer satisfaction,
16
<PAGE>
offerings by competitors, our customer service levels, and price. In
providing certain services, particularly payroll processing and tax filing
services, we incur installation and conversion costs in connection with new
customers that must be recovered before the customer relationship provides
incremental profit. The longer we are able to retain a customer, the more
profitable that customer relationship is likely to be to us.
PROBLEMS OR DELAYS EFFECTING SYSTEM UPGRADES AND CONVERSIONS COULD DISRUPT OR
INCREASE OUR COSTS.
We are in the process of transitioning to new data processing systems
and/or software in several of our business units, including systems that process
customer data and internal management information systems. The successful
implementation of these new systems is critical to the effective delivery of
products and services and the efficient operation of our businesses. Problems or
delays with the installation or initial operation of the new systems could
disrupt or increase costs in connection with the delivery of services and with
operations planning, financial reporting and management.
FAILURE TO BE YEAR 2000 COMPLIANT COULD DISRUPT OUR OPERATIONS AND ADVERSELY
AFFECT OUR OPERATING RESULTS.
Our businesses are significantly dependent upon accurate and efficient
operation of our computer systems as well as the compliance efforts and
readiness of third parties. Although we have tested, remediated or replaced most
of our major or key systems, software and products, we continue to test,
implement changes and make necessary refinements.
Our total cumulative year 2000 remediation costs through June 30, 1999
amounted to $31.0 million. We estimate our total remediation costs for all of
1999 to be approximately $18.0 million, $13.3 million of which we spent through
June 30, 1999. We have not yet completed our estimate of year 2000 costs for
periods after 1999. Although we believe our remediation, replacement and testing
efforts will address all of the year 2000 issues for which we are responsible,
to the extent these efforts are not successful, additional remediation efforts
would be necessary together with additional customer service efforts and
expenditures. If third parties fail in their compliance efforts, we could also
be impacted and required to provide additional customer service efforts. In such
an event, we could incur additional costs and experience a negative impact on
revenues.
The year 2000 remediation of a customer's customized software that
facilitates the use of our payroll services is the customer's responsibility and
there can be no assurance that their systems will become compliant or the impact
that their failure to become compliant would have on our business. As part of
our customer service efforts, we are assisting our customers in their
remediation efforts. These assistance efforts are expected to continue into the
first half of 2000 due to the delay by some of our customers in making their
customized software available for remediation. Our costs, and the related amount
and percentage of our cost recoveries for these efforts, will be highly
dependent on a number of factors, including the extent to which our customers
utilize these services, the nature of the required remediation, the cooperation
of our customers in making their customized software available for remediation,
the timing of these remediation efforts and other alternatives available to our
customers.
See "Management's Discussion and Analysis of Results of Operations and
Financial Condition--Year 2000 Matters" from our Annual Report on Form 10-K for
the year ended December 31, 1998 and our Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999 for more information as to our
year 2000 efforts, including status, costs, issues, risks and contingency plans,
which discussion is incorporated herein by reference.
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<PAGE>
CONSOLIDATION IN THE RADIO BROADCASTING INDUSTRY MAY NEGATIVELY IMPACT OUR
OPERATING RESULTS.
The recent consolidation in the radio broadcasting industry could put
pressure on the pricing of Arbitron's radio ratings service, from which Arbitron
derives a substantial majority of its total revenue. While we have experienced
some success in offsetting the revenue impact of any concessions by providing
ratings to additional stations within a radio group and by providing additional
software and other services, there can be no assurance as to the degree to which
we will be able to continue to do so.
FAILURE TO INTRODUCE NEW PRODUCTS OR ENHANCEMENTS AND OTHERWISE ADAPT TO
CHANGING TECHNOLOGY COULD HARM OUR BUSINESS.
As a provider of information management and data processing services, we
must adapt and respond to technological advances offered by competitors and
technological requirements of customers in order to maintain and improve upon
our competitive position. We may not develop or release new products and product
enhancements within the time frames and at costs which we envisioned.
Significant delays, difficulties or added costs in introducing new products or
enhancements, either through internal development, acquisitions or cooperative
relationships with other companies, could have a material adverse effect on the
market acceptance of our products and services and the operating results of our
businesses generally.
WE FACE COMPETITION IN THE HRS MARKET FROM OUR COMPETITORS WHO HAVE GREATER
FINANCIAL RESOURCES THAN US AND IN ALL OF OUR MARKETS FROM POTENTIAL NEW
COMPETITORS.
Some of our competitors in the HRS market have greater financial resources
than us and may as a result be able to take advantage of certain opportunities
presented in the market more readily than us. This could materially harm our HRS
business and operating results. In addition, new competitors could decide to
enter our markets, and thereby intensify the highly competitive conditions that
already exist. These new entrants could offer new technologies or a different
service model, or could treat the services provided by one of our businesses as
one component of a larger product/service offering, thereby enabling them to
reduce prices on the component offered by us. Any of these or similar
developments could materially harm our business and operating results.
WE MAY INCUR LIABILITY FOR ENVIRONMENTAL MATTERS.
In the past, we were engaged in certain lines of business that consisted of
manufacturing operations, including, for example, computer disk drive and chip
manufacturing. These operations used or generated substances or wastes that may
be deemed hazardous under applicable environmental laws. As a result, we have
incurred, and may in the future incur, liability under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA") or similar state laws for costs and damages related to spills or
other releases of such substances to the environment at sites where such
businesses operated, or at off-site locations where hazardous substances were
sent for disposal. Courts have interpreted CERCLA to impose strict, joint and
several liability upon all persons liable for response costs at a site in
certain instances. This generally means that each responsible party could be
held liable for all costs and damages relating to the cleanup. As a practical
matter, however, the costs of cleanup typically are allocated, according to a
volumetric or other standard, among the responsible parties. In that regard, we
have responded to information requests from the Minnesota Pollution Control
Agency relating to a site where former subsidiaries or businesses allegedly sent
wastes for disposal. Because we are awaiting response from the Minnesota
Pollution Control Agency, we cannot predict our liability, if any, for these
matters. In addition, we are aware of several other contaminated sites at which
we have incurred and may
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continue to incur cleanup costs. Based on our past experience with such
matters, our established reserves and, in some cases, the availability of
indemnification or contribution from other parties, we do not believe such
matters will be material to our business and operating results. We cannot
assure you, however, that such claims or similar future claims will not be
material.
AS A RESULT OF THE ACQUISITION OF CERIDIAN BENEFITS SERVICES, WE FACE POTENTIAL
LEGAL LIABILITY AS A PORTABILITY ADMINISTRATOR.
As a result of the acquisition of Ceridian Benefits Services, we are
subject to potential legal liability as a provider of portability compliance
services. As a provider of COBRA compliance services, Ceridian Benefits Services
is subject to excise taxes for noncompliance with certain provisions of COBRA.
Under current federal laws, the maximum amount of such taxes that may be imposed
on Ceridian Benefits Services in any taxable year for unintentional violations
of COBRA is $2.0 million. In addition to the excise tax liability that may be
imposed on Ceridian Benefits Services, substantial excise taxes may be imposed
under COBRA on Ceridian Benefits Services' customers. Under Ceridian Benefits
Services' service agreements with its customers, Ceridian Benefits Services
assumes financial responsibility for the payment of such taxes assessed against
its customers arising out of Ceridian Benefits Services' failure to comply with
COBRA, unless such taxes are attributable to the customer's failure to comply
with COBRA or with the terms of its agreement with Ceridian Benefits Services.
In addition to liability for excise taxes for noncompliance with COBRA, Ceridian
Benefits Services accepts financial responsibility for certain liabilities
incurred by its customers that are attributable to Ceridian Benefits Services'
failure to comply with COBRA or to fulfill the terms of its obligations to its
customers under its agreements. These liabilities could, in certain cases, be
substantial. The imposition of such liability on us as a result of the
acquisition of Ceridian Benefits Services in excess of any available insurance
coverage could harm our business and adversely affect our operating results.
As a provider of HIPAA compliance and administration services, Ceridian
Benefits Services is subject to ERISA penalties for noncompliance with certain
provisions of HIPAA. Under Ceridian Benefits Services' service agreements with
its customers, Ceridian Benefits Services assumes financial responsibility for
the payment of penalties assessed against its customers arising out of Ceridian
Benefits Services' failure to comply with HIPAA, unless such penalties are
attributable to the customer's failure to comply with HIPAA or with the terms of
its agreement with Ceridian Benefits Services. Under ERISA, employers that are
subject to HIPAA are liable for penalties at the rate of $110 per "qualified
beneficiary" for each day during which the customer's group healthcare plan is
in noncompliance. These liabilities could, in certain cases, be substantial. The
imposition of such liability on us as a result of the acquisition of Ceridian
Benefits Services in excess of any available insurance coverage could harm our
business and adversely affect our operating results.
CHANGES IN GOVERNMENTAL REGULATIONS COULD HARM OUR BUSINESS AND ADVERSELY AFFECT
OUR OPERATING RESULTS.
Changes in governmental regulation, and in particular, the extent and type
of benefits that employers are required to or may choose to provide employees,
and the amount and type of federal or state taxes, may adversely affect our
revenue and earnings. Such changes in governmental regulation are difficult to
predict and could be significant.
19
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate herein by reference
contain forward-looking statements. In addition, from time to time, we or our
representatives may make forward-looking statements orally or in writing. We
base these forward-looking statements on our expectations and projections about
future events, which we derive from the information currently available to us.
Such forward-looking statements relate to future events or our future
performance, including:
- our financial performance;
- our growth in revenue and earnings;
- our cash flows from operations;
- our ability to refinance and repay indebtedness; and
- our ability to integrate successfully Ceridian Benefits Services'
operations into ours.
You can identify forward-looking statements by those that are not
historical in nature, particularly those that utilize terminology such as "may,"
"will," "should," "expects," "anticipates," "contemplates," "estimates,"
"believes," "plans," "projected," "predicts," "potential" or "continue" or the
negative of these or similar terms. In evaluating these forward-looking
statements, you should consider various factors, including the risk factors
described in this prospectus. Such factors may cause our actual results to
differ materially from any forward-looking statement.
Forward-looking statements are only predictions. The forward-looking events
discussed in this prospectus may not occur, and actual events and results may
differ materially and are subject to risks, uncertainties and assumptions about
us. We are not obligated to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
USE OF PROCEEDS
The exchange offer is intended to satisfy our obligations under the
registration rights agreement that we entered into in connection with the
private offering of the old notes. We will not receive any cash proceeds from
the issuance of the new notes. The old notes that are surrendered in exchange
for the new notes will be retired and canceled and cannot be reissued. As a
result, the issuance of the new notes will not result in any increase or
decrease in our indebtedness. We have agreed to bear the expenses of the
exchange offer. No underwriter is being used in connection with the exchange
offer.
The net proceeds from the issuance and sale of the old notes was
approximately $444.6 million (after deduction of initial purchasers' discounts
and estimated offering expenses payable by us). We used those net proceeds to
repay short-term borrowings we used to finance the acquisition of ABR. At the
time of such repayment, such borrowings bore interest at a weighted-average rate
of approximately 5.63% per annum.
20
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization on an actual basis as of
June 30, 1999. This table should be read together with the consolidated
financial statements and notes incorporated by reference into this prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1999
-----------------------
(IN MILLIONS)
<S> <C>
Short-term debt and current portion of long-term obligations............................ $ 0.2
--------------------
--------------------
Long-term debt:
Long-term obligations, less current portion........................................... 198.9
Notes................................................................................. 450.0
--------------------
Total long-term obligations, excluding current portion............................. 648.9
--------------------
Stockholders' equity:
Common stock, $.50 par value; 500,000,000 authorized shares
161,685,596 shares issued and 144,725,633 shares outstanding....................... $ 80.8
Additional paid-in capital............................................................ 1,116.4
Accumulated deficit................................................................... (59.3)
Treasury common stock, at cost, 16,959,963 shares..................................... (364.7)
Accumulated other comprehensive income................................................ (13.2)
--------------------
Total stockholders' equity......................................................... $760.0
--------------------
Total capitalization.................................................... $1,408.9
--------------------
--------------------
</TABLE>
21
<PAGE>
SELECTED HISTORICAL CONSOLIDATED AND PRO FORMA FINANCIAL DATA
We derived the selected historical consolidated statements of operations
data for each of the years in the five-year period ended December 31, 1998
and consolidated balance sheet data as of December 31, 1998 from our
consolidated financial statements which have been audited by KPMG LLP,
independent auditors. The consolidated statements of operations data for the
six month periods ended June 30, 1999 and 1998 and consolidated balance sheet
data at June 30, 1999 include all adjustments, consisting only of normal
recurring adjustments, which management considers necessary for a fair
presentation of results for these unaudited periods. The results of
operations for the six month period ended June 30, 1999 are not necessarily
indicative of the results of operations that may be expected for the full
fiscal year 1999.
Pro forma financial data based on continuing operations for the year ended
December 31, 1998 and the six month period ended June 30, 1999, appearing below,
include the results of operations of ABR and adjustments to reflect our
acquisition of ABR as described in our Current Report on Form 8-K as amended and
filed with the SEC on August 20, 1999.
You should read the selected consolidated financial data presented below in
conjunction with the "Management's Discussion and Analysis of Financial
Condition and Results of Operations", our consolidated financial statements with
related notes and other financial information contained or incorporated by
reference in our Annual Report on Form 10-K for the year ended December 31,
1998, our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 and
our Current Report on Form 8-K as filed with the SEC on June 21, 1999, as
amended and filed with the SEC on August 20, 1999, which we incorporate by
reference in this prospectus. See "Documents Incorporated By Reference."
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------------------------------- ---------------------------
PRO FORMA PRO FORMA
1998 1998 1997 1996 1995 1994 1999 1999 1998
------- ---- ---- ---- ---- ---- ---- ---- ----
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Revenue............................$1,245.5 $1,162.1 $1,074.8 $942.6 $823.5 $691.5 $701.7 $643.6 $566.4
Costs and Expenses:
Cost of revenue.................. 598.8 551.5 527.6 456.9 400.2 338.2 327.3 296.1 263.9
Selling, general and
administrative................. 352.1 316.0 308.0 285.1 260.4 230.0 206.6 186.1 159.8
Research and development......... 77.8 77.8 59.6 52.5 38.2 28.5 37.1 37.1 37.7
Other expense (income) (1)....... 15.0 (6.8) 309.3 0.2 32.5 (3.2) 1.7 1.7 1.8
------- ----- ------- ----- ------ ----- ------ ----- -----
Total costs and expenses...... 1,043.7 938.5 1,204.5 794.7 731.3 593.5 572.7 521.0 463.2
------- ----- ------- ----- ------ ----- ------ ----- -----
Earnings (loss) before interest
and taxes.......................... 201.8 223.6 (129.7) 147.9 92.2 98.0 129.0 122.6 103.2
Interest income.................. 11.1 10.4 2.3 3.0 8.0 8.7 3.3 3.8 5.2
Interest expense................. (47.2) (4.3) (11.2) (9.7) (29.5) (30.6) (25.6) (4.1) (2.2)
------- ----- ------- ----- ------ ----- ------ ----- -----
Earnings (loss) before income taxes 165.7 229.7 (138.6) 141.2 70.7 76.1 106.7 122.3 106.2
Income tax provision (benefit) (2). 53.4 65.3 (174.0) 5.7 11.5 11.5 42.8 44.8 39.1
------- ----- ------- ----- ------ ----- ------ ----- -----
Earnings from continuing operations $112.3 164.4 35.4 135.5 59.2 64.6 $ 63.9 77.5 67.1
------- ------
------- ------
Discontinued operations:
Gain on sale (3)................. 25.4 386.3 -- -- -- -- --
Earnings from operations (4)..... -- 50.7 46.4 38.3 33.1 -- --
Extraordinary loss................. -- -- -- (38.9) -- -- --
----- ------- ----- ------ ----- ----- -----
Net earnings ...................... $189.8 $472.4 $181.9 $58.6 $97.7 $ 77.5 $ 67.1
----- ------- ----- ------ ----- ----- -----
----- ------- ----- ------ ----- ----- -----
Basic earnings per share:
Continuing operations............ $0.78 $1.14 $0.23 $0.90 $0.35 $0.39 $0.44 $0.54 $0.46
Net earnings..................... $1.32 $3.01 $1.24 $0.34 $0.64 $0.54 $0.46
Diluted earnings per share:
Continuing operations............ $0.76 $1.11 $0.22 $0.84 $0.37 $0.41 $0.43 $0.52 $0.45
Net earnings..................... $1.29 $2.96 $1.12 $0.37 $0.63 $0.52 $0.45
Shares used in calculations
(in thousands):
Basic............................ 144,070 144,070 156,835 135,841 132,269 131,650 144,338 144,338 144,521
Diluted.......................... 147,597 147,597 159,481 161,938 159,473 156,021 148,981 148,981 147,930
OTHER FINANCIAL DATA:
EBITDA (5)......................... $296.8 $265.6 $236.3 $201.7 $171.2 $129.2 $175.2 $154.8 $128.1
Ratio of earnings to fixed charges
(6)........................... 3.74x 15.01x -- 9.04x 3.61x 3.49x 4.35x 13.01x 13.67x
Earnings to fixed charges
deficiency (6)................ -- -- $77.1 -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
-------- -----------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA(7):
Working capital.................................................................... $ 187.8 $197.0
Total assets....................................................................... 2,089.5 1,289.7
Long-term obligations, less current portion........................................ 648.9 54.2
Total stockholders' equity......................................................... 760.0 650.6
</TABLE>
22
<PAGE>
(1) Includes 1998 unusual gains of $9.2 million related primarily to the sale
of land not used in the business, 1997 unusual losses of $307.6 million
related to the termination of a software development project, asset
write-offs, contract cancellations and certain legal and administrative
proceedings involving us and 1995 pooling expenses of $29.7 million. Pro
forma amounts also include ABR unusual losses related to write-offs of
$11.0 million of purchased in-process research and development in April
1998 and $13.8 million of software development costs in October 1998.
(2) Includes a 1997 income tax benefit of $175.0 million related to a reduction
in the valuation allowance for the future utilization of our remaining net
operating losses and other future tax deductions.
(3) Represents gain, adjusted in 1998, from the December 1997 sale of Computing
Devices International.
(4) Represents earnings from operations of Computing Devices International
prior to its sale.
(5) EBITDA represents income from continuing operations before interest expense
and income, income taxes and unusual gains and losses plus depreciation and
amortization. EBITDA is included herein because we believe that certain
investors find it to be a useful tool for measuring our ability to service
our debt; however, EBITDA does not represent cash flow from operations, as
defined by generally accepted accounting principles, and should not be
considered as a substitute for net income as an indicator of our operating
performance or for cash flow as a measure of liquidity. Our determination
and presentation of non-GAAP measures of financial performance, such as
EBITDA, may not be comparable to similarly titled measures reported by
other companies.
(6) The ratio of earnings to fixed charges is computed by dividing fixed
charges into income before income taxes plus fixed charges. Fixed charges
consist of interest (whether expensed or capitalized), amortization of
financing costs and the estimated interest component of rent expense. In
1997, the aggregate increase in earnings or decrease in fixed charges
required to bring the ratio to 1.00 was $77.1 million.
(7) On June 7, 1999, we purchased 98.3% of the outstanding shares of ABR, which
shares had been validly tendered and not withdrawn, and soon completed a
series of financing transactions related to the acquisition. The acquired
assets and liabilities and the financing transactions are included in our
consolidated balance sheet as of June 30, 1999, which appears in this
report. Therefore, no pro forma balance sheet is included in this report.
23
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We initially sold the old notes in a private offering on June 10, 1999 to
Banc of America Securities LLC, Chase Securities Inc., BNY Capital Markets,
Inc., TD Securities (USA) Inc. and U.S. Bancorp Piper Jaffray Inc. pursuant to a
purchase agreement dated June 8, 1999 between us and them. These initial
purchasers of the old notes resold them to qualified institutional buyers in
reliance on, and subject to the restrictions imposed under, Rule 144A under the
Securities Act. As of the date of this prospectus, $450.0 million aggregate
principal amount of old notes are outstanding.
In connection with the private offering of the old notes, we entered into a
registration rights agreement dated June 10, 1999, with the initial purchasers,
in which we agreed, among other things, to:
(1) file with the SEC on or before October 8, 1999 an exchange offer
registration statement under the Securities Act relating to an exchange
offer for the old notes;
(2) use our reasonable best efforts to cause such exchange offer
registration statement to be declared effective under the Securities Act
on or before January 6, 2000;
(3) upon the effectiveness of the registration statement, commence the
exchange offer and offer the holders of the old notes the opportunity to
exchange their old notes for a like principal amount of new notes and to
keep the exchange offer open for not less than 20 business days (or longer
if required by applicable law) after the date on which notice of the
exchange offer is mailed to the holders of the old notes; and
(4) use our reasonable best efforts to complete the exchange offer and
issue the new notes on or prior to the date that is 35 days immediately
following the date that the exchange offer registration statement shall
have been declared effective by the SEC.
We are making the exchange offer to satisfy our obligations and your
registration rights under the registration rights agreement. If any of the
events described under (1), (2) or (4) above do not occur within the time period
required, we must pay you, as a holder of outstanding old notes, additional
interest at a rate of 0.5% per annum for the first 90-day period immediately
following any such failure. The additional interest rate shall be further
increased by an additional 0.5% per annum after the end of such period until all
registration defaults have been cured, up to a maximum additional interest rate
of 1% per annum. Upon filing of the exchange offer registration statement after
October 8, 1999, the declaration of the effectiveness of the exchange offer
registration statement after January 6, 2000, or the consummation of the
exchange offer after the date that is 35 days immediately following the date
that the exchange offer registration statement shall have been declared
effective by the SEC, as applicable, any such increase in the interest rate will
cease to be effective.
EFFECT OF THE EXCHANGE OFFER
Based on several no-action letters issued by the staff of the SEC to third
parties in unrelated transactions, we believe that you may offer for resale,
resell or otherwise transfer any new notes issued to you in the exchange offer
without further registration under the Securities Act or delivery of a
prospectus if you:
24
<PAGE>
- are acquiring the new notes in the ordinary course of your business;
- are not participating, do not intend to participate and have no
arrangement or understanding with any person to participate, in a
distribution of the new notes;
- are not an affiliate of us as defined in Rule 405 under the Securities
Act; and
- are not a broker-dealer who acquired old notes from us.
If you do not satisfy these criteria:
- you will not be able to rely on the interpretations of the staff of
the SEC in connection with any offer for resale, resale or other
transfer of new notes; and
- you must comply with the registration and prospectus delivery
requirements of the Securities Act, or have an exemption available to
you, in connection with any offer for resale, resale or other transfer
of the new notes.
Each broker-dealer that receives new notes for its own account in exchange
for old notes it acquired as a result of market-making or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus in connection with any resale of its new notes. This will
not be an admission by the broker-dealer that it is an underwriter within the
meaning of the Securities Act. See "Plan of Distribution."
SHELF REGISTRATION STATEMENT
In the event that (1) we reasonably determine that changes in law or the
applicable interpretations of the staff of the SEC do not permit us to effect
the exchange offer; (2) the exchange offer is not consummated on or before
February 10, 2000; or (3) upon the request of any initial purchaser with respect
to any old notes held by it, if such initial purchaser is not permitted pursuant
to applicable law or applicable interpretations of the staff of the SEC to
participate in the exchange offer and thereby receive new notes, we have agreed
that we will promptly notify the holders of the old notes and will, at our cost,
- cause to be filed with the SEC a shelf registration statement relating
to a shelf registration of the old notes covering resales of the old
notes,
- use our reasonable best efforts to cause the shelf registration
statement to be declared effective under the Securities Act as soon as
practicable, and
- use our reasonable best efforts to keep effective the shelf
registration statement until June 10, 2001 or until all old notes
eligible to be sold thereunder have been so sold or cease to be
outstanding.
We will provide to each relevant holder of the old notes copies of the
prospectus which is a part of the shelf registration statement, notify each such
holder when the shelf registration statement has become effective and take
certain other actions as are required to permit unrestricted resales of the
relevant old notes. A holder of old notes that sells its old notes pursuant to
the shelf registration statement generally will be required to be named as a
selling security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the registration rights agreement which are applicable to such a
holder (including certain indemnification obligations). In
25
<PAGE>
addition, a holder of old notes will be required to deliver information to be
used in connection with the shelf registration statement in order to have
such holder's notes included in the shelf registration statement.
In the event the shelf registration statement is not declared effective (or
shall thereafter cease to be effective, subject to certain exceptions, prior to
the earlier of June 10, 2001 and the date on which all transfer restricted old
notes have been sold thereunder) on or prior to the later of February 10, 2000
and the 60th calendar day after the publication of the change in law or
interpretation, we must pay you as a holder of outstanding old notes, additional
interest at a rate of 0.5% per annum, for the first 90-day period immediately
following any such registration default. The additional interest rate shall be
further increased by an additional 0.5% per annum after the end of such period
until all registration defaults have been cured, up to a maximum additional
interest rate of 1% per annum. Upon the effectiveness of the shelf registration
statement after February 10, 2000 or the 60th calendar day after the publication
of the change in law or interpretation, as applicable, any such increase in the
interest rate will cease to be effective. Any increases in the interest rate
pursuant to this paragraph or due to a failure by us to meet the registration
requirements discussed earlier in this prospectus in connection with the
exchange offer registration statement is referred to in this prospectus as
"Liquidated Damages."
The foregoing is a summary description of certain material provisions of
the registration rights agreement. Because it is a summary, it does not include
all of the information that is included in the registration rights agreement. We
encourage you to read the entire text of the registration rights agreement
carefully because it, and not this description, defines your rights as a holder
of the old notes. The registration rights agreement is included as an exhibit to
this registration statement. You may request a copy of the registration rights
agreement at our address set forth under "Documents Incorporated by Reference."
TERMS OF THE EXCHANGE OFFER
- We will accept all old notes validly tendered and not withdrawn prior
to 5:00 p.m., New York City time, on the expiration date of the
exchange offer. You should read "--Expiration Date; Extensions;
Amendments" below for an explanation of how the expiration date may be
amended.
- We will issue and deliver $1,000 principal amount of new notes in
exchange for each $1,000 principal amount of outstanding old notes
accepted in the exchange offer. Holders may exchange some or all of
their old notes in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
- By tendering old notes in exchange for new notes and by signing the
letter of transmittal (or delivering an agent's message in lieu
thereof), you will be representing that, among other things:
(1) any new notes to be received by you will be acquired in the
ordinary course of your business;
(2) you have no arrangement or understanding with any person to
participate in the distribution of the new notes;
(3) you are not an affiliate (as defined in Rule 405 under the
Securities Act) of us, or, if you are an affiliate, you will
comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable;
and
(4) you are not a broker-dealer who acquired old notes directly
from us.
26
<PAGE>
- The terms of the new notes are identical in all material respects to
the terms of the old notes, except that the registration rights and
related liquidated damages provisions, and the transfer restrictions
applicable to the old notes are not applicable to the new notes. The
new notes will evidence the same debt as the old notes and will be
entitled to the benefits of the indenture governing the old notes.
- In connection with the exchange offer, holders of the old notes do not
have any appraisal or dissenters' rights under law or the indenture
governing the old notes.
- We are sending this prospectus and the letter of transmittal to all
registered holders of old notes as of the close of business on
September 20, 1999.
- We are not conditioning the exchange offer upon the tender of any
minimum amount of old notes.
- We have provided for customary conditions, which we may waive in our
discretion. See "--Conditions of the Exchange Offer."
- We may accept tendered old notes by giving oral (promptly confirmed in
writing) or written notice to the exchange agent. The exchange agent
will act as your agent for the purpose of receiving the new notes from
us and delivering them to you.
- You will not be required to pay brokerage commissions or fees or,
subject to the instructions in the letter of transmittal, transfer
taxes with respect to the exchange of old notes. We will pay all
charges and expenses in connection with the exchange offer other than
taxes specified under "--Transfer Taxes."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time, on
October 20,1999, unless we, in our sole discretion, extend it. We may
extend the exchange offer at any time and from time to time by giving oral
(promptly confirmed in writing) or written notice to the exchange agent and
by making a public announcement of the extension before 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date. We may also accept all properly tendered old notes as of the expiration
date and extend the expiration date in respect of the remaining outstanding
old notes. We may, in our sole discretion,
- amend the terms of the exchange offer in any manner;
- delay acceptance of, or refuse to accept, any old notes not previously
accepted;
- extend the exchange offer; or
- terminate the exchange offer.
We will give prompt notice of any amendment to the registered holders of
the old notes. If we materially amend the exchange offer, we will promptly
disclose the amendment in a manner reasonably calculated to inform you of the
amendment and we will extend the exchange offer to the extent required by law.
27
<PAGE>
PROCEDURES FOR TENDERING
Only a holder of old notes may tender them in the exchange offer. For
purposes of the exchange offer, the term "holder" or "registered holder"
includes any participant in The Depository Trust Company whose name appears on a
security position listing as a holder of old notes.
To tender in the exchange offer, you must cause the following to be
transmitted to and received by the exchange agent no later than 5:00 p.m., New
York City time, on the expiration date:
- a confirmation of the book-entry transfer of the tendered old notes
into the exchange agent's account at The Depository Trust Company;
- a properly completed and duly executed letter of transmittal in the
form accompanying this prospectus (with any required signature
guarantees) or, at the option of the tendering holder in the case of a
book-entry tender, an agent's message in lieu of such letter of
transmittal; and
- any other documents required by the letter of transmittal.
If you wish to tender your old notes and you cannot cause the old notes or
any other required documents to be transmitted to and received by the exchange
agent before 5:00 p.m., New York City time, on the expiration date, you may
tender your old notes according to the guaranteed delivery procedures described
in this section under the heading "--Guaranteed Delivery Procedures."
Any beneficial owner of old notes that are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee who wishes to
participate in the exchange offer should promptly contact the person through
which it beneficially owns such old notes and instruct that person to tender old
notes on behalf of such beneficial owner. See "Instructions Forming Part of the
Terms and Conditions of the Exchange Offer" included with the letter of
transmittal. If the beneficial owner wishes to tender on his or her own behalf,
such owner must, prior to completing and executing the letter of transmittal and
delivering such beneficial owner's old notes, either make appropriate
arrangements to register ownership of the old notes in such owner's name or
obtain a properly completed bond power from the registered holder. The transfer
of registered ownership may take considerable time.
The tender by a holder of old notes will constitute an agreement between
such holder, us and the exchange agent in accordance with the terms and subject
to the conditions specified in this prospectus and in the letter of transmittal.
If a holder tenders less than all the old notes held, the holder should fill in
the amount of old notes being tendered in the appropriate box on the letter of
transmittal. The exchange agent will deem the entire amount of old notes
delivered to it to have been tendered unless the holder has indicated otherwise.
The method of delivery of the letter of transmittal and all other required
documents to the exchange agent is at your election and risk. Instead of
delivery by mail, we recommend that you use an overnight or hand delivery
service. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ENSURE DELIVERY TO
THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. DO NOT SEND YOUR LETTER OF
TRANSMITTAL OR OTHER REQUIRED DOCUMENTS TO US.
28
<PAGE>
SIGNATURE REQUIREMENTS AND SIGNATURE GUARANTEE
You must arrange for an "eligible institution" to guarantee your signature
on the letter of transmittal or a notice of withdrawal, unless the old notes are
tendered:
- by a registered holder of such old notes; or
- for the account of an eligible guarantor institution.
The following are "eligible institutions":
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent
in the United States; or
- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act.
If a letter of transmittal is signed by a person other than the registered
holder of any old notes listed in the letter of transmittal, the old notes must
be endorsed or accompanied by a properly completed bond power and signed by the
registered holder as the registered holder's name appears on the old notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, sign or endorse any required documents, they should so indicate when
signing, and unless waived by us, submit evidence satisfactory to us of their
authority to so act with the letter of transmittal.
BOOK-ENTRY TRANSFER
The exchange agent will make a request promptly after the date of this
prospectus to establish an account with respect to the old notes. Subject to the
establishment of the account, any financial institution that is a participant in
The Depository Trust Company's system may make book-entry delivery of old notes
by causing The Depository Trust Company to transfer them into the exchange
agent's account with respect to the old notes. However, the exchange agent will
only exchange the old notes so tendered after a timely confirmation of their
book-entry transfer into the exchange agent's account, and timely receipt of an
agent's message and any other documents required by the letter of transmittal.
The term "agent's message" means a message, transmitted by The Depository
Trust Company to, and received by, the exchange agent and forming part of the
confirmation of a book-entry transfer, which states that:
- The Depository Trust Company has received an express acknowledgment
from a participant tendering old notes stating the aggregate principal
amount of old notes which have been tendered by such participant;
- the participant has received the letter of transmittal and agrees to
be bound by its terms; and
- we may enforce such agreement against the participant.
29
<PAGE>
Although you may effect delivery of old notes through The Depository Trust
Company into the exchange agent's account at The Depository Trust Company, you
must provide the exchange agent a completed and executed letter of transmittal
with any required signature guarantee (or an agent's message in lieu thereof)
and all other required documents prior to the expiration date. If you comply
with the guaranteed delivery procedures described below, you must provide the
letter of transmittal (or an agent's message in lieu thereof) to the exchange
agent within the time period provided. DELIVERY OF DOCUMENTS TO THE DEPOSITORY
TRUST COMPANY DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes and (1) you cannot deliver the letter
of transmittal or any other required documents to the exchange agent prior to
the expiration date or (2) you cannot complete the procedure for book-entry
transfer on a timely basis, you may instead effect a tender if:
- you make the tender through an eligible guarantor institution;
- prior to the expiration date, the exchange agent receives from such
eligible guarantor institution a properly completed and duly executed
notice of guaranteed delivery (by facsimile transmittal, mail or hand
delivery) specifying the name and address of the holder and the
principal amount of such old notes tendered, stating that the tender
is being made, and guaranteeing that, within three New York Stock
Exchange trading days after the date of execution of the notice of
guaranteed delivery, the old notes being tendered, a properly
completed and duly executed letter of transmittal or a confirmation of
a book-entry transfer into the exchange agent's account at The
Depository Trust Company and an agent's message and any other
documents required by the letter of transmittal, will be deposited by
the eligible guarantor institution with the exchange agent; and
- the exchange agent receives such old notes and letter of transmittal
or confirmation of a book-entry transfer into its account at The
Depository Trust Company and an agent's message and all other
documents required by the letter of transmittal within three New York
Stock Exchange trading days after the date of execution of the notice
of guaranteed delivery.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw tendered
old notes at any time before 5:00 p.m., New York City time, on the expiration
date. To do so, you must provide the exchange agent with a written or facsimile
transmission notice of withdrawal before 5:00 p.m., New York City time, on the
expiration date.
Any notice of withdrawal must:
- identify the old notes to be withdrawn (including the principal amount
of the old notes and the name and number of the account at The
Depository Trust Company to be credited); and
- be signed by you in the same manner as the original signature on your
letter of transmittal (including any required signature guarantee) or
be accompanied by documents of transfer sufficient to permit the
registrar to register the transfer of the withdrawn old notes into
your name.
We will determine all questions as to the validity, form and eligibility
(including time of receipt) of all withdrawal notices. Our determination shall
be final and binding on all parties. We will not deem any
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old notes so withdrawn to be validly tendered for purposes of the exchange
offer and will not issue new notes with respect to them unless the holder of
the old notes so withdrawn validly retenders them. You may retender withdrawn
old notes by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the expiration date.
DETERMINATION OF VALIDITY
We will determine all questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of the tendered old notes
in our sole discretion. Our determination will be final and binding. We may
reject any and all old notes which are not properly tendered or any old notes of
which our acceptance would, in the opinion of our counsel, be unlawful. We also
may waive any irregularities or conditions of tender as to particular old notes.
Our interpretation of the terms and conditions of the exchange offer (including
the instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, you must cure any defects or irregularities in
connection with tenders of old notes within such time as we shall determine.
Although we intend to notify tendering holders of defects or irregularities
with respect to tenders of old notes, neither we nor anyone else has any duty to
do so. Neither we nor anyone else shall incur any liability for failure to give
such notification. Your old notes will not be deemed tendered until you have
cured or we have waived any irregularities. As soon as practicable following the
expiration date, the exchange agent will return any old notes that we reject due
to improper tender or otherwise unless you cured all defects or irregularities
or we waive them.
We reserve the right in our sole discretion:
- to purchase or make offers for any old notes that remain outstanding
subsequent to the expiration date;
- to terminate the exchange offer, as set forth in "--Conditions of the
Exchange Offer"; and
- to the extent permitted by applicable law, to purchase old notes in
the open market, in privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
CONDITIONS OF THE EXCHANGE OFFER
We will not be required to accept for exchange, or to issue new notes for,
any old notes, and we may terminate or amend the exchange offer before the
acceptance of old notes if, in our judgment, any of the following conditions has
occurred or exists or has not been satisfied:
- any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the exchange
offer which, in our reasonable judgment, might materially impair our
ability to proceed with the exchange offer or materially impair the
contemplated benefits of the exchange offer to us, or any material
adverse development has occurred in any existing action or proceeding
with respect to us or any of our subsidiaries;
- any change, or any development involving a prospective change, in our
business or financial affairs or of any of our subsidiaries has
occurred which, in our reasonable judgment, might
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materially impair our ability to proceed with the exchange offer or
materially impair the contemplated benefits of the exchange offer
to us;
- there shall have been proposed, adopted or enacted any law, statute,
rule or regulation (or an amendment to any existing law, statute, rule
or regulation) which, in our sole judgment, might materially impair
our ability to proceed with the exchange offer or have a material
adverse effect on the contemplated benefits of the exchange offer to
us;
- there shall occur a change in the current interpretation by the staff
of the SEC which permits the new notes issued pursuant to the exchange
offer in exchange for the old notes to be offered for resale, resold
and otherwise transferred by holders thereof without compliance with
the registration and prospectus delivery provisions of the Securities
Act provided that: (1) such new notes are acquired in the ordinary
course of such holders' business; (2) such holders are not engaging in
and do not intend to engage in a distribution of the new notes and
have no arrangement or understanding with any person to participate in
the distribution of such new notes; (3) such holders are not
affiliates of us within the meaning of Rule 405 under the Securities
Act; and (4) such holders are not broker-dealers that acquired the old
notes directly from us.
- there shall have occurred:
(1) any general suspension of, shortening of hours for, or limitation
on prices for, trading in securities on any national securities
exchange or in the over-the-counter market (whether or not
mandatory);
(2) any limitation by any governmental agency or authority which may
adversely affect our ability to complete the transactions
contemplated by the exchange offer;
(3) a declaration of a banking moratorium or any suspension of
payments in respect of banks by federal or state authorities in
the United States (whether or not mandatory);
(4) a commencement of a war, armed hostilities or other international
or national crisis directly or indirectly involving the United
States;
(5) any limitation (whether or not mandatory) by any governmental
authority on, or other event having a reasonable likelihood of
affecting, the extension of credit by banks or other lending
institutions in the United States; or
(6) in the case of any of the foregoing existing at the time of the
commencement of the exchange offer, a material acceleration or
worsening thereof.
The conditions listed above are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any of these conditions. We
may waive these conditions in our reasonable discretion in whole or in part at
any time and from time to time. The failure by us at any time to exercise any of
the above rights shall not be deemed a waiver of such right and such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. If we determine in our reasonable discretion that any of the conditions
are not satisfied, we may:
- refuse to accept any old notes and return any old notes that have been
tendered to the tendering holders;
- extend the exchange offer and retain all old notes tendered prior to
the expiration date of the exchange offer, subject to the rights of
the holders of the tendered old notes to withdraw such old notes; or
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- waive such termination event with respect to the exchange offer and
accept the properly tendered old notes that have not been withdrawn.
If we determine that such waiver constitutes a material change in the
exchange offer, we will promptly disclose such change in a manner reasonably
calculated to inform the holders of such change and we will extend the exchange
offer to the extent required by law.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all old notes that have been
validly tendered and not withdrawn, and will issue the applicable new notes in
exchange for such old notes promptly after our acceptance of such old notes. For
purposes of the exchange offer, we will be deemed to have accepted validly
tendered old notes for exchange when, as, and if we have given written notice of
such acceptance to the exchange agent.
For each old note accepted for exchange, the holder of the old note will
receive a new note having a principal amount equal to that of the surrendered
old note. The new notes will bear interest from the most recent date to which
interest has been paid on the old notes or, if no interest has been paid on the
old notes, from June 10, 1999. Accordingly, registered holders of new notes on
the relevant record date for the first interest payment date following the
completion of the exchange offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from June 10, 1999. Old notes accepted for exchange will cease to accrue
interest from and after the date on which they are accepted for exchange.
Holders whose old notes are accepted for exchange will not receive any payment
for accrued interest on the old notes otherwise payable on any interest payment
date if the record date occurs on or after date on which they are accepted for
exchange and will be deemed to have waived their rights to receive the accrued
interest on the old notes.
If any tendered old notes are not accepted for any reason or if old notes
are submitted for a greater principal amount than the holder desires to
exchange, such unaccepted or non-exchanged old notes will be returned without
expense to the tendering holder of the old notes or, if the old notes were
tendered by book-entry transfer, the non-exchanged old notes will be credited to
an account maintained with the book-entry transfer facility. In either case, the
return of such old notes will be effected promptly after the expiration or
termination of the exchange offer.
EXCHANGE AGENT
We have appointed The Bank of New York as the exchange agent for the
exchange offer. The Bank of New York also acts as trustee under the indenture.
You should send all executed letters of transmittal to the exchange agent and
direct all communications with the exchange agent, including requests for
assistance or for additional copies of this prospectus or of the letter of
transmittal as follows:
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DELIVERY TO: THE BANK OF NEW YORK, EXCHANGE AGENT
By Mail: By Hand or Overnight Courier:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street
Floor 7E Corporate Trust Services Ground Level Window
New York, NY 10286 New York, NY 10286
Attn: Noriko Miyazaki, Attn: Noriko Miyazaki,
Reorganization Section Reorganization Section
(Registered or Certified
Mail Recommended)
Facsimile Transmissions
(Eligible Institutions Only):
(212) 815-4699
To Confirm by Telephone or for Information Call:
(212) 815-6333
IF YOU DELIVER THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMIT INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, SUCH DELIVERY OR INSTRUCTIONS WILL NOT BE EFFECTIVE.
FEES AND EXPENSES
We will bear all expenses of the exchange offer. We are making the
principal solicitation pursuant to the exchange offer by mail. Our officers and
employees and our affiliates may also make solicitations in person, by
telegraph, telephone or facsimile transmission.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We, however, will pay the exchange
agent reasonable and customary fees for its services and will reimburse its
reasonable out-of-pocket costs and expenses and will indemnify the exchange
agent for all losses and claims incurred by it as a result of the exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding
copies of this prospectus, letters of transmittal and related documents to the
beneficial owners of the old notes and in handling or forwarding tenders for
exchange.
TRANSFER TAXES
We will pay any transfer taxes applicable to the exchange of old notes
pursuant to the exchange offer. If, however, a transfer tax is imposed for
any reason other than the exchange of old notes pursuant to the exchange
offer, then the amount of any of these transfer taxes (whether imposed on the
registered holder thereof or any other person) will be payable by the
tendering holder.
For example, the tendering holder will pay transfer taxes, if:
- new notes for principal amounts not tendered, or accepted for exchange
are to be registered or issued in the name of any person other than
the registered holder of the old notes tendered; or
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- tendered old notes are registered in the name of any person other than
the person signing the letter of transmittal.
If you do not submit satisfactory evidence of payment of taxes for which
you are liable or exemption from them with your letter of transmittal, we will
bill you for the amount of these transfer taxes directly.
ACCOUNTING TREATMENT
We will record the new notes at the same carrying value as the old notes,
which is the principal amount as reflected in our accounting records on the date
of the exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes. We will capitalize the expenses of the exchange offer for
accounting purposes. We will classify these expenses as prepaid expenses and
include them in other assets on our balance sheet. We will amortize these
expenses on a straight line basis over the life of the new notes.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of old notes who do not exchange their old notes for new notes
pursuant to the exchange offer will continue to be subject to the restrictions
on transfer of such old notes. The old notes were originally issued in a
transaction exempt from registration under the Securities Act, and may be
offered, sold, pledged, or otherwise transferred only:
- in the United States to a person whom the seller reasonably believes
is a qualified institutional buyer (as defined in Rule 144A under the
Securities Act);
- outside the United States in an offshore transaction in accordance
with Rule 904 under the Securities Act;
- pursuant to an exemption from registration under the Securities Act
provided by Rule 144, if available; or
- pursuant to an effective registration statement under the Securities
Act.
The offer, sale, pledge or other transfer of old notes must also be made in
accordance with any applicable securities laws of any state of the United
States, and the seller must notify any purchaser of the old notes of the
restrictions on transfer described above. We do not currently anticipate that we
will register the old notes under the Securities Act.
APPRAISAL OR DISSENTERS' RIGHTS
Holders of the old notes will not have appraisal or dissenters' rights in
connection with the exchange offer.
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DESCRIPTION OF NEW NOTES
GENERAL
The new notes will be issued by us pursuant to the indenture, dated as of
June 10, 1999, between us and The Bank of New York, as trustee (the "Trustee").
The terms of the new notes include those stated in the indenture and those made
part of the indenture by reference to the Trust Indenture Act of 1939 (the
"TIA").
Capitalized terms used in this prospectus but not defined herein will have
the meanings assigned to such terms in the indenture. The following is a summary
description of certain material provisions of the indenture. Because it is a
summary, it does not include all of the information that is included in the
indenture. You should read the indenture carefully and in its entirety because
it, and not this description, defines your rights as a holder of the new notes.
You may request a copy of the indenture at our address set forth under
"Documents Incorporated By Reference."
The new notes will mature on June 1, 2004 (the "Stated Maturity Date"). The
new notes will be our general unsecured obligations and will rank PARI PASSU in
right of payment with all of our other unsubordinated indebtedness and will rank
senior in right of payment to all of our subordinated indebtedness. Our secured
indebtedness, to the extent of such security, and all indebtedness and other
obligations (including trade payables) of our Subsidiaries will be effectively
senior to the new notes. As of June 30, 1999, we had approximately $49.3 million
of subsidiary debt and $649.1 million of total indebtedness. The new notes will
be issued in denominations of $1,000 and integral multiples thereof. All
payments on the new notes will be made in U.S. dollars.
INTEREST AND INTEREST PAYMENT DATES
The new notes will bear interest at 7.25% per annum of the principal amount
then outstanding from June 10, 1999, payable semi-annually on June 1 and
December 1 of each year (each, an "Interest Payment Date"), commencing December
1, 1999, to the persons in whose name the new notes are registered at the close
of business on the preceding May 15 and November 15, respectively (whether or
not a Business Day) (each, a "Regular Record Date"); provided, however, that
interest payable on the Stated Maturity Date will be paid to the person to whom
principal is payable. The interest rate on the new notes is subject to increase
in certain circumstances if the registration statement of which this prospectus
is a part is not declared effective on a timely basis or if certain other
conditions are not satisfied, all as further described under "Exchange
Offer--Purpose of Exchange Offer."
Interest payments will be in the amount of interest accrued from and
including the next preceding Interest Payment Date (or from and including June
10, 1999 if no interest has been paid or duly provided for with respect to the
new notes) to but excluding the relevant Interest Payment Date or Stated
Maturity Date, as the case may be. Interest on the new notes will be computed on
the basis of a 360-day year of twelve 30-day months. "Business Day" means any
day that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
OPTIONAL REDEMPTION
We will have the right to redeem the new notes, in whole or in part, at any
time and from time to time, subject to the receipt of any consent required under
the terms of any of our indebtedness which may be outstanding from time to time,
upon not less than 30 nor more than 60 days notice, at a
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redemption price equal to the sum of (1) 100% of the principal amount of the
new notes being redeemed, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date, and (2) the Make-Whole
Amount, if any, with respect to such notes.
The term "MAKE-WHOLE AMOUNT" means, in connection with any optional
redemption of any new notes, the excess, if any, of (1) the sum, as determined
by a Quotation Agent of the present values of the principal amount of such
notes, together with scheduled payments of interest from the redemption date to
the stated maturity of the new notes, in each case discounted to the redemption
date on a semi-annual basis, which assumes a 360-day year consisting of twelve
30-day months, at the Adjusted Treasury Rate over (2) 100% of the principal
amount of the new notes to be redeemed.
The term "ADJUSTED TREASURY RATE" means, with respect to any redemption
date, the rate per annum equal to the semi-annual equivalent yield to maturity
of the Comparable Treasury Issue, calculated using a price for the Comparable
Treasury Issue, which is expressed as a percentage of its principal amount,
equal to the Comparable Treasury Price for such redemption date, calculated on
the third business day preceding the redemption date, plus in each case 25 basis
points.
The term "COMPARABLE TREASURY ISSUE" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
remaining term from the redemption date to the stated maturity of the new notes
that would be utilized, at the time of selection and in accordance with
customary financial practice in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the new notes.
The term "QUOTATION AGENT" means the Reference Treasury Dealer appointed by
us.
The term "REFERENCE TREASURY DEALER" means: (1) Banc of America Securities
LLC and its respective successors and two additional Primary Treasury Dealers
selected by us; PROVIDED, HOWEVER, that if any of the foregoing cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), we will substitute therefor another Primary Treasury Dealer; and (2)
any other Primary Treasury Dealer selected by us.
The term "COMPARABLE TREASURY PRICE" means, with respect to any redemption
date: (1) the average of the bid and asked prices for the Comparable Treasury
Issue, which is 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 (2) if such release is not published or does not
contain such prices on such business day, (A) the average of the Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest such Reference Treasury Dealer Quotations, or (B) if the Quotation
Agent obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such quotations.
The term "REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Quotation Agent, of the bid and asked prices for the Comparable Treasury
Issue, which is expressed in each case as a percentage of its principal amount,
quoted in writing to the Trustee by such quotation agent at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of notes to be redeemed at its
registered address. Unless we default in
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payment of the redemption price, on and after the redemption date interest
will cease to accrue on the new notes called for redemption.
In the case of any partial redemption, the Trustee will select notes for
redemption in compliance with the requirements of the principal national
securities exchange, if any, on which the new notes are listed or, if not
listed, on a pro rata basis, by lot or by such other method as the Trustee in
its sole discretion shall deem fair and appropriate. However, the new notes to
be redeemed shall be equal to at least $1,000 or any multiple thereof. If any
new note is to be redeemed in part, the notice of redemption relating to the new
note will state the portion of the principal amount to be redeemed. A new note
in principal amount equal to the unredeemed portion will be issued in the name
of the Holder upon cancellation of the original note.
MANDATORY REDEMPTION
We will not be required to make any mandatory sinking fund payments with
regard to the new notes.
PAYMENT AND PAYMENT AGENTS
Principal of and any interest or Liquidated Damages on the new notes will
be payable, subject to any applicable laws and regulations, at the offices of
such paying agents as we may designate from time to time pursuant to the
indenture ("Paying Agents"), except that, at our option, payment of any interest
or Liquidated Damages may be made by check mailed to the address of the person
entitled thereto as such address appears in the Security Register.
We have designated the Corporate Trust Office of the Trustee in New York,
New York as the Paying Agent and as the place where the new notes may be
presented for payment. We may at any time designate one or more additional
Paying Agents or rescind the designation of any Paying Agent or approve a change
in the office through which any Paying Agent acts, except that we will be
required to maintain a Paying Agent in each Place of Payment.
Notwithstanding the foregoing, payment of principal and any interest or
Liquidated Damages on Book-Entry Securities will be made in accordance with the
arrangements from time to time in place between the Paying Agent and the
Depository or its nominee as holder. See "--Book-Entry, Delivery and Form."
Any payment due on any day that is not a Business Day need not be made on
such day, but may be made on the next succeeding Business Day, with the same
force and effect as if made on the due date, and no interest or Liquidated
Damages will be payable on the date of payment for the period from and after the
due date.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the new notes to be sold as set forth herein
will initially be issued in the form of registered global notes (the "Global
Notes"), each of which will be deposited on the issue date with, or on behalf
of, the Depository and registered in the name of Cede & Co. (the Depository's
nominee). The following are summaries of certain rules and operating procedures
of the Depository which affect the Global Notes.
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The new notes that are issued as described under "--Certificated
Securities," will be issued in registered form (the "Certificated Securities").
Upon the transfer of Certificated Securities, such Certificated Securities will,
unless the Global Notes have previously been exchanged for Certificated
Securities, be exchanged for an interest in the Global Notes representing the
principal amount of new notes being transferred.
The Depository has advised us that it is a limited-purpose trust company
that was created to hold securities for its participating organizations
(collectively, the "Participants" or the "Depository's Participants") and to
facilitate the clearance and settlement of transactions in such securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Depository's Participants include securities brokers and
dealers, banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only through the Depository's
Participants or the Depository's Indirect Participants.
We expect that pursuant to procedures established by the Depository (1)
upon deposit of the Global Notes, the Depository will credit the accounts of
Participants with an interest in the Global Notes, and (2) ownership of the new
notes will be shown on, and the transfer of ownership thereof will be effected
only through, records maintained by the Depository (with respect to the
interests of the Depository's Participants), the Depository's Participants and
the Depository's Indirect Participants. The laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer new notes will be limited to
such extent.
So long as the Depository or its nominee is the registered owner of any
Global Notes, the Depository or its nominee, as the case may be, will be
considered the sole owner of such outstanding new notes. Except as provided
below, owners of beneficial interests in a Global Note will not be entitled to
have new notes represented by such Global Note registered in their names, will
not receive or be entitled to receive physical delivery of Certificated
Securities, and will not be considered the owners or Holders thereof under the
indenture for any purpose. As a result, the ability of a person having a
beneficial interest in new notes represented by a Global Note to pledge such
interest to persons or entities that do not participate in the Depository's
system or to otherwise take actions in respect of such interest, may be affected
by the lack of a physical certificate evidencing such interest. Accordingly,
each person owning a beneficial interest in a Global Note must rely on the
procedures of the Depository and, if such person is not a Participant or an
Indirect Participant, on the procedures of the Participant through which such
person owns its interest, to exercise any rights of a Holder under such Global
Note or the indenture.
Neither we nor the Trustee will have any responsibility or liability for
any aspect of the records relating to or payments made on account of new notes
by the Depository, or for maintaining, supervising or reviewing any records of
the Depository relating to such new notes.
Payments in respect of the principal of, premium and Liquidated Damages, if
any, and interest on any new notes registered in the name of the Depository or
its nominee on the applicable record date will be payable by the Trustee to or
at the direction of such Holder in its capacity as the registered holder under
the indenture. Under the terms of the indenture, we and the Trustee may treat
the persons in whose names the new notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither we nor
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the Trustee have or will have any responsibility or liability for the payment
of such amounts to beneficial owners of new notes (including principal,
premium and Liquidated Damages, if any, and interest), or to immediately
credit the accounts of the relevant Participants with such payment, in
amounts proportionate to their respective holdings of beneficial interests in
the relevant security as shown on the records of the Depository. Payments by
the Depository's Participants and the Depository's Indirect Participants to
the beneficial owners of new notes will be governed by standing instructions
and customary practice and will be the responsibility of the Depository's
Participants or the Depository's Indirect Participants.
CERTIFICATED SECURITIES
If (1) we notify the Trustee in writing that the Depository is no longer
willing or able to act as a depository and we are unable to locate a qualified
successor within 90 days or (2) we, at our option, notify the Trustee in writing
that we elect to cause the issuance of the new notes in definitive form under
the indenture, then, upon surrender by the Holder of the Global Note, notes in
such form will be issued to each person that the Holder of the Global Note and
the Depository identify as the beneficial owner of the new notes. In addition,
subject to certain conditions, any person having a beneficial interest in the
Global Note may, upon request to the Trustee, exchange such beneficial interest
for new notes in definitive form. Upon any such issuance, the Trustee is
required to register such new notes in the name of, and cause the same to be
delivered to, such person or persons (or the nominee of any thereof). Such new
notes will be issued in fully registered form.
Neither we nor the Trustee shall be liable for any delay by the Holder of
the Global Note or the Depository in identifying the beneficial owners of the
related securities, and each such person may conclusively rely on, and shall be
protected in relying on, instructions from the Holder of the Global Note or the
Depository for all purposes.
CERTAIN COVENANTS
The indenture contains, among others, the following covenants:
LIMITATION ON LIENS. So long as any of the new notes remain outstanding, we
will not, and will not permit any of our Subsidiaries to, create or assume any
Indebtedness which is secured by a Lien, other than Permitted Liens, of or upon
any of our assets or those of our Subsidiaries, whether now owned or hereafter
acquired, without equally and ratably securing the new notes by a Lien ranking
ratably with and equal to (or, at our option or in the case of liens securing
Indebtedness ranked subordinate to the new notes, senior to) such secured
Indebtedness.
LIMITATION ON AFFILIATE TRANSACTIONS. We will not, and will not permit any
of our Subsidiaries to, enter into or permit to exist any transaction or series
of related transactions (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with any of our Affiliates (an "Affiliate Transaction") unless the terms
thereof:
(1) are materially no less favorable to us or our Subsidiary than those
that could be obtained at the time of such transaction in arm's-length
dealings with a Person who is not an Affiliate;
(2) if such Affiliate Transaction (or series of related Affiliate
Transactions) involve aggregate payments in an amount in excess of $10
million in any one year, (x) comply with the terms described in clause (1)
and (y) have been approved by a majority of the disinterested members of
the Board of Directors; and
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(3) if such Affiliate Transaction (or series of related Affiliate
Transactions) involve aggregate payments in an amount in excess of $20
million in any one year, (x) comply with the terms described in clause (2)
and (y) have been determined by a nationally recognized investment banking,
accounting or qualified appraisal firm to be fair, from a financial
standpoint, to us and our Subsidiaries.
The provisions described above will not prohibit:
(1) any issuance of securities or any payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock option and stock ownership plans and other stock-based
employee compensation in the ordinary course of business and approved by
the Board of Directors;
(2) the grant of stock options or similar rights to our employees,
officers and directors or those of any of our Subsidiaries in the ordinary
course of business and pursuant to plans approved by the Board of
Directors;
(3) loans or advances to our employees, officers or directors or those
of any of our Subsidiaries in the ordinary course of business;
(4) fees, compensation or employee benefit arrangements paid to and
indemnity provided for the benefit of our directors, officers or employees
or those of any of our Subsidiaries in the ordinary course of business;
(5) any Affiliate Transaction between us and our Subsidiary or Joint
Venture, or between any of our Subsidiaries or Joint Ventures (so long as
the other stockholders or partners of any participating Subsidiaries or
Joint Ventures which are not our wholly owned Subsidiaries are not
themselves our Affiliates); and
(6) any transactions effected pursuant to agreements in effect on June
10, 1999; PROVIDED, that such transactions are effected pursuant to terms
substantially similar to the terms of such agreements as in effect on June
10, 1999.
MERGER, CONSOLIDATION AND SALE OF ASSETS. We will not, in a single
transaction or series of related transactions, consolidate or merge with or into
any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or
cause or permit any of our Subsidiaries to sell, assign, transfer, lease, convey
or otherwise dispose of) all or substantially all of our assets (determined on a
consolidated basis) to any Person, unless:
(1) either (a) we are the surviving or continuing corporation or (b)
the Person (if other than us) formed by such consolidation or into which we
are merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition all or substantially all of our
assets (the "Surviving Entity") (x) is a corporation organized and validly
existing under the laws of the United States or any state thereof or the
District of Columbia and (y) expressly assumes, by supplemental indenture
(in form and substance satisfactory to the Trustee) executed and delivered
to the Trustee, the due and punctual payment of the principal of, and
Liquidated Damages, if any, and interest on, all of the new notes and the
performance of every covenant of the new notes, the indenture and the
registration rights agreement on the part of us to be performed or observed
by us;
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(2) immediately before and immediately after giving effect to the
transaction and the assumption described in clause (1)(b)(y) above, no
Default or Event of Default has occurred and is continuing; and
(3) we or the Surviving Entity have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that the
consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition, and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, comply with
the applicable provisions of the indenture and that all conditions
precedent in the indenture relating to the transaction have been satisfied.
For purposes of the foregoing description, the transfer (by lease,
assignment, sale or otherwise in a single transaction or series of transactions)
of all or substantially all of the assets of one or more of our Subsidiaries,
the Capital Stock of which constitutes all or substantially all of our assets,
will be deemed to be the transfer of all or substantially all of our assets.
The indenture will provide that upon any consolidation, combination or
merger or any transfer of all or substantially all of our assets in accordance
with the foregoing description, in which we are not the continuing corporation,
the Surviving Entity formed by such consolidation or into which we are merged or
to which such sale, assignment, transfer, lease, conveyance or other disposition
is made will succeed to, and be substituted for, and may exercise every right
and power of, us under the indenture and the new notes with the same effect as
if such Surviving Entity had been named as such.
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS. So long as any of the new
notes remain outstanding, we will not, and will not permit any Subsidiary to,
enter into any sale and lease-back transactions with respect to any assets
(other than any sale leaseback transaction involving leases for a term of not
more than three years), unless either
(1) it relates to our headquarters building now under construction or
any real property now owned by ABR;
(2) we or such Subsidiary would be entitled to incur Indebtedness
secured by a Permitted Lien on the assets to be leased in an amount at
least equal to the Attributable Debt in respect of such transaction; or
(3) the proceeds of the sale of the assets to be leased are at least
equal to their fair market value (as determined by our Board of Directors)
and the proceeds are applied to the purchase or acquisition (or, in the
case of real property, the construction) of tangible assets or to the
retirement (other than at maturity or pursuant to a mandatory sinking fund
or mandatory redemption provision) of our Indebtedness for money borrowed
which ranks PARI PASSU to the new notes.
REPORTS
Regardless of whether required by the rules and regulations of the SEC, so
long as any new notes are outstanding, we will furnish to the Trustee and each
Holder of new notes, within 15 days after we are or would have been required to
file with the SEC:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
we were required to file such forms, including for
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each a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information only,
a report thereon by our independent certified public accountants; and
(2) all information that would be required to be contained in a filing
with the SEC on Form 8-K if we were required to file such reports.
From and after the time we file a registration statement with the SEC with
respect to the new notes, we will file the above information with the SEC so
long as the SEC will accept such filings.
EVENTS OF DEFAULT
The following are Events of Default under the indenture with respect to the
new notes:
(1) failure to pay interest or any Liquidated Damages payable on any
outstanding notes when due, continued for 30 days;
(2) failure to pay principal on any notes when due;
(3) failure to perform any other covenant in the indenture, continued
for 30 days, after written notice as provided in the indenture;
(4) (x) we or any of our Subsidiaries fail to pay any of our
Indebtedness under one or more agreements or instruments evidencing an
aggregate principal amount of Indebtedness equal to at least $15 million
(or its equivalent in any other currency or currencies) as and when that
Indebtedness becomes due and payable, after the expiration of any
applicable grace period, or
(y) any other event occurs which, under one or more agreements or
instruments evidencing our Indebtedness of or that of any Subsidiary,
obligates us or our Subsidiary to pay an aggregate principal amount of
Indebtedness equal to at least $15 million (or its equivalent in any
other currency or currencies) prior to the date on which it otherwise
would have become due and payable; and
(5) certain events of voluntary or involuntary bankruptcy, insolvency
or reorganization.
If an Event of Default (other than an Event of Default described in clause
(5) above) occurs and is continuing, either the Trustee or the Holders of at
least 25% in principal amount of the outstanding notes by notice as provided in
the indenture may declare the principal amount of all of the new notes to be due
and payable immediately. However, at any time after a declaration of
acceleration with respect to the new notes has been made, but before a judgment
or decree based on such acceleration has been obtained, the Holders of a
majority in principal amount of the outstanding notes may, under certain
circumstances, rescind and annul such acceleration. If an Event of Default
described in clause (5) above occurs, all unpaid principal of and accrued
interest and Liquidated Damages on the outstanding notes will ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder. For information as to waiver of defaults, see
"--Modification and Waiver" below.
The indenture provides that, subject to the duty of the Trustee during an
Event of Default to act with the required standard of care, the Trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request or direction of any of the Holders, unless such Holders shall
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have offered to the Trustee reasonable security or indemnity. Subject to certain
provisions, including those requiring security or indemnification of the
Trustee, the Holders of a majority in principal amount of the outstanding notes
will 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 the new notes.
We will be required to furnish to the Trustee annually a statement as to
our performance of our obligations under the indenture and as to any default in
such performance.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The indenture provides that the we, at our option,
(1) will be deemed to have been discharged from any and all obligations
in respect of the new notes (except for certain obligations to register the
transfer of or new notes, to replace stolen, lost, destroyed or mutilated
notes upon satisfaction of certain requirements (including, without
limitation, providing such security or indemnity as we or the Trustee may
require), to maintain paying agencies and to hold certain moneys in trust
for payment) ("legal defeasance"), or
(2) need not comply with certain restrictive covenants of the indenture
(including those described under "--Certain Covenants" above) ("covenant
defeasance"),
in each case, if we deposit, in trust with the Trustee, money in U.S. dollars or
U.S. Government Obligations that through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will provide money in
an amount or a combination thereof, in each case sufficient to pay all the
principal of, and interest and Liquidated Damages, if any, on the new notes on
the dates such payments are due in accordance with the terms of the indenture
and the new notes. In the case of discharge as described in clause (1) above, we
are required to deliver to the Trustee an opinion of nationally recognized tax
counsel in the United States acceptable to the Trustee to the effect that:
(1) the Holders of the new notes will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of the exercise of
the option set forth in clause (1) above and will be subject to U.S.
federal income tax on the same amounts and in the same manner and at the
same times as would have been the case if such option had not been
exercised; and
(2) either (A) we have received from, or there has been published by
the U.S. Internal Revenue Service, a ruling to that effect, or (B) since
the date of the indenture, there has been a change in the applicable U.S.
federal income tax law.
In the case of an election as described in clause (2) above, we are
required to deliver to the Trustee an opinion of nationally recognized tax
counsel to the effect that the Holders of the new notes will not recognize
income, gain or loss for U.S. federal income tax purposes as a result of the
exercise of the option set forth in clause (2) above.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of notes
as expressly provided for in the indenture) as to all outstanding notes when:
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(1) either
(a) all the notes theretofore authenticated and delivered (except
lost, stolen or destroyed notes which have been replaced or paid and
notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by us and thereafter been repaid to us
or discharged from such trust) have been delivered to the Trustee for
cancellation, or
(b) all notes not theretofore delivered to the Trustee for
cancellation have become due and payable or will become due and payable
at their stated maturity within one year and we have irrevocably
deposited or caused to be deposited with the Trustee funds in trust in
an amount sufficient to pay and discharge the entire Indebtedness on
such notes not theretofore delivered to the Trustee for cancellation,
including the principal of and any Liquidated Damages and interest on
such notes to the date of deposit or to the maturity thereof;
(2) we have paid all other sums payable by us under the indenture in
respect of the outstanding notes; and
(3) we have delivered to the Trustee an officers' certificate and, in
certain circumstances, an opinion of counsel satisfactory to the Trustee,
each stating that all conditions precedent under the indenture relating to
the satisfaction and discharge of the indenture in respect of the new notes
of such series have been complied with.
MODIFICATION AND WAIVER
From time to time we and the Trustee may, without the consent of the
Holders, amend, waive or supplement the indenture or the new notes for certain
specified purposes, including, among other things, curing ambiguities, defects
or inconsistencies, or making any other provisions with respect to matters or
questions arising under the indenture, or making any change that does not
adversely affect the interests of any Holder in any material respect. Other
modifications and amendments of the indenture may be made by us and the Trustee
with the consent of the Holders of not less than a majority in principal amount
of the outstanding notes of each series affected thereby; provided, that no such
modification or amendment may, without the consent of the Holder of each
outstanding note affected thereby:
(1) change the stated maturity of the principal of, or any installment
of principal of, or interest on, any notes;
(2) reduce the principal amount of or the rate of interest on any
notes;
(3) change the place or currency of payment of principal of or
interest on any notes;
(4) impair the right to institute suit for the enforcement of any
payment on or with respect to any notes;
(5) reduce the percentage in principal amount of outstanding notes, the
consent of the Holders of which is required for modification or amendment
of the indenture or for waiver of compliance with certain provisions of the
indenture or for waiver of certain defaults; or
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(6) change our obligation to maintain an office or agency in the places
and for the purposes specified in the indenture.
The Holders of not less than a majority in principal amount of the
outstanding notes may on behalf of the Holders of all notes waive compliance by
us with certain covenants of the indenture. The Holders of not less than a
majority in principal amount of the outstanding notes may on behalf of the
Holders of all notes waive any past default under the indenture, except a
default in the payment of the principal of or interest on any notes or in
respect of a provision which cannot be modified or amended under the indenture
without the consent of the Holder of each outstanding note affected.
GOVERNING LAW AND SERVICE OF PROCESS
The indenture and the new notes will be governed by the laws of the State
of New York. We have appointed The Bank of New York as our authorized agent upon
which process may be served in any action or proceeding arising out of or based
upon the indenture or the new notes which may be instituted in any federal or
state court having subject matter jurisdiction in the Borough of Manhattan, the
City of New York, New York and will irrevocably submit to the jurisdiction of
such courts in any such action or proceeding.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for the definitions of other capitalized terms used in
this prospectus herein but not defined herein.
"AFFILIATE" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by, or under direct or indirect common
control with, such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction means, at
the time of determination, the present value (discounted at the interest rate
implicit in such transaction in accordance with GAAP) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"BOARD OF DIRECTORS" means our Board of Directors or any committee thereof
duly authorized to act on behalf of such Board.
"CAPITAL LEASE OBLIGATION" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP.
"CAPITAL STOCK" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
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"COMMODITY PRICE PROTECTION AGREEMENT" means any forward contract,
commodity swap, commodity option or other similar financial agreement or
arrangement relating to, or the value of which is dependent upon, fluctuations
in commodity prices.
"CONSOLIDATED NET WORTH" of any Person means the stockholders' equity of
such Person, determined on a consolidated basis in accordance with GAAP, less
(without duplication) amounts attributable to Disqualified Capital Stock of such
Person.
"CONSOLIDATED TANGIBLE ASSETS" means Total Assets less the sum of:
(1) the total book value of all of our assets and the assets of our
Subsidiaries properly classified as intangible assets under GAAP, including
such items as goodwill, the purchase price of acquired assets in excess of
the fair market value thereof, trademarks, trade names, service marks,
customer lists, brand names, copyrights, patents and licenses, and rights
with respect to the foregoing, and
(2) all amounts representing any write-up in the book value of any of
our assets or the assets of our Subsidiaries resulting from a revaluation
thereof subsequent to the date of our then most recent audited financial
statements.
"CURRENCY AGREEMENT" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or of which such Person is a beneficiary.
"DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"DISQUALIFIED CAPITAL STOCK" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible or exchangeable or for which it is exercisable, is, or
upon the happening of an event or the passage of time or both would be, required
to be redeemed or repurchased (including at the option of the holder thereof) by
such Person or any of its Subsidiaries, in whole or in part, on or prior to the
Stated Maturity Date of the new notes.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or such other statements by such other
entity as may be approved by a significant segment of the accounting profession
of the United States, as are in effect on the Issue Date of the new notes.
"GLOBAL NOTES" has the meaning given to such term in the section of this
Description of Notes entitled "Book-Entry, Delivery and Form."
"HEDGING OBLIGATIONS" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Price
Protection Agreement.
"HOLDER" means a Person in whose name a note is registered on the Security
Registrar's books.
"INCUR" means issue, assume, guarantee, incur or otherwise become liable
for; PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary of another Person (whether
by merger, consolidation, acquisition or otherwise) will be deemed to be
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Incurred by such Person at the time it becomes such a Subsidiary; PROVIDED
FURTHER, HOWEVER, that in the case of a discount security, neither the accrual
of interest nor the accretion of original issue discount will be considered an
Incurrence of Indebtedness, but the entire face amount of such security will be
deemed Incurred upon the issuance of such security. The term "Incurrence" when
used as a noun will have a correlative meaning.
"INDEBTEDNESS" means, with respect to any Person on any date of
determination (without duplication): (i) the principal of and premium (if any)
in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person and all Attributable Debt in respect of
Sale/Leaseback Transactions entered into by such Person; (iii) the amount of all
obligations of such Person with respect to the redemption, repayment or other
repurchase of any Disqualified Capital Stock or, with respect to any Subsidiary
of such Person, any Preferred Stock (but excluding, in each case, any accrued
dividends); and (iv) all obligations of the type referred to in clauses (i) and
(iii) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise. The amount of Indebtedness of
any Person at any date will be the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations as described above at such date; PROVIDED HOWEVER, that the amount
outstanding at any time of any Indebtedness issued with original issue discount
will be deemed to be the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect us or any of our Subsidiaries against fluctuations in interest rates.
"ISSUE DATE" means the date on which the new notes are originally issued.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; PROVIDED,
HOWEVER, that, as to any such arrangement in corporate form, such corporation
will not, as to any Person of which such corporation is a Subsidiary, be
considered to be a Joint Venture to which such Person is a party.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof and any Sale/Lease-back Transaction
other than a Sale/Lease-back Transaction permitted pursuant to clause (a) or (c)
of the covenant described herein under the heading "Limitation on Sale and
Lease-back Transactions").
"PERMITTED LIENS" means any:
(1) Liens arising by reason of:
(x) operation of law in favor of carriers, warehousemen,
landlords, mechanics, materialmen, laborers, employees or suppliers in
existence for less than 120 days or for more than 120 days which are
not yet delinquent or are being contested in good faith by negotiations
or by appropriate proceedings which suspend the collection thereof; or
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(y) any interest or title of a lessor under any lease;
(2) Liens in favor of us or (other than in the case of Liens
securing our Indebtedness or Indebtedness of any of our Subsidiaries) our
Subsidiaries;
(3) Liens on property of a Person existing at the time such Person is
acquired by, merged into or consolidated with us or any of our
Subsidiaries; provided that such Liens were not incurred in contemplation
of such acquisition, merger or consolidation and do not extend to any
assets other than those of the Person acquired by, merged into or
consolidated with us or any such Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by us
or any of our Subsidiaries provided that such Liens were not incurred in
contemplation of such acquisition;
(5) Liens existing on the date of the indenture;
(6) Liens to secure taxes, assessments and other government charges or
claims for labor, material or supplies:
(x) in respect of obligations which are not overdue, or
(y) which are currently being contested in good faith by
appropriate proceedings if we have set aside on our books adequate
reserves with respect thereto, if required, and if no proceedings have
been commenced to foreclose any such Lien;
(7) deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(8) Liens in respect of judgments or awards which have been in force
for less than the applicable period for taking an appeal, so long as
execution is not levied thereunder, or in respect of which we or one of our
Subsidiaries, as the case may be, at the time in good faith are prosecuting
an appeal or proceedings for review and in respect of which we and our
Subsidiaries have maintained reserves in an amount satisfactory to us;
(9) encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's Liens under
leases to which we or any of our Subsidiaries are a party, and other minor
liens or encumbrances none of which in our opinion or in the opinion of
such Subsidiary interferes materially with the use of the property affected
in the ordinary conduct of our business or the business of such Subsidiary
and which defects do not individually or in the aggregate have a material
adverse effect on our business and the business of our Subsidiaries on a
consolidated basis;
(10) Liens securing Indebtedness in respect of performance bonds,
bankers' acceptances, and surety or appeal bonds entered into by us or our
Subsidiaries in the ordinary course of business;
(11) Liens securing Hedging Obligations consisting of Interest Rate
Agreements, Commodity Price Protection Agreements and Currency Agreements
entered into in the ordinary course of business and not for the purpose of
speculation;
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(12) Liens securing Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided that such
Indebtedness is extinguished within five business days of Incurrence;
(13) Liens securing our Indebtedness and that of our Subsidiaries
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, in any case Incurred in connection
with the disposition of any of our assets or those of any such Subsidiary
(other than guarantees of Indebtedness Incurred by any Person acquiring all
or any portion of such assets for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds
actually received by us or any such Subsidiary in connection with such
disposition;
(14) Liens arising in the ordinary course of business in connection
with obligations (other than obligations for borrowed money) that are not
overdue or which are being contested in good faith and by appropriate
proceedings, including, but not limited to Liens under bid, performance and
other surety bonds, supersedes and appeal bonds, Liens on advance or
progress payments received from customers under contracts for the sale,
lease or license of goods, software or services and upon the products being
sold or licensed, in each case securing performance of the underlying
contract or the repayment of such advances in the event final acceptance of
performance under such contracts does not occur, and Liens upon funds
collected temporarily from others pending payment or remittance on their
behalf;
(15) purchase money security interests on any property acquired or held
by us or our Subsidiaries in the ordinary course of business securing
Indebtedness incurred or assumed for the purpose of financing all or any
part of the cost of acquiring such property; PROVIDED, HOWEVER, that:
- any such Lien attaches to such property concurrently with or within 20
days after the acquisition thereof,
- such Lien attaches solely to the property so acquired in such
transaction, and
- the principal amount of the debt secured thereby does not exceed 100%
of the cost of such property;
(16) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; PROVIDED, HOWEVER, that:
- such deposit account is not a dedicated cash collateral account and is
not subject to restrictions against access by us in excess of those
set forth by regulations promulgated by the Federal Reserve Board, and
- such deposit account is not intended by us or any of our Subsidiaries
to provide collateral to the depository institution;
(17) rights of holders of notes or debentures issued by us or of our
Subsidiaries in deposits placed in trust to legally or "in substance"
defease such notes or debentures;
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(18) Any Lien deemed to be created in connection with the
securitization of accounts, receivables, instruments, chattel paper or
other rights to payment of the Company or its Subsidiaries, (a) to the
extent (i) such assets are transferred to a special purpose entity, (which
may be owned by the Company or any Subsidiary but is not consolidated for
accounting purposes with such transferor or owner) where such transfer is a
"true sale" for accounting purposes, and (ii) the face principal amount of
such assets at any time outstanding is not more than $150,000,000 or (b)
which is granted by any such special purpose entity in the assets so
transferred to it; and
(19) Liens securing Indebtedness in an aggregate principal amount
together with all Liens securing other of our Indebtedness and that of our
Subsidiaries outstanding on the date of such Incurrence (other than Liens
described in clauses (1) through (18) above) not exceeding 15% of
Consolidated Tangible Assets.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"PREFERRED STOCK" as applied to the Capital Stock of any corporation or the
equity securities of any trust, means Capital Stock of any class or classes
(however designated) which is preferred as to the payment of dividends or
distributions or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such corporation or trust over shares
of Capital Stock of any other class of such corporation or trust.
"PRINCIPAL" of any Indebtedness (including the new notes) means the
principal of such Indebtedness plus the premium, if any, payable on such
Indebtedness which is due or overdue or is to become due at the relevant time.
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to property now
owned or hereafter acquired whereby we or one of our Subsidiaries transfers such
property to a Person and we or any of our Subsidiaries leases it from such
Person under an operating lease.
"STATED MATURITY" means, with respect to any instrument, the date specified
in such instrument as the fixed date on which the final payment of principal of
such instrument is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase,
redemption or repayment of such instrument at the option of the holder thereof
upon the happening of any contingency unless such contingency has occurred).
"SUBSIDIARY" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by:
(1) such Person,
(2) such Person and one or more Subsidiaries of such Person, or
(3) one or more Subsidiaries of such Person.
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"TOTAL ASSETS" means our total consolidated assets (including the total
consolidated assets of our Subsidiaries) as shown on our most recent balance
sheet (excluding the footnotes thereto).
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal income
tax consequences associated with (1) the exchange of the old notes for the new
notes pursuant to the exchange offer by any Holder; and (2) the ownership and
disposition of the new notes by a person who is not a "United States person" as
defined below (a "Non-U.S. Holder"). This summary is based upon existing United
States federal income tax law, which is subject to change, possibly
retroactively. This summary does not discuss all aspects of United States
federal income taxation which may be important to particular Holders in light of
their individual investment circumstances, such as new notes held by investors
subject to special tax rules (e.g., financial institutions, insurance companies,
broker-dealers, and tax-exempt organizations) or to persons that will hold the
new notes as a part of a straddle, hedge, or synthetic security transaction for
United States federal income tax purposes or that have a functional currency
other than the United States dollar, all of whom may be subject to tax rules
that differ significantly from those summarized below.
In addition, this summary does not discuss any foreign, state, or local
income tax considerations or any taxes other than income taxes. This summary
assumes that investors (1) purchased their old notes for cash in the original
offering thereof, (2) exchanged their old notes for new notes in the exchange
offer, and (3) hold their new notes as "capital assets" (generally, property
held for investment) under the United States Internal Revenue Code of 1986, as
amended (the "Code"). YOU ARE URGED TO CONSULT WITH YOUR TAX ADVISOR REGARDING
THE UNITED STATES FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX
CONSIDERATIONS OF THE EXCHANGE OF THE OLD NOTES FOR THE NEW NOTES PURSUANT TO
THE EXCHANGE OFFER AND THE OWNERSHIP AND DISPOSITION OF THE NEW NOTES.
For purposes of this summary, a "United States person" is:
- an individual who is a citizen or resident of the United States;
- a corporation, partnership, or other entity created or organized under
the laws of the United States or any state or political subdivision
thereof;
- an estate the income of which is subject to United States federal
income taxation without regard to its source; or
- a trust the administration of which is subject to the primary
supervision of a United States court and which has one or more United
States persons who have the authority to control all substantial
decisions of the trust.
EXCHANGE OFFER
The exchange of the old notes for the new notes pursuant to the exchange
offer will not constitute a "significant modification" of the old notes for
federal income tax purposes because the terms of the new notes are not
materially different from the terms of the old notes. Accordingly, the exchange
will be disregarded for federal income tax purposes and the new notes received
will be treated as a continuation of the old notes in the hands of each Holder
of a new note. As a result (1) a U.S. Holder or Non-U.S. Holder should not
recognize taxable gain or loss as a result of exchanging old notes for new notes
pursuant to the exchange offer, (2) the holding period of the new notes should
include the holding period of the old notes
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exchanged therefor, and (3) the adjusted tax basis of the new notes should be
the same as the adjusted tax basis of the old notes exchanged therefor.
FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following discussion addresses certain material U.S. federal income tax
consequences to Non-U.S. Holders.
PAYMENTS OF INTEREST
Interest paid by us to Non-U.S. Holders will not be subject to United
States federal income or withholding tax provided that (1) such holder does not
actually or constructively own 10% or more of the total combined voting power of
all of our classes of stock entitled to vote, (2) such holder is not a
controlled foreign corporation that is related to us through stock ownership, a
foreign tax-exempt organization or foreign private foundation for United States
federal income tax purposes, and (3) the requirements of section 871(h) or
881(c) of the Code are satisfied as described below under the heading "Owner
Statement Requirement."
Notwithstanding the above, a Non-U.S. Holder that is engaged in the conduct
of a United States trade or business will be subject to (1) United States
federal income tax on interest that is effectively connected with the conduct of
such trade or business and (2) if the Non-U.S. Holder is a corporation, a United
States branch profits tax equal to 30% of its "effectively connected earnings
and profits" as adjusted for the taxable year, unless the holder qualifies for
an exemption from such tax or a lower tax rate under an applicable treaty. Any
Non-U.S. Holder subject to United States federal income tax under the rules
described in the preceding sentence, or claiming an exemption from or reduced
rate of taxation pursuant to a treaty, will be required to file an applicable
statement with us or our agent in order to avoid U.S. withholding tax at a rate
of 30% on interest paid on the new notes.
GAIN ON DISPOSITION
A Non-U.S. Holder will generally not be subject to United States federal
income tax on gain recognized on a sale, redemption, or other disposition of a
new note unless (1) the gain is effectively connected with the conduct of a
trade or business within the United States by the Non-U.S. Holder or (2) in the
case of a Non-U.S. Holder who is a nonresident alien individual, such holder is
present in the United States for 183 or more days during the taxable year in
which such gain is realized and certain other requirements are met. Any such
gain that is effectively connected with the conduct of a United States trade or
business by a Non-U.S. Holder will be subject to United States federal income
tax on a net income basis in the same manner as if such holder were a United
States person and, if such Non-U.S. Holder is a corporation, such gain may also
be subject to the 30% United States branch profits tax described above, subject
to the holder qualifying for an exemption from such tax or a lower tax rate
under an applicable treaty.
OWNER STATEMENT REQUIREMENT
Sections 871(h) and 881(c) of the Code require that either the beneficial
owner of a note or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and that holds a new note on behalf of
such owner file a statement with us or our agent to the effect that the
beneficial owner is not a United States person in order to avoid withholding of
United States federal income tax. Under current regulations, this requirement
will be satisfied if we or our agent receives (1) a statement (an "Owner's
Statement") from the beneficial
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owner of a note in which such owner certifies, under penalties of perjury,
that such owner is not a United States person and provides such owner's name
and address, or (2) a statement from the Financial Institution holding the
note on behalf of the beneficial owner in which the Financial Institution
certifies, under penalties of perjury, that it has received the Owner's
Statement together with a copy of the Owner's Statement. The beneficial owner
must inform us or our agent (or, in the case of a statement described in
clause (2) of the immediately preceding sentence, the Financial Institution)
within 30 days of any change in information on the Owner's Statement.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Current United States federal income tax law provides that in the case of
payments of interest to Non-U.S. Holders, the 31% backup withholding tax and
information reporting will not apply to payments made outside the United States
by us or a paying agent on a note if an Owner's Statement is received or an
exemption has otherwise been established; provided in each case that we or the
paying agent, as the case may be, have no actual knowledge that the payee is a
United States person.
Under current treasury regulations, payments of the proceeds of the sale of
a note to or through a foreign office of a "broker" will not be subject to
backup withholding but will be subject to information reporting if the broker is
a United States person, a controlled foreign corporation for United States
federal income tax purposes, or a foreign person 50% or more of whose gross
income is from a United States trade or business for a specified three-year
period, unless the broker has in its records documentary evidence that the
holder is not a United States person and certain other conditions are met or the
holder otherwise establishes an exemption. Payment of the proceeds of a sale to
or through the United States office of a broker is subject to backup withholding
and information reporting unless the holder certifies its non-United States
status under penalties of perjury or otherwise establishes an exemption.
Recently, the Treasury Department has promulgated final regulations
regarding the withholding and information reporting rules discussed above. In
general, such final regulations do not significantly alter the substantive
withholding and information reporting requirements but unify current
certification procedures and forms and clarify reliance standards. Under the
final regulations, special rules apply which permit the shifting of primary
responsibility for withholding to certain financial intermediaries acting on
behalf of beneficial owners. The final regulations are generally effective for
payments made after December 31, 1999, subject to certain transition rules. The
United States Internal Revenue Service has recently issued an administrative
notice that the effective date of the final regulations will be extended such
that the final regulations will only apply to payments made after December 31,
2000, but such administrative notice did not actually modify the text of the
effective date provisions of the final regulations.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant
to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. A broker-dealer may use this
prospectus, as it may be amended or supplemented from time to time, in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired as a result of market-making or other trading
activities (not directly from us). We have agreed that, for a period of 60
days after the expiration date, we will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any
such resale. In addition, until December 19, 1999, all dealers effecting
transactions in the new notes may be required to deliver a prospectus.
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We will not receive any proceeds from any sale of new notes by
broker-dealers. Broker-dealers may sell from time to time new notes they receive
for their own account pursuant to the exchange offer through:
- one or more transactions in the over-the-counter market;
- in negotiated transactions;
- through the writing of options on the new notes; or
- a combination of such methods of resale.
Such broker-dealers may sell at:
- market prices prevailing at the time of resale;
- prices related to such prevailing market prices; or
- negotiated prices.
Any broker-dealer may resell directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from the broker-dealer or the purchasers of the new notes. Any
broker-dealer that resells new notes that it received for its own account
pursuant to the exchange offer and any broker-dealer that participates in a
distribution of the new notes may be deemed to be an "underwriter" within the
meaning of the Securities Act. Any profit on any underwriter's resale of new
notes and any commission or concessions received by any underwriters may be
deemed to be underwriting compensation under the Securities Act. The letter of
transmittal states that a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act by acknowledging that
it will deliver and by delivering a prospectus.
The letter of transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. We
have agreed, for a period of 60 days after the expiration date to promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal. We have also agreed to pay all expenses incident to the exchange
offer (including the expenses of one counsel for the initial purchasers of the
old notes directly from us) and will indemnify the holders of the new notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act to the extent they arise out of or are
based upon (1) any untrue statement or alleged untrue statement of a material
fact contained in the registration statement or prospectus or (2) an omission or
alleged omission to state in the registration statement or the prospectus a
material fact that is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. This indemnification
obligation does not extend to statements or omissions in the registration
statement or prospectus made in reliance upon and in conformity with written
information pertaining to the holder that is furnished to us by or on behalf of
the holder.
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LEGAL MATTERS
Certain legal matters relating to the new notes offered hereby will be
passed upon for us by Oppenheimer Wolff & Donnelly LLP, Minneapolis, Minnesota.
EXPERTS
The consolidated financial statements and schedule of Ceridian Corporation
and subsidiaries as of December 31, 1998 and 1997, and for each of the years in
the three-year period ended December 31, 1998, have been incorporated by
reference herein and in the registration statement in reliance upon the reports
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of ABR Information Services, Inc. and
subsidiaries incorporated by reference into this prospectus have been audited by
Grant Thornton LLP, independent certified public accountants, to the extent and
for the periods indicated in their report thereon. Such consolidated financial
statements have been incorporated in reliance upon the report of Grant Thornton
LLP.
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[CERIDIAN LOGO]
$450,000,000
7.25% SENIOR NOTES DUE 2004
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PROSPECTUS
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September 20, 1999
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