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Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-52571
PROSPECTUS
THE BOEING COMPANY
OFFER TO EXCHANGE ITS
6 5/8% DEBENTURES DUE FEBRUARY 15, 2038
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
6 5/8% DEBENTURES DUE FEBRUARY 15, 2038
WHICH WERE ISSUED AND SOLD IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933
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THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON JULY 8, 1998, UNLESS EXTENDED.
The Boeing Company, a Delaware corporation (the "Company"), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus (as
the same may be amended or supplemented from time to time, this "Prospectus")
and in the accompanying Letter of Transmittal (which together constitute the
"Exchange Offer"), to exchange up to $300,000,000 aggregate principal amount of
its 6 5/8% Debentures due February 15, 2038 (the "Exchange Debentures") that
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement (as defined herein) of
which this Prospectus constitutes a part, for a like aggregate principal amount
of its outstanding 6 5/8% Debentures due February 15, 2038 (the "Original
Debentures"), of which $300,000,000 aggregate principal amount are issued and
outstanding. The Original Debentures and the Exchange Debentures are sometimes
collectively referred to herein as the "Debentures." See "The Exchange Offer"
and "Description of Exchange Debentures."
The terms of the Exchange Debentures are identical in all material respects
to the terms of the Original Debentures, except that the Exchange Debentures (i)
have been registered under the Securities Act and therefore will not be subject
to certain restrictions on transfer applicable to the Original Debentures and
(ii) will not provide for any increase in the interest rate thereon. See
"Description of Exchange Debentures." The Exchange Debentures are being offered
for exchange in order to satisfy certain obligations of the Company under the
Registration Rights Agreement dated as of February 19, 1998 (the "Registration
Rights Agreement") between the Company and the Initial Purchasers (as defined
herein).
(continued on the following page)
This Prospectus and the Letter of Transmittal are first being mailed to all
holders of the Original Debentures on June 2, 1998.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 29, 1998
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The Exchange Debentures will be unsecured indebtedness of the Company, will
rank pari passu in right of payment with all other unsubordinated and unsecured
indebtedness of the Company and will mature on February 15, 2038. Interest on
the Exchange Debentures will accrue from February 24, 1998 and will be payable
in cash on each February 15 and August 15, commencing August 15, 1998. The
Exchange Debentures will be redeemable in whole or in part, at the option of the
Company at any time and from time to time, at a redemption price equal to the
greater of (i) 100% of the principal amount of the Exchange Debentures to be
redeemed and (ii) the sum of the present values of the Remaining Scheduled
Payments (as defined herein) discounted to the redemption date on a semiannual
basis at the Treasury Rate (as defined herein) plus 15 basis points, together in
either case with accrued interest to the date of redemption. See "Description of
Exchange Debentures -- Optional Redemption."
In the event that the Exchange Offer is consummated, any Original
Debentures that remain outstanding after consummation of the Exchange Offer and
the Exchange Debentures issued in the Exchange Offer will vote together as a
single class for purposes of determining whether holders of the requisite
percentage in outstanding principal amount thereof have taken certain actions or
exercised certain rights under the Indenture dated as of August 15, 1991 between
the Company and The Chase Manhattan Bank, as trustee (the "Trustee"), as amended
and supplemented from time to time (the "Indenture"), relating to the
Debentures.
The Company sold the Original Debentures in an offering exempt from the
registration requirements of the Securities Act, which was consummated on
February 24, 1998.
Each broker-dealer that receives Exchange Debentures for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Debentures. The Letter
of Transmittal states that by so acknowledging 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. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Debentures received in exchange for Original Debentures
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, for a period ending on the
close of business on the 180th day following the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution." However, a
broker-dealer which acquired Original Debentures for its own account as a result
of market-making activities or other trading activities (a "Participating
Broker-Dealer"), and which intends to use this Prospectus in connection with the
resale of Exchange Debentures received in exchange for Original Debentures
pursuant to the Exchange Offer must notify the Company, or cause the Company to
be notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that purpose
in the Letter of Transmittal or may be delivered to the Exchange Agent (as
defined herein) at the addresses set forth herein under "The Exchange Offer --
Exchange Agent." Any Participating Broker-Dealer which acquired Original
Debentures directly from the Company or which is an "affiliate" of the Company
will not be permitted or entitled to tender such Original Debentures in the
Exchange Offer and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
See "The Exchange Offer -- Resales of Exchange Debentures."
In such regard, each Participating Broker-Dealer which surrenders Original
Debentures pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that upon receipt of notice from the
Company of the occurrence of (i) any event or the discovery of any fact that
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or that causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or (ii) certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
use of this Prospectus until the Company has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer, or
the Company has given notice that the use of this Prospectus may be resumed, as
the case may be. If the Company gives such notice to suspend the use of this
Prospectus, it shall extend the 180-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus
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in connection with the resale of Exchange Debentures by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales of
the Exchange Debentures or to and including the date on which the Company has
given notice that the use of this Prospectus may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Original Debentures. The Exchange Debentures will
be a new issue of securities for which there currently is no market. Although
Credit Suisse First Boston Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, the initial purchasers of the Original Debentures (the "Initial
Purchasers"), have informed the Company that they currently intend to make a
market in the Exchange Debentures, they are not obligated to do so, and any such
market making may be discontinued at any time without notice. Accordingly, there
can be no assurance as to the development or liquidity of any market for the
Exchange Debentures. The Company currently does not intend to apply for listing
of the Exchange Debentures on any securities exchange or for quotation through
the National Association of Securities Dealers, Inc. ("NASD") Automated
Quotation System.
Any Original Debentures not tendered and accepted in the Exchange Offer
will remain outstanding and will be entitled to the same rights and will be
subject to the same limitations applicable thereto under the Indenture (except
for those rights that terminate upon consummation of the Exchange Offer).
Following consummation of the Exchange Offer, the holders of Original Debentures
will continue to be subject to all the existing restrictions upon transfer
thereof and the Company will have no further obligation to such holders (other
than under certain limited circumstances) to provide for registration under the
Securities Act of the Original Debentures held by them. To the extent that
Original Debentures are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Original Debentures could be adversely affected.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL DEBENTURES ARE URGED TO READ THIS PROSPECTUS
AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO
TENDER THEIR ORIGINAL DEBENTURES PURSUANT TO THE EXCHANGE OFFER.
Original Debentures may be tendered for exchange on or prior to 5:00 p.m.,
New York City time, on July 8, 1998 (such time on such date being hereinafter
called the "Expiration Date"), unless the Exchange Offer is extended by the
Company (in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended). Tenders of Original Debentures
may be withdrawn at any time on or prior to the Expiration Date. The Exchange
Offer is not conditioned upon any minimum principal amount of Original
Debentures being tendered for exchange. However, the Exchange Offer is subject
to certain events and conditions that may be waived by the Company and to the
terms and provisions of the Registration Rights Agreement. Original Debentures
may be tendered in whole or in part in integral multiples of $1,000 in aggregate
principal amount. The Company has agreed to pay all expenses of the Exchange
Offer. See "The Exchange Offer -- Fees and Expenses." Holders of the Original
Debentures whose Original Debentures are accepted for exchange will not receive
interest on such Original Debentures and will be deemed to have waived the right
to receive any interest on such Original Debentures accumulated from and after
February 24, 1998. Accordingly, holders of Exchange Debentures as of the record
date for the payment of interest on August 15, 1998 will be entitled to receive
interest accumulated from and after February 24, 1998. See "The Exchange
Offer -- Interest Payments on Exchange Debentures."
The Company will not receive any cash proceeds from the issuance of the
Exchange Debentures offered hereby. No dealer-manager is being used in
connection with the Exchange Offer. See "Use of Proceeds" and "Plan of
Distribution."
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DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
When used in this Prospectus, the words "estimate," "project," "intend" and
"expect" and similar expressions are intended to identify forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Prospectus.
Such statements are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated in such forward-looking
statements. Such risks and uncertainties include, among others, those risks,
uncertainties and risk factors identified under the heading "Forward-Looking
Information Is Subject to Risk and Uncertainty" accompanying "Management's
Discussion and Analysis of Results of Operations, Financial Condition and
Business Environment" that is in the Company's 1997 Annual Report to
shareholders, that is incorporated by reference in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 and that is in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
The Company does not undertake any obligation to publicly release any revisions
to these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission also maintains a World Wide Web site that
contains reports, proxy and information statements, and other information
regarding registrants (including the Company) that file electronically with the
Commission (http://www.sec.gov). The Company's common stock is listed on the New
York Stock Exchange, and reports, proxy statements and other information
relating to the Company can be inspected at the New York Stock Exchange, 20
Broad Street, New York, New York 10006.
Prior to the merger on August 1, 1997 (the "Merger") of West Acquisition
Corp., a wholly owned subsidiary of the Company, into McDonnell Douglas
Corporation ("McDonnell Douglas"), pursuant to which McDonnell Douglas became a
wholly owned subsidiary of the Company, McDonnell Douglas was subject to the
informational requirements of the Exchange Act, and the common stock of
McDonnell Douglas was listed on the New York Stock Exchange and the Pacific
Stock Exchange. Information regarding McDonnell Douglas, including its Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, is available as
indicated in the preceding paragraph. In addition, such information can be
inspected at the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94014.
The Company has filed with the Commission a Registration Statement on Form
S-4, of which this Prospectus forms a part (the "Registration Statement"), to
register the securities offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted from this Prospectus in accordance with the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document do not purport to be complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. Items omitted from this
Prospectus but contained in the Registration Statement may be inspected and
copied as described above.
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THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
DATA SHIPPING DEPARTMENT, THE BOEING COMPANY, P.O. BOX 3707, MAIL STOP 3T-33,
SEATTLE, WASHINGTON 98124-2207. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY JUNE 15, 1998.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated into
this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997 (File No. 1-442);
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 (File No. 1-442); and
3. The Company's Current Reports on Form 8-K filed with the Commission on
January 28, February 2 and April 10, 1998 (File No. 1-442).
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of any offering of securities made by this Prospectus
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from their respective dates of filing. Any statement made in this
Prospectus or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that another statement made in this Prospectus or
in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
modified or superseded statement shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
As used herein, the terms "Prospectus" and "herein" mean this Prospectus,
including the documents incorporated or deemed to be incorporated herein by
reference, as the same may be amended, supplemented or otherwise modified from
time to time. Unless otherwise indicated, all references in this Prospectus to
documents "incorporated by reference" are to documents incorporated by reference
into this Prospectus. Statements contained in this Prospectus as to the contents
of any contract or other document referred to herein do not purport to be
complete, and where reference is made to the particular provisions of such
contract or other document, such provisions are qualified in all respects by
reference to all the provisions of such contract or other document. The Company
will provide without charge to any person to whom this Prospectus is delivered,
on such person's request, a copy of any or all of the documents incorporated by
reference (other than exhibits not specifically incorporated by reference into
the texts of such documents). Requests for such documents should be directed to
Data Shipping Department, The Boeing Company, P.O. Box 3707, Mail Stop 3T-33,
Seattle, Washington 98124-2207, telephone (206) 393-4964.
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PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus or incorporated by reference herein.
THE BOEING COMPANY
The Boeing Company, together with its subsidiaries (herein referred to as
the "Company"), is one of the world's major aerospace firms. The Company
operates in two principal industries: commercial aircraft, and information,
space and defense systems. Commercial aircraft operations -- conducted through
Boeing Commercial Airplane Group -- involve development, production and
marketing of commercial aircraft and providing related support services
principally to the commercial airline industry worldwide. The Company is a
leading producer of commercial aircraft and offers a family of commercial
jetliners designed to meet a broad spectrum of passenger and cargo requirements
of domestic and foreign airlines. This family of commercial jet aircraft
currently includes the 737, MD-80, MD-90 and 757 standard-body models and the
767, MD-11, 777 and 747 wide-body models. Information, space and defense systems
operations -- conducted through Boeing Information, Space, and Defense Systems
Group -- involve research, development, production, modification and support of
the following products and related systems: military aircraft, including
fighter, transport and attack aircraft; helicopters; space and missile systems;
satellite launching vehicles; rocket engines; and specialized information
services.
During 1997, approximately 59% of the Company's operating revenues were
attributable to the commercial aircraft segment, and approximately 40% of such
operating revenues were attributable to the information, space and defense
segment. An additional 1% of operating revenues were attributable to other
activities, including financial services. As of December 31, 1997, the Company
had shareholders' equity of approximately $13 billion and assets of
approximately $38 billion. As of January 1, 1998, the Company employed
approximately 239,000 employees.
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. For further information regarding the Company,
holders of Original Debentures may refer to such reports, proxy statements and
other information, which are available as described in "Available Information"
and "Incorporation of Certain Documents by Reference."
The mailing address and telephone number of the principal executive offices
of the Company are 7755 East Marginal Way South, Seattle, Washington 98108 and
(206) 655-2121. The Company was originally incorporated in Washington in 1916
and was reincorporated in Delaware in 1934.
THE EXCHANGE OFFER
The Exchange Offer........... The Company hereby offers up to $300,000,000
aggregate principal amount of Exchange Debentures
in exchange for a like aggregate principal amount
of Original Debentures. Original Debentures may
be tendered for exchange in whole or in part in
integral multiples of $1,000 in aggregate
principal amount. The Company is making the
Exchange Offer in order to satisfy its
obligations under the Registration Rights
Agreement relating to the Original Debentures.
For a description of the procedures for tendering
Original Debentures, see "The Exchange
Offer -- Procedures for Tendering Original
Debentures."
Expiration Date.............. 5:00 p.m., New York City time, on July 8, 1998,
unless the Exchange Offer is extended by the
Company (in which case the Expiration Date will
be the latest date and time to which the Exchange
Offer is
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extended). See "The Exchange Offer -- Terms of
the Exchange Offer."
Conditions to the Exchange
Offer........................ The Exchange Offer is subject to certain
conditions, which may be waived by the Company in
its sole discretion. The Exchange Offer is not
conditioned upon any minimum principal amount of
Original Debentures being tendered. See "The
Exchange Offer -- Conditions to the Exchange
Offer."
Offer........................ The Company reserves the right in its sole and
absolute discretion, subject to applicable law,
at any time and from time to time, to (i) delay
the acceptance of the Original Debentures for
exchange, (ii) terminate the Exchange Offer if
certain specified conditions have not been
satisfied, (iii) extend the Expiration Date of
the Exchange Offer and retain all Original
Debentures tendered pursuant to the Exchange
Offer, subject, however, to the right of holders
of Original Debentures to withdraw their tendered
Original Debentures, or (iv) waive any condition
or otherwise amend the terms of the Exchange
Offer in any respect. See "The Exchange
Offer -- Terms of the Exchange Offer."
Withdrawal Rights............ Tenders of Original Debentures may be withdrawn
at any time on or prior to the Expiration Date by
delivering a written notice of such withdrawal to
the Exchange Agent in conformity with certain
procedures set forth below under "The Exchange
Offer -- Withdrawal Rights."
Procedures for Tendering
Original Debentures.......... Brokers, dealers, commercial banks, trust
companies and other nominees who hold Original
Debentures through The Depository Trust Company
(the "Depository" or "DTC") may effect tenders by
book-entry transfer in accordance with DTC's
Automated Tender Offer Program ("ATOP"). Holders
of such Original Debentures registered in the
name of a broker, dealer, commercial bank, trust
company or other nominee are urged to contact
such person promptly if they wish to tender
Original Debentures. In order for Original
Debentures to be tendered by a means other than
by book-entry transfer, a Letter of Transmittal
must be completed and signed in accordance with
the instructions contained therein. The Letter of
Transmittal and any other documents required by
the Letter of Transmittal must be delivered to
The Chase Manhattan Bank (the "Exchange Agent")
by mail, facsimile, hand delivery or overnight
courier and either such Original Debentures must
be delivered to the Exchange Agent or specified
procedures for guaranteed delivery must be
complied with. See "The Exchange
Offer -- Procedures for Tendering Original
Debentures."
Letters of Transmittal and certificates
representing Original Debentures should not be
sent to the Company. Such documents should be
sent only to the Exchange Agent.
Resales of Exchange
Debentures................... The Company is making the Exchange Offer in
reliance on the position of the staff of the
Division of Corporation Finance of the Commission
as set forth in certain interpretive letters
addressed to third parties in other transactions.
However, the Company has not sought its own
interpretive letter and there can be no assurance
that
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the staff of the Division of Corporation Finance
of the Commission would make a similar
determination with respect to the Exchange Offer
as it has in such interpretive letters to third
parties. Based on these interpretations by the
staff of the Division of Corporation Finance of
the Commission, and subject to the two
immediately following sentences, the Company
believes that Exchange Debentures issued pursuant
to the Exchange Offer in exchange for Original
Debentures may be offered for resale, resold and
otherwise transferred by a holder thereof (other
than a holder which is a broker-dealer) without
further compliance with the registration and
prospectus delivery requirements of the
Securities Act, provided that such Exchange
Debentures are acquired in the ordinary course of
such holder's business and that such holder is
not participating, and has no arrangement or
understanding with any person to participate, in
a distribution (within the meaning of the
Securities Act) of such Exchange Debentures.
However, any holder of Original Debentures who is
an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company or who intends to
participate in the Exchange Offer for the purpose
of distributing Exchange Debentures, or any
broker-dealer which purchased the Original
Debentures from the Company to resell pursuant to
Rule 144A under the Securities Act ('Rule 144A")
or any other available exemption under the
Securities Act, (i) will not be able to rely on
the interpretations of the staff of the Division
of Corporation Finance of the Commission set
forth in the above-mentioned interpretive
letters, (ii) will not be permitted or entitled
to tender such Original Debentures in the
Exchange Offer, and (iii) must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any sale
or other transfer of such Original Debentures
unless such sale is made pursuant to an exemption
from such requirements. In addition, as described
below, if any broker-dealer holds Original
Debentures acquired for its own account as a
result of market-making or other trading
activities and exchanges such Original Debentures
for Exchange Debentures, then such broker-dealer
must deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resales of such Exchange Debentures.
Each holder of Original Debentures who wishes to
exchange Original Debentures for Exchange
Debentures in the Exchange Offer will be required
to represent that (i) it is not an "affiliate,"
as defined in Rule 405 under the Securities Act,
of the Company, (ii) any Exchange Debentures to
be received by it are being acquired in the
ordinary course of its business, (iii) it has no
arrangement or understanding with any person to
participate in a distribution (within the meaning
of the Securities Act) of such Exchange
Debentures, and (iv) if such holder is not a
broker-dealer, such holder is not engaged in, and
does not intend to engage in, a distribution
(within the meaning of the Securities Act) of
such Exchange Debentures. Each broker-dealer that
receives Exchange Debentures for its own account
in exchange for Original Debentures, where such
Original Debentures were acquired by such
broker-dealer as a result of market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange
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Debentures. See "Plan of Distribution." The
Letter of Transmittal states that, by so
acknowledging 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.
Based on the position taken by the staff of the
Division of Corporation Finance of the Commission
in the interpretive letters referred to above,
the Company believes that Participating
Broker-Dealers which acquired Original Debentures
for their own accounts as a result of
market-making activities or other trading
activities may fulfill their prospectus delivery
requirements with respect to the Exchange
Debentures received upon exchange of such
Original Debentures (other than Original
Debentures that represent an unsold allotment
from the initial sale of the Original Debentures)
with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus
prepared for an exchange offer so long as it
contains a description of the plan of
distribution with respect to the resale of such
Exchange Debentures. Accordingly, this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of
Exchange Debentures received in exchange for
Original Debentures where such Original
Debentures were acquired by such Participating
Broker-Dealer for its own account as a result of
market-making or other trading activities.
Subject to certain provisions set forth in the
Registration Rights Agreement and to the
limitations described in "The Exchange
Offer -- Resales of Exchange Debentures," the
Company has agreed that this Prospectus, as it
may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in
connection with resales of such Exchange
Debentures for a period ending 180 days after the
Expiration Date (subject to extension under
certain limited circumstances) or, if earlier,
when all such Exchange Debentures have been
disposed of by such Participating Broker-Dealer.
See "Plan of Distribution." Any Participating
Broker-Dealer which purchased Original Debentures
directly from the Company or which is an
"affiliate" of the Company may not rely on such
interpretive letters and must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with any
resale transaction. See "The Exchange
Offer -- Resales of Exchange Debentures."
Exchange Agent............... The exchange agent with respect to the Exchange
Offer is The Chase Manhattan Bank. The addresses,
and telephone and facsimile numbers, of the
Exchange Agent are set forth in "The Exchange
Offer -- Exchange Agent" and in the Letter of
Transmittal. The Chase Manhattan Bank also serves
as Trustee under the Indenture.
Use of Proceeds.............. The Company will not receive any cash proceeds
from the issuance of the Exchange Debentures
offered hereby. See "Use of Proceeds."
Certain Federal Income Tax
Consequences............... Holders of Original Debentures should review the
information set forth in "Certain Federal Income
Tax Consequences" prior to tendering Original
Debentures in the Exchange Offer.
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THE EXCHANGE DEBENTURES
Securities Offered........... Up to $300,000,000 aggregate principal amount of
the Company's Exchange Debentures that have been
registered under the Securities Act are being
offered in exchange for a like aggregate
principal amount of Original Debentures. The
Exchange Debentures will be issued and the
Original Debentures were issued under the
Indenture. The Exchange Debentures and any
Original Debentures that remain outstanding after
consummation of the Exchange Offer will vote
together as a single class for purposes of
determining whether holders of the requisite
percentage in outstanding principal amount
thereof have taken certain actions or exercised
certain rights under the Indenture. See
"Description of Exchange
Debentures -- Modification and Waiver." The terms
of the Exchange Debentures are identical in all
material respects to the terms of the Original
Debentures, except that the Exchange Debentures
have been registered under the Securities Act and
therefore will not be subject to certain
restrictions on transfer applicable to the
Original Debentures and will not provide for any
increase in the interest rate thereon. See "The
Exchange Offer -- Purpose of the Exchange Offer"
and "Description of Exchange Debentures."
Maturity Date................ February 15, 2038.
Interest..................... Interest on the Exchange Debentures is payable
semiannually on each February 15 and August 15,
commencing August 15, 1998.
Ranking...................... The Exchange Debentures will be unsecured
obligations of the Company and will rank pari
passu with all other unsecured and unsubordinated
indebtedness of the Company.
Redemption................... The Exchange Debentures will be redeemable in
whole or in part, at the option of the Company at
any time and from time to time, at a redemption
price equal to the greater of (i) 100% of the
principal amount of the Exchange Debentures to be
redeemed and (ii) the sum of the present values
of the Remaining Scheduled Payments discounted to
the redemption date on a semiannual basis at the
Treasury Rate plus 15 basis points, together in
either case with accrued interest to the date of
redemption. See "Description of Exchange
Debentures -- Optional Redemption."
Ratings...................... The Exchange Debentures are rated AA3 by Moody's
Investors Service, Inc. and AA+ by Standard &
Poor's Rating Services.
Book-Entry; Delivery and
Form......................... It is expected that delivery of the Exchange
Debentures will be made in book-entry or
certificated form. The Company expects that
Exchange Debentures exchanged for Original
Debentures currently represented by Global
Exchange Debentures (as herein defined) deposited
with, or on behalf of the Depository and
registered in the name of Cede & Co., its
nominee, will be represented by Global Exchange
Debentures and deposited upon issuance with the
Depository and registered in its name or the name
of its nominee. Beneficial interests in the
Global Exchange Debentures will be shown on, and
transfers thereof will be effected through,
records maintained by the Depository and its
participants.
10
<PAGE> 11
Transfer Restrictions........ The Exchange Debentures will be issued, and may
be transferred, only in minimum denominations of
not less than $1,000 principal amount. See "The
Exchange Offer -- Terms of the Exchange Offer."
Any such transfer of Exchange Debentures in
denominations of less than $1,000 principal
amount shall be deemed void and of no legal
effect whatsoever.
Absence of Market for the
Debentures................. The Exchange Debentures will be a new issue of
securities for which there currently is no
market. Although the Initial Purchasers have
informed the Company that they currently intend
to make a market in the Exchange Debentures, they
are not obligated to do so, and any such
market-making may be discontinued at any time
without notice. Accordingly, there can be no
assurance as to the development or liquidity of
any market for the Exchange Debentures. The
Company currently does not intend to apply for
listing of the Exchange Debentures on any
securities exchange or for quotation through the
NASD Automated Quotation System. See "Plan of
Distribution."
For additional information regarding the Exchange Debentures, see
"Description of Exchange Debentures" and "Certain Federal Income Tax
Considerations."
11
<PAGE> 12
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain obligations of the
Company under the Registration Rights Agreement. The Company will not receive
any cash proceeds from the issuance of the Exchange Debentures offered hereby
and has agreed to pay the expenses of the Exchange Offer. In consideration for
issuing the Exchange Debentures as contemplated in this Prospectus, the Company
will receive, in exchange, Original Debentures representing a like aggregate
principal amount at maturity. The form and terms of the Exchange Debentures are
identical in all material respects to the form and terms of the Original
Debentures, except as otherwise described in "The Exchange Offer -- Terms of the
Exchange Offer." The Original Debentures surrendered in the exchange for
Exchange Debentures will be retired and canceled and cannot be reissued.
Accordingly, issuance of the Exchange Debentures will not result in any increase
in the outstanding debt of the Company.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth information with respect to the Company's
consolidated ratios of earnings to fixed charges for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.................... (1) 5.8x (2) 5.0x 5.5x
</TABLE>
- ---------------
(1) For the year ended December 31, 1997, earnings available for fixed charges
totaling $312 million were insufficient to cover total fixed charges of $613
million.
(2) For the year ended December 31, 1995, earnings available for fixed charges
totaling $69 million were insufficient to cover total fixed charges of $492
million.
The ratio of earnings to fixed charges represents the number of times that
fixed charges were covered by earnings. In computing the ratio, earnings consist
of net earnings, plus federal taxes on income and fixed charges adjusted for the
capitalized interest and amortization of previously capitalized interest, less
earnings accounted for by the equity method and not distributed. Fixed charges
consist of interest on borrowings, both expensed and capitalized, and that
portion of rentals representative of an interest factor. As a result of the
Merger, each of the Company's ratios of earnings to fixed charges reflects the
combined operations of Boeing and McDonnell Douglas for the period indicated.
12
<PAGE> 13
SELECTED FINANCIAL DATA
The selected financial data presented below is derived from the financial
statements of the Company and its consolidated subsidiaries. The financial
statements of the Company and its subsidiaries as of December 31, 1997 and 1996,
and for each of the three years in the period ended December 31, 1997, are
incorporated herein by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 and have been restated to include the combined
results of operations and financial position of the Company and McDonnell
Douglas, accounting for the Merger as a pooling of interests. Such restated
financial statements, except those of McDonnell Douglas and its consolidated
subsidiaries as of December 31, 1996 and for each of the two years then ended,
have been audited by Deloitte & Touche LLP, as stated in their reports dated
January 27, 1998 incorporated herein by reference. The consolidated financial
statements of McDonnell Douglas and subsidiaries as of December 31, 1996 and for
each of the two years then ended, consolidated with those of the Company, have
been audited by Ernst & Young LLP, as stated in their reports incorporated by
reference in this Prospectus and the Registration Statement. The information set
forth below should be read in conjunction with such consolidated financial
statements and the notes thereto. See "Incorporation of Certain Documents by
Reference." The selected financial data as of December 31, 1995, 1994 and 1993
and for each of the two years in the period ended December 31, 1994 are derived
from unaudited consolidated financial statements of the Company (including the
combined results of the Company and McDonnell Douglas) which, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such financial information.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATIONS
Sales and other operating revenues
Commercial aircraft..................... $26,929 $19,916 $17,511 $19,778 $25,120
Information, space and defense
systems............................... 18,125 14,934 14,849 14,676 14,090
Customer and commercial financing,
other................................. 746 603 600 515 501
------- ------- ------- ------- -------
Total............................ $45,800 $35,453 $32,960 $34,969 $39,711
------- ------- ------- ------- -------
Net earnings (loss)....................... $ (178)(1) $ 1,818 $ (36)(2) $ 1,483 $ 1,640
Basic earnings per share(3)............. (.18) 1.88 (.04) 1.50 1.66
Diluted earnings per share(3)........... (.18) 1.85 (.04) 1.48 1.64
Cash dividends paid....................... $ 557 $ 480 $ 434 $ 395 $ 395
Per share............................... .56 .55 .50 .50 .50
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
-------------------------------------------------------
1997 1996 1995 1994 1993
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Total assets.............................. $38,024 $37,880 $31,877 $32,259 $31,199
Working capital........................... 5,111 7,783 7,490 6,299 5,108
Net plant and equipment................... 8,391 8,266 7,927 8,399 8,838
Cash and short-term investments........... 5,149 6,352 4,527 3,064 3,194
Total debt................................ 6,854 7,489 5,401 5,247 5,840
Shareholders' equity...................... 12,953 13,502 12,527 13,173 11,966
Per share............................... 13.31 13.96 12.80 13.37 12.12
</TABLE>
- ---------------
(1) Includes an after-tax charge of $876 million relating to the commercial
aircraft product lines of the former McDonnell Douglas. Such charge does not
include any costs that might be associated with future decisions regarding
facilities conversions or consolidations, which decisions will be based on
long-term business objectives. The Company is continuing to assess potential
opportunities for improved utilization and consolidation of facilities
across all parts of the Company.
(2) Includes after-tax charges of $1.125 billion relating to the revaluation of
the McDonnell Douglas MD-11 program inventory and an after-tax charge of
$390 million relating to a special retirement program.
(3) Per share computation excludes outstanding shares held by the ShareValue
Trust. The ShareValue Trust is a 14-year irrevocable trust that holds the
Company's common stock, receives dividends and distributes to employees
appreciation in value above a 3% per annum threshold rate of return.
13
<PAGE> 14
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Original Debentures, the Company entered
into the Registration Rights Agreement with the Initial Purchasers pursuant to
which the Company agreed to file and to use its best efforts to cause to become
effective with the Commission a registration statement with respect to the
exchange of the Original Debentures for debentures with terms identical in all
material respects to the terms of the Original Debentures. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement.
The Exchange Offer is being made to satisfy the contractual obligations of
the Company under the Registration Rights Agreement. The form and terms of the
Exchange Debentures are the same as the form and terms of the Original
Debentures except that the Exchange Debentures have been registered under the
Securities Act and therefore will not be subject to certain restrictions on
transfer applicable to the Original Debentures and will not provide for any
increase in the interest rate thereon. In that regard, the Original Debentures
provide, among other things, that, if a registration statement relating to the
Exchange Offer has not been filed by June 24, 1998, or if the Exchange Offer is
not consummated by August 24, 1998, the interest rate borne by the Original
Debentures will increase by 0.25% per annum until such registration statement is
filed or the Exchange Offer is consummated, as the case may be. Upon
consummation of the Exchange Offer, holders of Original Debentures will not be
entitled to any increase in the interest rate thereon or any further
registration rights under the Registration Rights Agreement, except under
limited circumstances. See "Description of Exchange Debentures."
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Original Debentures in any jurisdiction in
which the Exchange Offer or the acceptance thereof would not be in compliance
with the securities or blue sky laws of such jurisdiction.
Each broker-dealer that receives Exchange Debentures for its own account in
exchange for Original Debentures, where such Original Debentures were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Debentures. See "Plan of Distribution."
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Original Debentures are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder, or any person whose
Original Debentures are held of record by DTC who desires to deliver such
Original Debentures by book-entry transfer at DTC.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $300,000,000 aggregate principal amount of Exchange Debentures
for a like aggregate principal amount of Original Debentures properly tendered
on or prior to the Expiration Date and not properly withdrawn in accordance with
the procedures described below. The Company will issue, promptly after the
Expiration Date, an aggregate principal amount of up to $300,000,000 of Exchange
Debentures in exchange for a like principal amount of outstanding Original
Debentures tendered and accepted in connection with the Exchange Offer. Holders
may tender their Original Debentures in whole or in part in integral multiples
of $1,000 in aggregate principal amount.
The Exchange Offer is not conditioned upon any minimum principal amount of
Original Debentures being tendered. As of the date of this Prospectus,
$300,000,000 aggregate principal amount of the Original Debentures is
outstanding.
Holders of Original Debentures do not have any appraisal or dissenters'
rights in connection with the Exchange Offer. Original Debentures that are not
tendered for or are tendered but not accepted in connection
14
<PAGE> 15
with the Exchange Offer will remain outstanding and will be entitled to the
benefits of the Indenture, but will not be entitled to any further registration
rights under the Registration Rights Agreement, except under limited
circumstances. See "Description of Exchange Debentures."
If any tendered Original Debentures are not accepted for exchange because
of an invalid tender, the occurrence of certain other events set forth herein or
any other reason, certificates for any such unaccepted Original Debentures will
be returned, without expense, to the tendering holder thereof promptly after the
Expiration Date.
Holders who tender Original Debentures in connection with the Exchange
Offer 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 Original Debentures in connection with the Exchange Offer. The
Company will pay all charges and expenses, other than certain applicable taxes
described below, in connection with the Exchange Offer. See "-- Fees and
Expenses."
NEITHER THE COMPANY NOR THE BOARD OF DIRECTORS OF THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF ORIGINAL DEBENTURES AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR ORIGINAL DEBENTURES PURSUANT
TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF ORIGINAL DEBENTURES MUST MAKE THEIR OWN DECISIONS
BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS WHETHER TO TENDER
PURSUANT TO THE EXCHANGE OFFER AND, IF SO, WHAT PORTION OF THE AGGREGATE AMOUNT
OF THEIR ORIGINAL DEBENTURES TO TENDER.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on July 8,
1998, unless the Exchange Offer is extended by the Company (in which case the
term "Expiration Date" shall mean the latest date and time to which the Exchange
Offer is extended).
The Company expressly reserves the right in its sole and absolute
discretion, subject to applicable law, at any time and from time to time, to (i)
delay the acceptance of the Original Debentures for exchange, (ii) terminate the
Exchange Offer (whether or not any Original Debentures have theretofore been
accepted for exchange) if the Company determines, in its sole and absolute
discretion, that any of the events or conditions referred to in "-- Conditions
to the Exchange Offer" have occurred or exist or have not been satisfied, (iii)
extend the Expiration Date of the Exchange Offer and retain all Original
Debentures tendered pursuant to the Exchange Offer, subject, however, to the
right of holders of Original Debentures to withdraw their tendered Original
Debentures as described in "-- Withdrawal Rights," and (iv) waive any condition
or otherwise amend the terms of the Exchange Offer in any respect.
If the Exchange Offer is amended in a manner determined by the Company to
constitute a material change, or if the Company waives a material condition of
the Exchange Offer, the Company will promptly disclose such amendment by means
of a Prospectus supplement that will be distributed to the holders of the
Original Debentures, and will extend the Exchange Offer to the extent required
by Rule 14e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to an appropriate news agency.
15
<PAGE> 16
ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE DEBENTURES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange Exchange Debentures for Original Debentures validly
tendered and not withdrawn (pursuant to the withdrawal rights described in
"-- Withdrawal Rights") promptly after the Expiration Date.
Subject to the conditions set forth in "-- Conditions to the Exchange
Offer," delivery of Exchange Debentures in exchange for Original Debentures
tendered and accepted for exchange pursuant to the Exchange Offer will be made
only after timely receipt by the Exchange Agent of (i) certificates for Original
Debentures or a book-entry confirmation of a book-entry transfer of Original
Debentures into the Exchange Agent's account at DTC, including an Agent's
Message (as defined herein) if the tendering holder does not deliver a Letter of
Transmittal, (ii) a completed and signed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message in lieu of the Letter of Transmittal, and (iii) any
other documents required by the Letter of Transmittal. Accordingly, the delivery
of Exchange Debentures might not be made to all tendering holders at the same
time, and will depend on when certificates for Original Debentures, book-entry
confirmations with respect to Original Debentures and other required documents
are received by the Exchange Agent.
The term "book-entry confirmation" means a timely confirmation of a
book-entry transfer of Original Debentures into the Exchange Agent's account at
DTC. See "-- Procedures for Tendering Original Debentures -- Book-Entry
Transfer." The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent, which message forms part of a book-entry
confirmation stating that DTC has received an express acknowledgment from the
tendering participant that such participant has received and agrees to be bound
by the Letter of Transmittal and that the Company may enforce such Letter of
Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the Company will
be deemed to have accepted for exchange, and thereby have exchanged, Original
Debentures validly tendered and not withdrawn as, if and when the Company gives
oral or written notice to the Exchange Agent of the Company's acceptance of such
Original Debentures for exchange pursuant to the Exchange Offer. The Exchange
Agent will act as agent for the Company for the purpose of receiving tenders of
Original Debentures, Letters of Transmittal and related documents, and as agent
for tendering holders for the purpose of receiving Original Debentures, Letters
of Transmittal and related documents and transmitting to validly tendering
holders any Exchange Debentures that are not to be held in global form by DTC or
a nominee of DTC. Such exchange will be made promptly after the Expiration Date.
If for any reason whatsoever acceptance for exchange or the exchange of any
Original Debentures tendered pursuant to the Exchange Offer is delayed (whether
before or after the Company's acceptance for exchange of Original Debentures) or
the Company extends the Exchange Offer or is unable to accept for exchange or
exchange Original Debentures tendered pursuant to the Exchange Offer, then,
without prejudice to the Company's rights set forth herein, the Exchange Agent
may, nevertheless, on behalf of the Company and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered Original Debentures, which Original Debentures
may not be withdrawn except to the extent tendering holders are entitled to
withdrawal rights as described in "-- Withdrawal Rights."
Pursuant to an Agent's Message or a Letter of Transmittal, a holder of
Original Debentures will represent, warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Original Debentures, that the Company will acquire good,
marketable and unencumbered title to the tendered Original Debentures, free and
clear of all liens, restrictions, charges and encumbrances, and the Original
Debentures tendered for exchange are not subject to any adverse claims or
proxies. The holder also will warrant and agree that it will, upon request,
execute and deliver any additional documents deemed by the Company or the
Exchange Agent to be necessary or desirable to complete the exchange, sale,
assignment and transfer of the Original Debentures tendered pursuant to the
Exchange Offer.
16
<PAGE> 17
PROCEDURES FOR TENDERING ORIGINAL DEBENTURES
VALID TENDER
Except as set forth below, in order for Original Debentures to be validly
tendered by book-entry transfer, an Agent's Message or a completed and signed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, and in either case any other documents required by the Letter of
Transmittal, must be delivered to the Exchange Agent by mail, facsimile, hand
delivery or overnight courier at the Exchange Agent's address or facsimile
number set forth in "-- Exchange Agent" on or prior to the Expiration Date and
either (i) such Original Debentures must be tendered pursuant to the procedures
for book-entry transfer set forth below or (ii) the guaranteed delivery
procedures set forth below must be complied with.
Except as set forth below, in order for Original Debentures to be validly
tendered by a means other than book-entry transfer, a completed and signed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, and any other documents required by the Letter of Transmittal must
be delivered to the Exchange Agent on or prior to the Expiration Date by mail,
facsimile, hand delivery or overnight courier at the Exchange Agent's address or
facsimile number set forth in "-- Exchange Agent" and either (i) such Original
Debentures must be delivered to the Exchange Agent on or prior to the Expiration
Date or (ii) the guaranteed delivery procedures set forth below must be complied
with.
If less than all Original Debentures are tendered, a tendering holder
should fill in the amount of Original Debentures being tendered in the
appropriate box on the Letter of Transmittal. The entire amount of Original
Debentures delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS TO BE BY MAIL, THE USE OF REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER
The Exchange Agent and DTC have confirmed that any participant (as defined
herein) in DTC's book-entry transfer facility system may utilize DTC's ATOP
procedures to tender Original Debentures. The Exchange Agent will establish an
account with respect to the Original Debentures at DTC for purposes of the
Exchange Offer within two business days after the date of this Prospectus. Any
Participant may make a book-entry delivery of the Original Debentures by causing
DTC to transfer such Original Debentures into the Exchange Agent's account at
DTC in accordance with DTC's ATOP procedures for transfer. However, although
delivery of Original Debentures may be effected through book-entry transfer into
the Exchange Agent's account at DTC, an Agent's Message or a completed and
signed Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other documents required by the Letter of Transmittal, must
in any case be delivered to and received by the Exchange Agent on or prior to
the Expiration Date at its address or facsimile number set forth in "-- Exchange
Agent," or the guaranteed delivery procedure set forth below must be complied
with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES
Certificates for the Original Debentures need not be endorsed and signature
guarantees on the Letter of Transmittal are unnecessary unless (i) a certificate
for the Original Debentures is registered in a name other than that of the
person surrendering the certificate or (ii) such holder completes the sections
entitled "Special Issuance Instructions" or "Special Delivery Instructions" in
the Letter of Transmittal. In the case of (i) or
17
<PAGE> 18
(ii) above, such certificates for Original Debentures must be duly endorsed or
accompanied by a properly executed bond power, with the endorsement or signature
on the bond power and on the Letter of Transmittal guaranteed by a firm or other
entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible
guarantor institution," including (as such terms are defined therein): (i) a
bank; (ii) a broker, dealer, municipal securities broker or dealer or government
securities broker or dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association
recognized program (an "Eligible Institution"), unless surrendered on behalf of
such Eligible Institution. See Instruction 1 to the Letter of Transmittal.
GUARANTEED DELIVERY
If a holder desires to tender Original Debentures pursuant to the Exchange
Offer and the certificates for such Original Debentures are not immediately
available or time will not permit all required documents to reach the Exchange
Agent on or prior to the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, such Original Debentures may
nevertheless be tendered, provided that all the following guaranteed delivery
procedures are complied with:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal,
is received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(c) the certificates (or a book-entry confirmation) representing all
tendered Original Debentures, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of Exchange
Debentures in exchange for Original Debentures tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Original Debentures, or of a book-entry
confirmation with respect to such Original Debentures, and a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), together with
any required signature guarantees and any other documents required by the Letter
of Transmittal. Accordingly, the delivery of Exchange Debentures might not be
made to all tendering holders at the same time, and will depend upon when
Original Debentures, book-entry confirmations with respect to Original
Debentures and other required documents are received by the Exchange Agent.
The Company's acceptance for exchange of Original Debentures tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions of the Exchange Offer.
DETERMINATION OF VALIDITY
All questions as to the form of documents, validity, eligibility (including
time of receipt) and acceptance for exchange of any tendered Original Debentures
will be determined by the Company, in its sole discretion, which determination
shall be final and binding on all parties. The Company reserves the absolute
right, in its sole and absolute discretion, to reject any and all tenders that
it determines are not in proper form or that, in the opinion of counsel to the
Company, cannot be accepted, or exchanged for, without violating the law. The
Company also reserves the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer as set forth under "-- Conditions to
the Exchange Offer" or any condition or irregularity in any tender of Original
Debentures of any particular holder whether or not similar conditions or
irregularities are waived in the case of other holders.
18
<PAGE> 19
The interpretation by the Company of the terms and conditions of the
Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Original Debentures will be
deemed to have been validly made until all irregularities with respect to such
tender have been cured or waived. None of the Company, any affiliates or assigns
of the Company, the Exchange Agent or any other person shall be under any duty
to give any notification of any irregularities in tenders or incur any liability
for failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney,
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing and, unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Original Debentures that are held by or registered in
the name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
RESALES OF EXCHANGE DEBENTURES
The Company is making the Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of the Commission as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, the Company has not sought its own interpretive letter and there can be
no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance of the
Commission, and subject to the two immediately following sentences, the Company
believes that Exchange Debentures issued pursuant to the Exchange Offer in
exchange for Original Debentures may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder which is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Debentures are
acquired in the ordinary course of such holder's business and that such holder
is not participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of
such Exchange Debentures. However, any holder of Original Debentures who is an
"affiliate" of the Company or who intends to participate in the Exchange Offer
for the purpose of distributing Exchange Debentures, or any broker-dealer which
purchased Original Debentures from the Company to resell pursuant to Rule 144A
or any other available exemption under the Securities Act, (i) will not be able
to rely on the interpretations of the staff of the Division of Corporation
Finance of the Commission set forth in the above-mentioned interpretive letters,
(ii) will not be permitted or entitled to tender such Original Debentures in the
Exchange Offer, and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or other
transfer of such Original Debentures unless such sale is made pursuant to an
exemption from such requirements. In addition, as described below, if any
broker-dealer holds Original Debentures acquired for its own account as a result
of market-making or other trading activities and exchanges such Original
Debentures for Exchange Debentures, then such broker-dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of such Exchange Debentures.
Each holder of Original Debentures who wishes to exchange Original
Debentures for Exchange Debentures in the Exchange Offer will be required to
represent that (i) it is not an "affiliate" of the Company, (ii) any Exchange
Debentures to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of such
Exchange Debentures, and (iv) if such holder is not a broker-dealer, such holder
is not engaged in, and does not intend to engage in, a distribution (within the
meaning of the Securities Act) of such Exchange Debentures. In addition, the
Company may require such holder, as a condition to such holder's eligibility to
participate in the Exchange Offer, to furnish to the Company (or an agent
thereof) in writing information as to the number of "beneficial owners" (within
the meaning of Rule 13d-3 under the Exchange Act) on behalf of whom such holder
holds the Debentures to be exchanged in
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<PAGE> 20
the Exchange Offer. Each broker-dealer that receives Exchange Debentures for its
own account pursuant to the Exchange Offer must acknowledge that it acquired the
Original Debentures for its own account as the result of market-making
activities or other trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Debentures. The Letter of Transmittal states that, by so
acknowledging 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.
Based on the position taken by the staff of the Division of Corporation Finance
of the Commission in the interpretive letters referred to above, the Company
believes that Participating Broker-Dealers which acquired Original Debentures
for their own accounts as a result of market-making activities or other trading
activities may fulfill their prospectus delivery requirements with respect to
the Exchange Debentures received upon exchange of such Original Debentures
(other than Original Debentures that represent an unsold allotment from the
initial sale of the Original Debentures) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for an
exchange offer so long as it contains a description of the plan of distribution
with respect to the resale of such Exchange Debentures. Accordingly, this
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer during the period referred to below in
connection with resales of Exchange Debentures received in exchange for Original
Debentures where such Original Debentures were acquired by such Participating
Broker-Dealer for its own account as a result of market-making or other trading
activities. Subject to certain provisions set forth in the Registration Rights
Agreement, the Company has agreed that this Prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer in
connection with resales of such Exchange Debentures for the earlier of: (i) a
period ending 180 days after the Expiration Date (subject to extension under
certain limited circumstances described below) and (ii) when all such Exchange
Debentures have been disposed of by such Participating Broker-Dealer. See "Plan
of Distribution."
However, a Participating Broker-Dealer which intends to use this Prospectus
in connection with the resale of Exchange Debentures received in exchange for
Original Debentures pursuant to the Exchange Offer must notify the Company, or
cause the Company to be notified, on or prior to the Expiration Date, that it is
a Participating Broker-Dealer. Such notice may be given in the space provided
for that purpose in the Letter of Transmittal or may be delivered to the
Exchange Agent at the address set forth in "-- Exchange Agent." Any
Participating Broker-Dealer which is an "affiliate" of the Company may not rely
on such interpretive letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction.
In such regard, each Participating Broker-Dealer which surrenders Original
Debentures pursuant to the Exchange Offer will be deemed to have agreed, by
execution of the Letter of Transmittal, that upon receipt of notice from the
Company of the occurrence of (i) any event or the discovery of any fact that
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or that causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which they
were made, not misleading or (ii) certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
use of this Prospectus until the Company has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies of
the amended or supplemented Prospectus to such Participating Broker-Dealer, or
the Company has given notice that the use of this Prospectus may be resumed, as
the case may be. If the Company gives such notice to suspend the use of this
Prospectus, it shall extend the 180-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of Exchange Debentures by the number of days during the period
from and including the date of the giving of such notice to and including the
date when Participating Broker-Dealers shall have received copies of the amended
or supplemented Prospectus necessary to permit resales of the Exchange
Debentures or to and including the date on which the Company has given notice
that the use of this Prospectus may be resumed, as the case may be.
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<PAGE> 21
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Original Debentures may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at the address or facsimile number set forth in "-- Exchange
Agent" on or prior to the Expiration Date. Any such notice of withdrawal must
specify the name of the person who tendered the Original Debentures to be
withdrawn, the aggregate principal amount of Original Debentures to be
withdrawn, and (if certificates for such Original Debentures have been tendered)
the name of the registered holder of the Original Debentures as set forth on the
Original Debentures, if different from that of the person who tendered such
Original Debentures. If Original Debentures have been delivered or otherwise
identified to the Exchange Agent, then, prior to the physical release of such
Original Debentures, the tendering holder must submit the serial numbers shown
on the particular Original Debentures to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Original Debentures tendered for the account of an Eligible
Institution. If Original Debentures have been tendered pursuant to the
procedures for book-entry transfer set forth in "-- Procedures for Tendering
Original Debentures," the notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawal of Original Debentures,
in which case a notice of withdrawal will be effective if delivered to the
Exchange Agent by written, telegraphic, telex or facsimile transmission.
Withdrawals of tenders of Original Debentures may not be rescinded. Original
Debentures properly withdrawn will not be deemed validly tendered for purposes
of the Exchange Offer, but may be retendered at any subsequent time on or prior
to the Expiration Date by following any of the procedures described in
"-- Procedures for Tendering Original Debentures."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, which determination shall be final and binding on all parties.
None of the Company, any affiliates or assigns of the Company, the Exchange
Agent or any other person shall be under any duty to give any notification of
any irregularities in any notice of withdrawal or incur any liability for
failure to give any such notification. Any Original Debentures that have been
tendered but are withdrawn will be returned to the holder thereof promptly after
withdrawal.
INTEREST PAYMENTS ON EXCHANGE DEBENTURES
Holders of Original Debentures which are accepted for exchange will not
receive interest payments on such Original Debentures and will be deemed to have
waived the right to receive any interest payments on such Original Debentures
accumulated from and after February 24, 1998. Accordingly, holders of Exchange
Debentures as of the record date for the payment of interest on August 15, 1998
will be entitled to receive interest accumulated from and after February 24,
1998.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept for
exchange, or to exchange, any Original Debentures for any Exchange Debentures,
and, as described below, may terminate the Exchange Offer (whether or not any
Original Debentures have theretofore been accepted for exchange) or may waive
any conditions to or amend the Exchange Offer, if any of the following
conditions has occurred or exist or has not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the Exchange Debentures issued
pursuant to the Exchange Offer in exchange for Original Debentures to be
offered for resale, resold and otherwise transferred by holders thereof
(other than broker-dealers and any such holder which is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Exchange Debentures are acquired
in the ordinary course of such holders' business and such holders have no
arrangement or understanding with any person to participate in the
distribution of such Exchange Debentures;
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(b) any law, statute, rule or regulation shall have been adopted or
enacted that, in the judgment of the Company, would reasonably be expected
to impair its ability to proceed with the Exchange Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement, or proceedings shall have been initiated or, to the knowledge of
the Company, threatened for that purpose, or any governmental approval has
not been obtained, which approval the Company shall, in its sole
discretion, deem necessary for the consummation of the Exchange Offer as
contemplated hereby.
If the Company determines in its sole and absolute discretion that any of
the foregoing events or conditions has occurred or exists or has not been
satisfied, it may, subject to applicable law, terminate the Exchange Offer
(whether or not any Original Debentures have theretofore been accepted for
exchange) or may waive any such condition or otherwise amend the terms of the
Exchange Offer in any respect. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Company will promptly disclose such
waiver or amendment by means of a Prospectus supplement that will be distributed
to the registered holders of the Original Debentures and will extend the
Exchange Offer to the extent required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for a
Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed
as follows:
THE CHASE MANHATTAN BANK
<TABLE>
<S> <C>
By Mail, Hand or Overnight Delivery: By Facsimile Transmission:
The Chase Manhattan Bank (For Eligible Institutions Only)
55 Water Street (212) 638-7375
Room 234, North Building
New York, New York 10041 Confirm by Telephone:
Attention: Carlos Esteves Carlos Esteves (212) 638-0828
</TABLE>
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
The Chase Manhattan Bank also serves as Trustee under the Indenture.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will 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 and related documents
to the beneficial owners of Original Debentures, and in handling or tendering
for their customers.
Holders who tender their Original Debentures for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Debentures are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Original Debentures tendered,
or if a transfer tax is imposed for any reason other than the exchange of
Original Debentures in connection with the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
The Company will not make any payment to brokers, dealers or other nominees
soliciting acceptances of the Exchange Offer.
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<PAGE> 23
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Original
Debentures are urged to consult their financial and tax advisors in making their
own decisions on what action to take.
Original Debentures that are not exchanged for the Exchange Debentures
pursuant to the Exchange Offer will remain "restricted securities" within the
meaning of Rule 144(a)(3)(iv) of the Securities Act. Accordingly, such Original
Debentures may not be offered, sold, pledged or otherwise transferred except (i)
to a person whom the seller reasonably believes is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act in a transaction
meeting the requirements of Rule 144A, (ii) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 thereunder (if
available), or (iii) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with all other applicable securities
laws. The Company will not have any further obligation to holders of Original
Debentures (other than under certain limited circumstances) to provide for
registration under the Securities Act of the Original Debentures held by them.
To the extent that Original Debentures are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Original Debentures could be
adversely affected. The Company may in the future seek to acquire untendered
Original Debentures in the open market or in privately negotiated transactions,
through subsequent exchange offers or otherwise. The Company has no present plan
to acquire any Original Debentures that are not tendered in the Exchange Offer.
ACCOUNTING TREATMENT
For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the remaining term of the Debentures.
DESCRIPTION OF EXCHANGE DEBENTURES
The terms of the Exchange Debentures are identical in all material respects
to the Original Debentures, except that the Exchange Debentures (i) have been
registered under the Securities Act, are not subject to the same restrictions on
transfer and are not entitled to any rights under the Registration Rights
Agreement and (ii) will not provide for any increase in the interest rate
thereon. The Original Debentures provide that, in the event that, among other
things, (a) a registration statement relating to the Exchange Offer has not been
filed by June 24, 1998, (b) the Exchange Offer is not consummated by August 24,
1998, or (c) in certain limited circumstances, a shelf registration statement
with respect to the resale of the Original Debentures is not filed and declared
effective by the respective times required by the Registration Rights Agreement,
then liquidated damages will accrue at the rate of 0.25% per annum on the
principal amount of the Original Debentures for the period from the occurrence
of such event until such time as such registration statement has been filed or
declared effective or the Exchange Offer is consummated, as the case may be.
These rights will terminate upon consummation of the Exchange Offer, except in
limited circumstances. The Exchange Debentures are not, and upon consummation of
the Exchange Offer the Original Debentures will not be (except in certain
limited circumstances), entitled to any such additional interest.
GENERAL
The Exchange Debentures will be, and the Original Debentures were, issued
under an Indenture, dated as of August 15, 1991, between the Company and The
Chase Manhattan Bank, as Trustee, a copy of which is available upon request to
the Company. The following summary of certain provisions of the Indenture does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all provisions of the Indenture, including the definitions therein
of certain terms. The section references below are to provisions of the
Indenture. Capitalized terms used but not otherwise defined in this section of
the Prospectus are as defined in the Indenture, and certain capitalized terms
defined herein are more fully defined in the Indenture.
The Exchange Debentures will be limited to $300,000,000 aggregate principal
amount and will mature on February 15, 2038. Each Exchange Debenture will bear
interest at the rate of 6 5/8% per annum from February 24, 1998 or from the most
recent Interest Payment Date to which interest has been paid or duly
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<PAGE> 24
provided for, payable on February 15 and August 15 of each year, commencing
August 15, 1998, to the person in whose name the Exchange Debenture (or any
predecessor Exchange Debenture) is registered at the close of business on the
February 1 or August 1, as the case may be, next preceding such Interest Payment
Date. Interest on the Exchange Debentures will be calculated on the basis of a
360-day year consisting of 12 months of 30 days each.
Principal of (and premium, if any) and interest, if any, on the Exchange
Debentures will be payable, and transfers of the Exchange Debentures will be
registrable, at the office of the Trustee in the Borough of Manhattan, City of
New York, provided that at the option of the Company payment of interest may be
made by mailing a check for such interest, payable to or upon the written order
of the Person entitled thereto, to the address of such Person as it appears in
the Security Register. (Sections 301, 305 and 1001)
The Exchange Debentures will be issued only in fully registered form
without coupons in denominations of $1,000 or any integral multiple thereof.
(Section 302) No service charge will be made for any registration of transfer or
exchange of Exchange Debentures, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305)
The Indenture does not limit the amount of unsecured debentures, notes or
other evidences of indebtedness that may be issued thereunder (such securities
issued under the Indenture being herein referred to as "Debt Securities"). The
Indenture provides that Debt Securities may be issued from time to time in one
or more series. All Debt Securities, including the Exchange Debentures and any
remaining Original Debentures, will be unsecured obligations of the Company.
OPTIONAL REDEMPTION
The Exchange Debentures are redeemable in whole or in part, at the option
of the Company at any time and from time to time, on not less than 30 or more
than 60 days' notice mailed to holders thereof, at a redemption price equal to
the greater of (i) 100% of the principal amount of the Exchange Debentures to be
redeemed and (ii) the sum of the present values of the Remaining Scheduled
Payments thereon discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate plus 15 basis points, together, in either case, with accrued interest on
the principal amount being redeemed to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Exchange Debentures. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (a) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or (b) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its
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<PAGE> 25
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer as of 3:30 p.m., New York time, on the third business day preceding such
redemption date.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated and their
respective successors and three other nationally recognized investment banking
firms that are Primary Treasury Dealers specified from time to time by the
Company; provided, however, that if any of the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another nationally recognized
investment banking firm that is a Primary Treasury Dealer.
"Remaining Scheduled Payments" means, with respect to each Exchange
Debenture to be redeemed, the remaining scheduled payments of the principal
thereof and interest thereon that would be due after the related redemption date
but for such redemption; provided, however, that, if such redemption date is not
an interest payment date with respect to such Exchange Debenture, the amount of
the next succeeding scheduled interest payment thereon will be reduced by the
amount of interest accrued thereon to such redemption date.
On and after any redemption date, interest will cease to accrue on the
Exchange Debentures or any portion thereof called for redemption. On or before
any redemption date, the Company shall deposit with a paying agent (or the
Trustee) money sufficient to pay the redemption price of and accrued interest on
the Exchange Debentures to be redeemed on such date. If less than all the
Exchange Debentures are to be redeemed, the Exchange Debentures to be redeemed
shall be selected by the Trustee by such method as the Trustee shall deem fair
and appropriate in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances.
CERTAIN DEFINITIONS
"Subsidiary" of the Company means a corporation more than 50% of the
outstanding voting stock of which is owned by the Company and/or one or more
Subsidiaries. "Principal Property" means any manufacturing plant located within
the United States owned by the Company or a Subsidiary, excluding, however, (i)
certain types of personal property and equipment, (ii) property financed through
tax-exempt state or municipal securities, (iii) any real property held for
development or sale, and (iv) any property, the gross book value of which
(without deduction of depreciation reserves) is less than 15% of Consolidated
Net Tangible Assets or which the Board of Directors of the Company determines is
not material to the operation of the business of the Company and its
Subsidiaries taken as a whole. "Consolidated Net Tangible Assets" means the
aggregate amount at which assets of the Company and all Subsidiaries are
reflected on the asset side of the consolidated balance sheet after deducting
(a) all related depreciation, amortization and other valuation reserves, (b)
goodwill, trade names, trademarks, patents, unamortized debt discount and
expenses and other like intangibles, (c) capital lease property rights, and (d)
all current liabilities on the balance sheet. (Section 101)
LIMITATIONS ON LIENS
The Indenture provides that if the Company or any Subsidiary shall issue,
assume or guarantee any evidence of indebtedness for money borrowed
("Indebtedness") secured by a mortgage, security interest, pledge or lien
("Mortgage") on any Principal Property, or shares of stock or Indebtedness of
any Subsidiary, the Company will secure or cause such Subsidiary to secure the
Debt Securities equally and ratably with such secured Indebtedness, unless the
aggregate amount of all such secured Indebtedness, together with all
attributable debt (as defined in the Indenture) with respect to sale and
leaseback transactions involving Principal Properties (with the exception of
such transactions that are excluded as described in "-- Limitations on Sale and
Leaseback Transactions" below), would not at the time of such issuance,
assumption or guarantee of secured Indebtedness exceed 15% of Consolidated Net
Tangible Assets. (Section 1004)
Such limitation will not apply to Indebtedness secured by (i) Mortgages on
any property existing at the date of the Indenture or at the time of acquisition
by the Company or a Subsidiary (including acquisition through merger or
consolidation), (ii) Mortgages on property of any corporation existing at the
time such corporation becomes a Subsidiary, (iii) Mortgages securing
Indebtedness of a Subsidiary to the Company or
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<PAGE> 26
to another Subsidiary, (iv) purchase money and construction Mortgages entered
into within specified time limits, (v) mechanics' liens, tax liens, liens in
favor of and to secure progress, advance or other payments or the acquisition of
real or personal property from any governmental body pursuant to contract or
provision of statute, any other liens, charges and encumbrances incidental to
construction, conduct of business or ownership of property of the Company or any
Subsidiary that were not incurred in connection with borrowing money, obtaining
advances or credits or the acquisition of property and in the aggregate do not
materially impair use of any Principal Property or that are being contested in
good faith, or (vi) any extension, renewal or replacement of any of the
aforementioned Mortgages not in excess of the principal amount of such
Indebtedness plus the fee incurred in connection with such transaction. (Section
1004)
LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that neither the Company nor any Subsidiary may
enter into any sale and leaseback transaction involving any Principal Property
unless the aggregate amount of all attributable debt (as defined in the
Indenture) with respect to such transactions plus all Indebtedness secured by
Mortgages on Principal Properties (with the exception of secured Indebtedness
that is excluded as described in "-- Limitations on Liens" above) would not at
the time of such sale and leaseback transaction exceed 15% of Consolidated Net
Tangible Assets.
Such limitation will not apply to any sale and leaseback transaction if (i)
the lease is for a period of not more than three years, (ii) the purchaser's
commitment is obtained within a specified period after the acquisition,
construction or placing in service of the Principal Property, (iii) the rent
payable pursuant to such lease is to be reimbursed under a contract with the
United States Government or any instrumentality or agency thereof, (iv) the
transaction is between the Company and a Subsidiary or between Subsidiaries, (v)
the Company or such Subsidiary would be entitled, as described in
"-- Limitations on Liens" above, to mortgage such Principal Property without
equally and ratably securing the Debt Securities, or (vi) the Company or such
Subsidiary, within 180 days after the effective date of the transaction, applies
to the retirement of Debt Securities or other Indebtedness of the Company or a
Subsidiary an amount equal to (a) either (1) the lesser of the net proceeds of
the sale or transfer or the book value at the date of such sale or transfer of
the Principal Property leased, if the transaction is for cash, or (2) the fair
market value of the Principal Property leased, if the transaction is for other
than cash, minus (b) the amount equal to the principal amount of Debt Securities
delivered to the Trustee within such 180 days for cancellation and the principal
amount of Indebtedness voluntarily retired within such 180 days. (Section 1005)
DEFEASANCE
Defeasance and Discharge. The Indenture and the terms of the Debentures
provide that the Company will be discharged from any and all obligations in
respect of the Debentures (except for certain obligations to register the
transfer or exchange of Debentures, to replace stolen, lost or mutilated
Debentures, to maintain paying agencies and to hold monies for payment in trust)
upon the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations that through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of (and premium, if any) and each installment of
interest on the Debentures on the Stated Maturity of such payments in accordance
with the terms of the Indenture and the Debentures. In the event of any such
defeasance and discharge of the Debentures, holders of Debentures would be able
to look only to such trust fund for payment of principal of (and premium, if
any) and interest, if any, on their Debentures until maturity. Such defeasance
and discharge may be treated as a taxable exchange of the Debentures for an
issue of obligations of the trust or a direct interest in the cash and
securities held in the trust. In that case holders of the Debentures would
recognize gain or loss as if the trust obligations or the cash or securities
deposited, as the case may be, had actually been received by them in exchange
for their Debentures. Such holders thereafter might be required to include in
income a different amount than would be includable in the absence of defeasance
and discharge. Prospective investors are urged to consult their own tax advisors
as to the specific consequences of defeasance and discharge. (Sections 403 and
405)
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<PAGE> 27
Defeasance of Certain Obligations. The Indenture and the terms of the
Debentures provide that the Company may omit to comply with the restrictive
covenants in Sections 1004 (Limitations on Liens) and 1005 (Limitations on Sale
and Leaseback Transactions) of the Indenture, and any such omission shall not be
an Event of Default with respect to the Debentures, upon the deposit with the
Trustee, in trust, of money and/or U.S. Government Obligations that through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of (and
premium, if any) and each installment of interest on the Debentures on the
Stated Maturity of such payments in accordance with the terms of the Indenture
and the Debentures. The obligations of the Company under the Indenture and the
Debentures other than with respect to the covenants referred to above and the
Events of Default other than the Event of Default referred to above shall remain
in full force and effect. Such a trust may only be established if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel (who may
be an employee of or counsel for the Company) to the effect that the holders of
the Debentures will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amounts and in the same manner
and at the same times as would have been the case if such deposit and defeasance
had not occurred. (Sections 404 and 405)
Defeasance and Certain Other Events of Default. In the event the Company
exercises its option to omit compliance with certain covenants of the Indenture
with respect to the Debentures as described above and the Debentures are
declared due and payable because of the occurrence of any Event of Default other
than the Event of Default described in clause (iii) under "-- Events of Default"
below with respect to Sections 1004 and 1005, the amount of money and U.S.
Government Obligations on deposit with the Trustee will be sufficient to pay
amounts due on the Debentures at the time of their Stated Maturity but may not
be sufficient to pay amounts due on the Debentures at the time of the
acceleration resulting from such Event of Default. The Company shall, however,
remain liable for such payments.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to the
Debentures: (i) failure to pay principal of (or premium, if any, on) any
Debenture when due; (ii) failure to pay any interest on any Debenture when due,
continued for 30 days; (iii) failure to perform any other covenant of the
Company in the Indenture (other than a covenant included in the Indenture solely
for the benefit of a series of Debt Securities other than the Debentures),
continued for 90 days after written notice as provided in the Indenture; and
(iv) certain events in bankruptcy, insolvency or reorganization. (Section 501)
If an Event of Default with respect to the Debentures occurs and is continuing,
either the Trustee or the holders of at least 25% in principal amount of the
Outstanding Debentures may declare the principal amount of all the Debentures to
be due and payable immediately. At any time after a declaration of acceleration
with respect to the Debentures has been made, but before a judgment or decree
based on acceleration has been obtained, the holders of a majority in principal
amount of the Outstanding Debentures may, under certain circumstances, rescind
and annul such acceleration. (Section 502)
The Indenture provides that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, to exercise any of its rights or powers under the Indenture at
the request or direction of any of the holders of the Debentures, unless such
holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions for indemnification of the Trustee, the holders of a
majority in principal amount of the Outstanding Debentures will have the right
to direct the time, method and place of conducting any proceedings for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to the Debentures, provided that the direction does not
conflict with the law or the Indenture, does not unduly prejudice the rights of
holders not taking part in the direction and does not involve the Trustee in
personal liability. (Section 512)
The Company is required to furnish to the Trustee annually a statement as
to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (Section 704)
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<PAGE> 28
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of a majority in principal
amount of the Outstanding Debt Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the holder of each Outstanding Debt
Security affected thereby, (i) extend the stated maturity date of the principal
of (or premium, if any, on), or any installment of principal of or interest on,
any Debt Security, (ii) reduce the principal amount of (or the premium, if any),
or interest on, any Debt Security, (iii) reduce the amount of principal of an
Original Issue Discount Security payable upon acceleration of the Maturity
thereof, (iv) in the case of any Debt Security denominated in U.S. dollars,
change the place or currency of payment of principal (or premium, if any) or
interest on such Debt Security, (v) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, or (vi)
reduce the percentage in principal amount of Outstanding Debt Securities of any
series, the consent of whose holders 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. (Section 902)
The holders of a majority in principal amount of the Outstanding Debentures
may on behalf of the holders of all Debentures waive compliance by the Company
with certain restrictive provisions of the Indenture (including the restrictive
covenants in Sections 1004 and 1005). (Section 1006) The holders of a majority
in principal amount of the Outstanding Debentures may on behalf of the holders
of all Debentures waive any past default under the Indenture with respect to the
Debentures, except a default in the payment of the principal of (or premium, if
any) or interest on any Debenture or in respect of a provision that under the
Indenture cannot be modified or amended without the consent of the holder of
each Debenture affected. (Section 513)
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
The Company, without the consent of any holders of Outstanding Debentures,
may consolidate or merge with or into, or transfer or lease substantially all
its assets to, any corporation, provided that the Company is the surviving
corporation, or the successor corporation is organized under the laws of any
United States jurisdiction and assumes the Company's obligations on the
Debentures and under the Indenture, and that after giving effect to the
transaction no Event of Default, and no event that, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing. (Section 801)
The covenants contained in the Indenture and the Debentures would not
necessarily afford holders of the Debentures protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
such holders.
REGARDING THE TRUSTEE
The Trustee maintains an office at 1 Chase Manhattan Plaza, New York, New
York for the transfer, exchange, redemption and payment of principal of and
interest on the Exchange Debentures and the Original Debentures. The Trustee is
the indenture trustee for the Company's 8 3/4% Debentures Due 2021, 8 3/4%
Debentures Due 2031, 8.10% Debentures Due 2006, 8 5/8% Debentures Due 2031,
7.95% Debentures Due 2024, 7 7/8% Notes Due 2043, 6.35% Notes Due 2003, 7 1/4%
Notes Due 2025, 6 7/8% Notes Due 2043 and 7.50% Notes Due 2042. The Trustee is
also the indenture trustee for the following debt securities of Boeing North
American, Inc., a wholly owned subsidiary of the Company: 8 7/8% Notes Due 1999,
8 3/8% Notes Due 2001, 6 3/4% Notes Due 2002, 7 7/8% Notes Due 2005 and 6 5/8%
Notes Due 2005.
BOOK-ENTRY; DELIVERY AND FORM
The Exchange Debentures will be issued in fully registered form without
interest coupons. The Exchange Debentures will be represented by a permanent
global Exchange Debenture or Debentures in definitive, fully registered form
without interest coupons (the "Global Exchange Debentures") and will be
deposited with the Trustee as custodian for DTC and registered in the name of a
nominee of DTC. The Global Exchange
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<PAGE> 29
Debentures will be subject to certain restrictions on transfer set forth therein
and will bear a legend regarding such restrictions.
Upon the issuance of the Global Exchange Debentures in exchange for the
Original Debentures pursuant to the Exchange Offer, DTC will credit, on its
internal system, the respective principal amounts of the individual beneficial
interests represented by such Global Exchange Debentures to the accounts of the
persons who surrendered Original Debentures for exchange. Ownership of
beneficial interests in the Global Exchange Debentures will be limited to
persons who have accounts with DTC ("participants") or persons who hold
interests through participants. Ownership of beneficial interests in the Global
Exchange Debentures will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants). Investors may hold their
interests in the Global Exchange Debentures directly through DTC if they are
participants in such system, or indirectly through organizations which are
participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Global Exchange Debentures, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Exchange Debentures represented by
such Global Exchange Debentures for all purposes under the Indenture and the
Exchange Debentures. No beneficial owner of an interest in the Global Exchange
Debentures will be able to transfer that interest except in accordance with
DTC's applicable procedures, in addition to those provided for under the
Indenture.
Payments of principal of, and interest on, the Global Exchange Debentures
will be made to DTC or its nominee, as the case may be, as the registered owner
thereof. None of the Company, the Trustee or any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Exchange Debentures or for maintaining, supervising or reviewing any records
relating to such beneficiary ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of the Global Exchange Debentures, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Exchange
Debentures as shown on the records of DTC or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in such
Global Exchange Debentures held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Debentures (including the presentation of Exchange
Debentures for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the Global Exchange
Debentures are credited and only in respect of such portion of the aggregate
principal amount of Exchange Debentures as to which such participant or
participants has or have given such direction. However, if there is an Event of
Default under the Exchange Debentures, DTC will exchange the Global Exchange
Debentures for certificated Exchange Debentures that it will distribute to its
participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organiza-
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<PAGE> 30
tions. Indirect access to the DTC system is available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Debentures among participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under the
rules and procedures governing their respective operations.
CERTIFICATED EXCHANGE DEBENTURES
If DTC is at any time unwilling or unable to continue as a depository for
the Global Exchange Debentures and a successor depository is not appointed by
the Company within 90 days, the Company will issue certificated Exchange
Debentures in exchange for the Global Exchange Debentures.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion, which was prepared by Perkins Coie, special tax
counsel to the Company, summarizes the material U.S. federal income tax
consequences of the exchange of the Original Debentures for the Exchange
Debentures pursuant to the Exchange Offer. This discussion is based on
provisions of the Internal Revenue Code of 1986, as amended, its legislative
history, judicial authority, current administrative rulings and practice, and
existing and proposed Treasury Regulations, all as in effect and existing on the
date hereof. Legislative, judicial or administrative changes or interpretations
after the date hereof could alter or modify the validity of this discussion and
the conclusions set forth below. Any such changes or interpretations may be
retroactive and could adversely affect a holder of the Original Debentures or
the Exchange Debentures.
This discussion does not purport to deal with all aspects of U.S. federal
income taxation that might be relevant to particular holders in light of their
personal investment or tax circumstances or status, nor does it discuss the U.S.
federal income tax consequences to certain types of holders subject to special
treatment under the U.S. federal income tax laws, such as certain financial
institutions, insurance companies, dealers in securities or foreign currency,
tax-exempt organizations, foreign corporations or nonresident alien individuals,
or persons holding Original Debentures or Exchange Debentures that are a hedge
against, or that are hedged against, currency risk or that are part of a
straddle or conversion transaction, or persons whose functional currency is not
the United States dollar. Moreover, the effect of any state, local or foreign
tax laws is not discussed.
THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY. EACH HOLDER OF AN
ORIGINAL DEBENTURE THAT IS PARTICIPATING IN THE EXCHANGE OFFER IS STRONGLY URGED
TO CONSULT WITH ITS OWN TAX ADVISORS TO DETERMINE THE IMPACT OF SUCH HOLDER'S
PARTICULAR TAX SITUATION ON THE ANTICIPATED TAX CONSEQUENCES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN OR OTHER TAX LAWS, OF THE EXCHANGE OF
THE ORIGINAL DEBENTURES FOR THE EXCHANGE DEBENTURES PURSUANT TO THE EXCHANGE
OFFER.
EXCHANGE OFFER
The exchange of the Original Debentures by any holder for the Exchange
Debentures pursuant to the Exchange Offer should not be treated as an "exchange"
for federal income tax purposes because the Exchange Debentures should not be
considered to differ materially in kind or extent from the Original Debentures.
Rather, the Exchange Debentures received by any holder should be treated as a
continuation of the Original Debentures in the hands of such holder. As a
result, there should be no federal income tax consequences to holders exchanging
the Original Debentures for the Exchange Debentures pursuant to the Exchange
Offer, and the federal income tax consequences of holding and disposing of the
Exchange Debentures should be the
30
<PAGE> 31
same as the federal income tax consequences of holding and disposing of the
Original Debentures. Accordingly, a holder's adjusted tax basis in the Exchange
Debentures will be the same as its adjusted tax basis in the Original Debentures
exchanged therefor and its holding period for the Original Debentures will be
included in its holding period for the Exchange Debentures. Thus, the
determination of gain on a sale or other disposition of the Exchange Debentures
will be the same as for the Original Debentures.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Debentures for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Debentures. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Debentures received in
exchange for Original Debentures where such Original Debentures were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period starting on the Expiration
Date and ending on the close of business on the 180th day following the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until January 4, 1998, all dealers effecting transactions in the
Exchange Debentures may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of Exchange
Debentures by broker-dealers. Exchange Debentures received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions, in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Debentures or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Debentures. Any broker-dealer that resells Exchange Debentures that
were received by it for its own account pursuant to the Exchange Offer and any
broker or dealer that participates in a distribution of such Exchange Debentures
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit of any such resale of Exchange Debentures and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. 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.
For a period of 180 days after the Expiration Date, the Company will
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. The Company has agreed to pay all fees and
expenses incident to the Exchange Offer and will indemnify the holders of the
Debentures (including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Debentures will be passed upon for the Company
by Theodore J. Collins, Esq., Senior Vice President and General Counsel of the
Company, who will rely on Perkins Coie LLP, Seattle, Washington, as to certain
matters. As of May 12, 1998, Mr. Collins held 35,944 shares, and options to
acquire 178,870 shares, of common stock of the Company. Additionally, Mr.
Collins has the right, under certain circumstances, to receive 12,058.59 shares
of common stock of the Company pursuant to the Company's Incentive Compensation
Plan for Officers and Employees and, under certain circumstances, to receive
28,573 shares of common stock pursuant to the Company's 1997 Incentive Stock
Plan for Employees. Certain matters relating to U.S. federal income tax
considerations will be passed upon for the Company by Perkins Coie LLP, Seattle,
Washington.
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EXPERTS
The financial statements and related schedule of the Company and its
consolidated subsidiaries as of December 31, 1997 and 1996, and for each of the
three years in the period ended December 31, 1997, except those of McDonnell
Douglas and its consolidated subsidiaries as of December 31, 1996 and for each
of the two years then ended, incorporated by reference in this Prospectus and
the Registration Statement have been audited by Deloitte & Touche LLP as stated
in their reports dated January 27, 1998 included and incorporated by reference
in the Company's Annual Report on Form 10-K for the year ended December 31,
1997. The consolidated financial statements of McDonnell Douglas and
subsidiaries as of December 31, 1996 and for each of the two years then ended,
consolidated with those of the Company, have been audited by Ernst & Young LLP,
as stated in their reports incorporated by reference in this Prospectus and the
Registration Statement. Such financial statements of the Company and its
consolidated subsidiaries are incorporated by reference herein and in the
Registration Statement in reliance upon the respective reports of such firms
given upon their authority as experts in accounting and auditing. All of the
foregoing firms are independent auditors.
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======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE EXCHANGE
OFFER, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER OR A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Disclosure Regarding Forward-Looking
Information......................... 4
Available Information................. 4
Incorporation of Certain Documents by
Reference........................... 5
Prospectus Summary.................... 6
Use of Proceeds....................... 12
Ratios of Earnings to Fixed Charges... 12
Selected Financial Data............... 13
The Exchange Offer.................... 14
Description of Exchange Debentures.... 23
Certain Federal Income Tax
Consequences........................ 30
Plan of Distribution.................. 31
Legal Matters......................... 31
Experts............................... 32
</TABLE>
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======================================================
======================================================
The Boeing Company
------------------------
OFFER TO EXCHANGE ITS
6 5/8% Debentures due February 15, 2038 which have been registered under the
Securities Act of 1933 for any and all of its outstanding 6 5/8% Debentures due
February 15, 2038 which were issued
and sold in a transaction exempt
from registration under the
Securities Act of 1933
--------------------
PROSPECTUS
--------------------
May 29, 1998
======================================================
