<PAGE> 1
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 11, 1994)
16,000,000 DEPOSITARY SHARES
DIGITAL EQUIPMENT CORPORATION
EACH REPRESENTING ONE-FOURTH OF A SHARE OF SERIES A 8 7/8% CUMULATIVE PREFERRED
STOCK
------------------------
Each of the 16,000,000 Depositary Shares offered hereby (the "Depositary
Shares") represents ownership of one-fourth of a share of Series A 8 7/8%
Cumulative Preferred Stock, par value $1.00 per share (the "Series A Preferred
Stock"), liquidation preference $100 per share, of Digital Equipment Corporation
(the "Corporation") deposited with the Depositary (as defined herein), and
entitles the holder to all proportional rights and preferences of the Series A
Preferred Stock (including dividend, redemption and liquidation rights). The
proportionate liquidation preference of each Depositary Share is $25. See
"Description of Series A Preferred Stock and Depositary Shares."
Dividends on the Series A Preferred Stock shall be cumulative and shall
accrue from the date of original issue at the fixed annual rate of $8.875 per
share (equivalent to $2.21875 per Depositary Share). Dividends shall be payable
quarterly in arrears on January 15, April 15, July 15 and October 15 of each
year commencing April 15, 1994. See "Description of Series A Preferred Stock and
Depositary Shares -- Dividends."
The Series A Preferred Stock is not redeemable prior to April 1, 1999. On
and after April 1, 1999, the Corporation, at its option, may redeem shares of
the Series A Preferred Stock, as a whole or in part, for cash at a redemption
price per share of $100 (equivalent to $25 per Depositary Share), plus accrued
and unpaid dividends to the redemption date. See "Description of Series A
Preferred Stock and Depositary Shares -- Redemption."
Application has been made to list the Depositary Shares on the New York
Stock Exchange. The Series A Preferred Stock represented by the Depositary
Shares will not be so listed, and the Corporation does not expect that there
will be any trading market for the Series A Preferred Stock except as
represented by the Depositary Shares.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT(2)(4) COMPANY(1)(3)(4)
- --------------------------------------------------------------------------------------------------------
Per Depositary Share........................... $25.00 $0.7875 $24.2125
- --------------------------------------------------------------------------------------------------------
Total.......................................... $400,000,000 $12,600,000 $387,400,000
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued dividends, if any, from the date of issue.
(2) The Corporation has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Corporation estimated at $375,000.
(4) The Underwriting Discount will be $0.50 per Depositary Share with respect to
any Depositary Shares sold to certain institutions. Therefore, to the extent
of any such sales to such institutions, the actual total Underwriting
Discount will be less than, and the actual total Proceeds to Corporation
will be greater than, the amounts shown in the table above.
------------------------
The Depositary Shares offered by this Prospectus Supplement are offered by
the Underwriters subject to prior sale, withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain further conditions. It is expected that delivery of the
Depositary Receipts evidencing the Depositary Shares will be made at the offices
of Lehman Brothers Inc., New York, New York, on or about March 28, 1994.
------------------------
LEHMAN BROTHERS
CS FIRST BOSTON
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
KIDDER, PEABODY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY SHEARSON INC.
March 21, 1994
<PAGE> 2
Alpha AXP, Digital, the Digital logo and LinkWorks are trademarks of
Digital Equipment Corporation. UNIX(R) is a registered trademark of Unix System
Laboratories, Inc., a wholly-owned subsidiary of Novell, Inc. Windows NT is a
trademark of Microsoft Corporation. OSF/1(R) is a registered trademark of the
Open Software Foundation, Inc.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEPOSITARY
SHARES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
THE COMPANY
Founded in 1957, Digital Equipment Corporation (the "Corporation") is one
of the world's largest suppliers of networked computer systems, software and
services and a leader in interactive, distributed computing and multivendor
systems integration in open computing environments. The Corporation offers a
full range of desktop, client/server and production systems and related
peripheral equipment, software and services used in a wide variety of
applications and industries. As an integrated, worldwide provider of information
technology and multivendor services, the Corporation is committed to open
systems. To this end, the Corporation has entered into strategic alliances with
customers, other hardware and software companies, systems integrators and
suppliers to address the needs of a rapidly changing market place. The
Corporation conducts operations in approximately 100 countries and derives more
than 60% of its revenues from outside of the United States.
<TABLE>
The following table notes the percentage of revenues from products and
services for the last five years, illustrating a shift in the revenue mix toward
a greater percentage of service revenues.
<CAPTION>
YEAR ENDED
----------------------------------------------------------
JULY 3, JUNE 27, JUNE 29, JUNE 30, JULY 1,
1993 1992 1991 1990 1989
------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Product Sales.................................. 53% 55% 60% 63% 64%
Service and Other Revenues..................... 47 45 40 37 36
------- --- --- --- -------
Total Revenues....................... 100% 100% 100% 100% 100%
</TABLE>
PRODUCTS
The Corporation offers one of the broadest ranges of compatible hardware,
software and communications products in the information technology industry.
SYSTEMS AND PRODUCTS: Most of the Corporation's systems are general
purpose digital computers, designed to perform, interpret and record
computations on collected data or act as servers providing computing resources
across a network. The Corporation offers a broad line of VAX systems and
servers, from VAXstation workstations to VAXcluster systems and VAX10000
mainframes.
The Corporation also offers a full range of Intel-based and industry
compatible personal computers and network hardware and desktop integration
products. In addition, the Corporation offers a full range of peripheral and
data storage devices, some of which are used with and sold as part of the
Corporation's computer systems. Selected peripherals and components are also
sold separately to other systems and peripheral equipment manufacturers and
distributors. The Corporation also is a major manufacturer and supplier of video
terminals, printers and network components, such as hubs, routers and switches.
ALPHA AXP: In 1992, the Corporation announced a new 64-bit, reduced
instruction set computing ("RISC") product architecture known as "Alpha
AXP[TRADEMARK]". The Alpha AXP architecture is designed to support multiple
operating systems and to be the foundation for a leading high performance
computer system family. Over the past two years, the Corporation has introduced
a full line of Alpha AXP-based computer systems that range from personal
computers and high performance workstations to larger general purpose computer
systems.
Although the Corporation's revenues from the sale of Alpha AXP-based
systems have continued to increase since the initial introduction in fiscal
1993 of computer systems based on the Alpha architecture, it is too early to
predict when and if revenues from sales of Alpha AXP systems will reach the
levels previously realized from the sale of VAX systems. The Corporation is in
the midst of a major product transition and believes that such transitions in
the information technology industry take, and historically have taken,
considerable time. This is particularly true because of the time it takes for
software applications to become available on the new platforms. In the
Corporation's case, two of the three major operating systems that Alpha
supports -- DEC OSF/1 V1.2, its 64-bit unified UNIX[REGISTERED SYMBOL] from the
Open Software Foundation, and Windows NT[REGISTERED SYMBOL] from Microsoft
Corporation -- were delivered to the marketplace later than originally
anticipated. These
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<PAGE> 4
operating systems, as well as the Open VMS operating system, are now available
and additional applications for each of the operating systems supported by Alpha
are continuing to become available.
SOFTWARE: The Corporation designs, develops or acquires from third parties
and distributes under license various software products for use on its computer
systems and computer systems from other vendors. These products consist of
operating systems, communication and networking software, run-time services
(such as data/information handling and graphical user interfaces), language
compilers, productivity tools, production systems (including databases and
transaction processing monitors), office and workgroup software frameworks, and
other application software. Many customers and systems integrators use the
application development software and the various software frameworks provided by
the Corporation to design their own application software.
The Corporation's software offerings are intended to promote open
client/server computing and, to this end, are designed to open industry-standard
interfaces that enable applications to work across different platforms and
operating systems. Recent software product development announcements support
this strategy.
In October 1993 and February 1994, the Corporation introduced a number
of software products, including its LinkWorks[TRADEMARK] offerings, which
enable users of industry standard personal computer applications to deploy and
integrate those applications in a multivendor networked environment.
The Corporation recently announced a joint effort with Microsoft
Corporation to develop the Common Object Model, a set of software standards that
are designed to enable applications in different operating systems, data formats
and geographical locations to work together across a network.
SERVICES
The Corporation provides a comprehensive portfolio of consulting, systems
integration and support services to help customers plan, implement and manage
their information technology solutions through a global network of employees and
partners.
The Corporation's services offerings include maintenance and support
services for the Corporation's products, as well as products manufactured by
other companies; management and information systems consulting; technical and
application design services; education and customer training services; systems
integration and project management services; network design and support
services; and outsourcing and resource management services.
Many of the Corporation's services offerings assist and guide customers in
the implementation of solutions in an open computing environment. These services
are designed to help customers manage, implement and integrate the Corporation's
hardware and software products, and products manufactured by other companies, to
meet the customer's business and strategic objectives.
The Corporation's principal executive offices are located at 146 Main
Street, Maynard, Massachusetts 01754-2571, and its telephone number is (508)
493-5111.
USE OF PROCEEDS
The net proceeds from the sale of the Depositary Shares will be used for
working capital and for other general corporate purposes.
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<PAGE> 5
<TABLE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Corporation at January 1, 1994 and as adjusted to give effect to the issuance of
the Depositary Shares offered hereby and the application of the proceeds
therefrom.
<CAPTION>
AS OF JANUARY 1, 1994
-----------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents......................................... $1,147,257 $1,534,282
========== ==============
Short-term debt and current portion of long-term debt............. $ 11,574 $ 11,574
========== ==============
Long-term debt.................................................... $1,017,360 $1,017,360
========== ==============
Stockholders' equity:
Preferred Stock, $1.00 par value; authorized 25,000,000 shares;
4,000,000 shares of Series A 8 7/8% Cumulative Preferred
Stock issued and outstanding, as adjusted.................... 0 4,000
Common Stock, $1.00 par value; authorized 450,000,000 shares;
137,889,665 shares issued and outstanding.................... 137,890 137,890
Additional paid-in capital...................................... 2,937,205 3,320,230
Retained earnings............................................... 1,754,856 1,754,856
---------- --------------
Total stockholders' equity...................................... $4,829,951 $5,216,976
---------- --------------
Total capitalization.................................... $5,847,311 $6,234,336
========== ==============
<FN>
- ---------------
(1) After deduction of estimated underwriting discounts and expenses in
connection with the offering.
</TABLE>
S-5
<PAGE> 6
<TABLE>
SUMMARY FINANCIAL INFORMATION
The following table sets forth summary financial information for the
Corporation for the six-month periods ended January 1, 1994 and December 26,
1992 and for each of the fiscal years in the five-year period ended July 3,
1993. The summary financial information for the five-year period has, with the
exception of the ratio of earnings to fixed charges, been derived from the
Corporation's consolidated financial statements, which have been examined by
Coopers & Lybrand, independent accountants. Such information is contained in and
should be read in conjunction with the consolidated financial statements and
accompanying notes included or incorporated by reference in the Corporation's
Annual Reports on Form 10-K for such years. The summary financial information
for the six-month periods has been derived from the Corporation's unaudited
financial statements. The unaudited financial statements include all
adjustments, consisting only of normal recurring adjustments, which the
Corporation considers necessary for a fair presentation of the financial
position and results of operations for these periods. Operating results for the
six months ended January 1, 1994 are not necessarily indicative of the results
that may be expected for the full fiscal year. The six-month data should be read
in conjunction with the Corporation's Quarterly Reports on Form 10-Q for such
periods and the Corporation's Annual Report on Form 10-K for the fiscal year
ended July 3, 1993, as amended.
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
----------------------- -------------------------------------------------------------------
JAN. 1, DEC. 26, JULY 3, JUNE 27, JUNE 29, JUNE 30, JULY 1,
1994 1992 1993 1992 1991 1990 1989
---------- ---------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND OTHER DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Product sales..................... $3,216,928 $3,735,055 $ 7,587,994 $ 7,696,029 $ 8,298,515 $ 8,145,491 $ 8,190,308
Service and other revenues........ 3,052,099 3,268,687 6,783,375 6,234,843 5,612,489 4,797,032 4,551,648
---------- ---------- ----------- ----------- ----------- ----------- -----------
Total operating revenues.......... 6,269,027 7,003,742 14,371,369 13,930,872 13,911,004 12,942,523 12,741,956
---------- ---------- ----------- ----------- ----------- ----------- -----------
Cost of product sales............. 2,093,707 2,136,495 4,464,445 4,248,118 3,905,355 3,825,897 3,468,307
Service expense and cost of other
revenues........................ 1,912,350 2,075,920 4,166,946 3,883,705 3,373,025 2,968,529 2,773,563
Research and engineering
expenses........................ 645,665 810,320 1,530,119 1,753,898 1,649,380 1,614,423 1,525,129
Selling, general and
administrative expenses......... 1,780,895 2,308,493 4,447,160 4,680,822 4,471,629 3,971,059 3,638,868
Restructuring charges............. -- -- -- 1,500,000 1,100,000 550,000 --
---------- ---------- ----------- ----------- ----------- ----------- -----------
Operating income/(loss)........... (163,590) (327,486) (237,301) (2,135,671) (588,385) 12,615 1,336,089
Interest income................... 29,284 27,425 63,831 96,176 113,221 142,015 124,021
Interest expense.................. 35,034 16,344 50,837 38,517 44,556 30,641 39,435
---------- ---------- ----------- ----------- ----------- ----------- -----------
Income/(loss) before income taxes
and cumulative effect of change
in accounting principle......... (169,340) (316,405) (224,307) (2,078,012) (519,720) 123,989 1,420,675
Provision for income taxes........ 6,031 18,000 27,023 232,000 97,707 49,596 348,065
---------- ---------- ----------- ----------- ----------- ----------- -----------
Income/(loss) before cumulative
effect of change in accounting
principle....................... (175,371) (334,405) (251,330) (2,310,012) (617,427) 74,393 1,072,610
Cumulative effect of change in
accounting principle, net of
tax............................. (20,042) -- -- 485,495 -- -- --
---------- ---------- ----------- ----------- ----------- ----------- -----------
Net income/(loss)................. $ (155,329) $ (334,405) $ (251,330) $(2,795,507) $ (617,427) $ 74,393 $ 1,072,610
========== ========== =========== =========== =========== =========== ===========
Income/(loss) per share before
cumulative effect of change in
accounting principle............ $(1.29) $(2.60) $(1.93) $(18.50) $(5.08) $0.59 $8.45
Cumulative effect of change in
accounting principle
per share....................... 0.14 -- -- (3.89) -- -- --
---------- ---------- ----------- ----------- ----------- ----------- -----------
Net income/(loss) per share....... $(1.15) $(2.60) $(1.93) $(22.39) $(5.08) $0.59 $8.45
========== ========== =========== =========== =========== =========== ===========
BALANCE SHEET DATA:
Cash and cash equivalents......... 1,147,257 1,365,340 1,643,195 1,337,172 1,924,050 2,008,983 1,655,264
Working capital................... 2,999,979 2,653,837 2,963,801 2,014,790 3,777,217 4,331,843 4,500,969
Total assets...................... 10,368,757 11,025,756 10,950,343 11,284,309 11,874,703 11,654,821 10,667,779
Long-term debt.................... 1,017,360 779,785 1,017,577 41,636 150,004 150,001 136,019
OTHER DATA:
Employees......................... 92,300 102,100 94,200 113,800 121,000 124,000 125,800
Ratio of earnings to fixed charges
(unaudited)(a).................. (b) (c) (d) (e) (f) 1.6x(g) 8.5x
<FN>
- ---------------
(a) For the purpose of calculating the ratio of earnings to fixed charges, "earnings" consist of income before income taxes and
"fixed charges." "Fixed charges" include interest on indebtedness and one-third of all rental expense, excluding rent on
capitalized leases (being deemed representative of the interest factor in rental expense).
(b) Earnings were inadequate to cover fixed charges by $175 million.
(c) Earnings were inadequate to cover fixed charges by $316 million.
(d) Earnings were inadequate to cover fixed charges by $229 million.
(e) Earnings were inadequate to cover fixed charges by $2,078 million and by $578 million excluding restructuring charges.
(f) Earnings were inadequate to cover fixed charges by $519 million; the ratio would have been 3.6x excluding restructuring charges.
(g) The ratio would have been 4.3x excluding restructuring charges.
</TABLE>
S-6
<PAGE> 7
SUPPLEMENTAL INFORMATION CONCERNING THE CORPORATION
The following information is derived from the Corporation's Quarterly
Report on Form 10-Q for the quarter ended January 1, 1994 (including information
incorporated by reference therein) and should be read in conjunction with the
consolidated financial statements and notes thereto and other information
included or incorporated therein. See "Incorporation of Certain Documents by
Reference" in the Prospectus.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
REVENUES
Total operating revenues for the first six months of fiscal 1994 were $6.27
billion, down 10% from the comparable period a year ago. Total operating
revenues included product sales of $3.22 billion, down 14% from a year ago and
service and other revenues of $3.05 billion, down 7%. Operating revenues from
customers outside the United States were $3.86 billion or 61% of total operating
revenues, compared with $4.47 billion or 64% of total operating revenues for the
comparable six-month period last year. The Corporation continued to experience a
significant decrease in European revenues, as well as a decline in U.S.
revenues, partially offset by revenue growth in the Asia Pacific region and
Latin America. Total operating revenues for the quarter and first six months
were negatively affected by foreign currency exchange rate fluctuations.
For the quarter ended January 1, 1994, total operating revenues were $3.25
billion, down 12% from the comparable period a year ago. Product sales were
$1.66 billion, down 16% and service and other revenues were $1.59 billion, down
7%. Operating revenues from customers outside the United States were $2.04
billion or 63% of total operating revenues; this compared with $2.41 billion or
65% of total operating revenues for the second quarter of fiscal 1993.
Although revenues from the sale of Alpha AXP systems continue to grow, and
represented approximately 10% of product sales for both the quarter and first
six months, the Corporation continues to experience a significant decline in
demand for its VAX systems. Product sales for the quarter and first six months
were positively affected by a growth in demand for personal computers and Alpha
AXP workstations, as well as storage devices and networking products.
The decline in service revenues over the comparable periods of fiscal 1993
was due principally to lower levels of revenue from the Corporation's VAX/VMS
systems maintenance business, as well as the greater reliability of, and lower
maintenance revenues associated with newer products. This was partially offset
by an increase in revenues from maintenance of products manufactured by other
companies. In addition, the Corporation is becoming more selective in pursuing
consulting and systems integration opportunities, increasing its focus on the
profitability of projects; as a result, revenues from consulting and systems
integration services were down slightly for the quarter and essentially flat for
the first six months compared with the comparable periods a year ago.
The Corporation continues to take actions to respond to changes in industry
demand, economic conditions and other factors affecting the Corporation's
business. In October 1993, the Corporation announced new open client-server
products and related software and service products. The Corporation continues to
seek alliances with other companies and to focus its resources in order to offer
products and services which meet customer needs for open systems. Just after the
close of the second quarter, the Corporation announced that it had hired a new
general manager to lead its European operations. The Corporation also is
focusing on increasing market penetration by improving its direct sales efforts,
targeting the growing small and medium enterprise information technology market
and expanding its use of resellers and other indirect channels of distribution.
EXPENSES AND PROFIT MARGINS
The Corporation recorded an operating loss of $66 million for the second
quarter of fiscal 1994, compared with an operating loss of $68 million in the
second quarter a year ago. For the first six months, the Corporation
S-7
<PAGE> 8
recorded an operating loss of $164 million, compared with an operating loss of
$327 million for the comparable period a year ago.
Gross profit on product sales for the quarter and first six months declined
from the comparable periods a year ago. Product gross margin (gross profit as a
percentage of product sales) represented 33% and 35% of product sales,
respectively, down 10 and 8 percentage points, respectively, from the comparable
periods last year. The decline in product gross profit resulted from the
decrease in product sales, a continued shift in the mix of product sales toward
personal computers and Alpha AXP-based systems which typically carry lower
margins than the Corporation's VAX systems, competitive pricing pressures and
unfavorable currency exchange rate fluctuations, partially offset by
manufacturing cost efficiencies.
Gross profit on service revenues for the quarter and first six months
declined slightly from the comparable periods a year ago. Service gross margin
(gross profit as a percentage of service revenues) represented 39% and 37% of
service revenues, respectively, slightly higher than the comparable periods of
fiscal 1993. The modest decline in service gross profit resulted principally
from lower service revenues, partially offset by increased efficiency in service
delivery and an increased focus on the profitability of consulting projects.
Spending on research and engineering (R&E) in the quarter totaled $331
million, a decrease of 18% from the $405 million of the comparable quarter a
year ago. For the first six months, R&E spending totaled $646 million, down 20%
from the $810 million of the comparable period last year. The Corporation is
focusing its current R&E investments on maintaining a strong, market-driven
product set and on attaining and sustaining technology leadership in selected
areas.
Selling, general and administrative (SG&A) expenses totaled $909 million in
the quarter, down 23% from the $1.18 billion of the comparable quarter a year
ago. For the first six months, SG&A spending totaled $1.78 billion, down 23%
from the $2.31 billion of the comparable period in fiscal 1993.
While spending for R&E and SG&A is declining, the Corporation believes its
cost and expense levels are still too high for the level and mix of total
operating revenues. The Corporation is reducing expenses by streamlining its
product offerings and selling and administrative practices, resulting in
reductions in employee population, closing and consolidation of facilities and
reductions in discretionary spending. The Corporation believes that the
remaining restructuring reserve of $443 million is adequate to cover presently
planned restructuring actions. The Corporation will continue to take actions
necessary to achieve a level of costs appropriate for its revenues and
competitive for its business.
Interest income for the quarter and first six months was $12 million and
$29 million, respectively. Interest expense for the quarter and first six months
was $15 million and $35 million, respectively, up from the comparable periods a
year ago due to the issuance of $1 billion aggregate principal amount of
long-term debt in fiscal 1993. Interest expense for the second quarter includes
the differential received on interest rate swap agreements entered into in the
first quarter of fiscal 1994 relating to $750 million of long-term debt.
Tax expense for the quarter and first six months was $2 million and $6
million, respectively. The tax expense reflects taxes provided for profitable
non-U.S. operations and an inability to recognize U.S. tax benefits from
operating losses.
The Corporation adopted Statement of Financial Accounting Standards (SFAS)
No. 109 -- Accounting for Income Taxes, effective July 4, 1993. The Corporation
had previously accounted for income taxes under Accounting Principles Board
Opinion No. 11. In the first quarter of fiscal 1994, the Corporation recorded a
one-time benefit of $20 million, or $0.14 per share, for the recognition of
previously unrecognized tax benefits. There is no cash flow impact from the
adoption of SFAS No. 109. The standard was adopted on a prospective basis and
amounts presented for prior years were not restated.
AVAILABILITY OF FUNDS TO SUPPORT CURRENT AND FUTURE OPERATIONS
Cash and cash equivalents totaled $1.15 billion at the end of the quarter,
down from $1.64 billion at the end of fiscal 1993. The net decrease in cash and
cash equivalents for the quarter was $127 million.
S-8
<PAGE> 9
Operating activities generated $6 million of cash for the quarter, and used
$241 million of cash for the first six months of fiscal 1994. Cash used for the
first six months was due principally to restructuring activities, higher
inventory levels and the operating loss, partially offset by a decrease in
accounts receivable.
Net cash used for investing activities was $198 million for the quarter and
$331 million for the first six months. Capital spending was $181 million for the
quarter and $348 million for the first six months, consisting principally of
investments in semiconductor and storage technology facilities and equipment.
During the first six months, the Corporation generated $57 million in cash
proceeds from the disposal of property, plant and equipment and other assets,
principally as the result of restructuring activities.
Net cash from financing activities was $65 million for the quarter, due
principally to the issuance of Common Stock under the Corporation's employee
stock plans.
On January 21, 1994 the Corporation filed with the Securities and Exchange
Commission a shelf registration statement on Form S-3 under the Securities Act
of 1933, as amended, covering the registration of securities, including senior
and subordinated debt securities, preferred stock, depositary shares (including
the Depositary Shares offered hereby) and warrants to purchase equity and debt
securities (the "Securities"), in an aggregate amount of $1 billion. The
Securities may be offered from time to time in amounts, at prices and on terms
to be determined at the time of sale. The Corporation believes the shelf
registration provides additional financing flexibility to meet potential future
funding requirements and to take advantage of potentially attractive capital
market conditions.
The Corporation historically has maintained a conservative capital
structure, and believes that its current cash position and access to capital
markets are adequate to support current and future operations.
DESCRIPTION OF SERIES A PREFERRED STOCK
AND DEPOSITARY SHARES
The following description of the particular terms of the Series A Preferred
Stock and Depositary Shares supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Preferred Stock and Depositary Shares set forth in the Prospectus, to which
description reference is hereby made. The description of certain provisions of
the Series A Preferred Stock set forth below does not purport to be complete and
is subject to, and qualified in its entirety by reference to, the Corporation's
Restated Articles of Organization, as amended (the "Restated Articles"),
including the Certificate of Designation relating to the Series A Preferred
Stock (the "Certificate of Designation"), which will be filed as an exhibit to
or incorporated by reference in the Registration Statement of which this
Prospectus is a part at or prior to the time of issuance of the Series A
Preferred Stock, and the Corporation's By-laws, as amended.
GENERAL
The Series A Preferred Stock will consist of 4,000,000 shares of Preferred
Stock. The Series A Preferred Stock will not be convertible into, or
exchangeable for, shares of any other class or classes of stock of the
Corporation. The Series A Preferred Stock will have priority as to dividends
over the Corporation's Common Stock and any other series or class of the
Corporation's stock hereafter issued that ranks junior as to dividends to the
Series A Preferred Stock.
CERTAIN TERMS OF THE DEPOSITARY SHARES
Each Depositary Share represents ownership of one-fourth of a share of
Series A Preferred Stock. The shares of Series A Preferred Stock underlying the
Depositary Shares will be deposited with the Depositary under a Deposit
Agreement (the "Deposit Agreement") among the Corporation, the Depositary and
the holders from time to time of the depositary receipts issued by the
Depositary thereunder (the "Depositary Receipts"). The Depositary Receipts so
issued will evidence the Depositary Shares. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled to all the rights
and preferences of one-fourth of a share of Series A Preferred Stock (including
dividend, redemption and liquidation rights). Since each share of Series A
Preferred Stock entitles the holder thereof to one vote on matters on which the
S-9
<PAGE> 10
Series A Preferred Stock is entitled to vote, each Depositary Share will, in
effect, entitle the holder thereof to one-fourth of a vote thereon, rather than
one full vote. The Depositary for the Series A Preferred Stock is Citibank,
N.A., and its principal office is currently located at 120 Wall Street, 5th
Floor, New York, NY 10073. See "Description of the Depositary Shares" in the
accompanying Prospectus.
DIVIDENDS
Holders of shares of the Series A Preferred Stock shall be entitled to
receive dividends at a fixed annual rate of $8.875 per share (equivalent to
$2.21875 per Depositary Share). Such dividends shall be cumulative from the date
of original issue and shall be payable, when and as declared by the Board of
Directors of the Corporation out of funds legally available therefor, quarterly
in arrears on January 15, April 15, July 15 and October 15 of each year. If a
dividend payment date is not a business day, dividends on the Series A Preferred
Stock will be paid on the immediately succeeding business day, without interest.
Each such dividend will be payable to holders of record as they appear in the
stock records of the Corporation at the close of business on each record date,
which shall be the 15th day prior to the payment date or such other date
designated by the Board of Directors of the Corporation (or an authorized
committee thereof) for the payment of dividends that is not more than thirty
(30) nor less than ten (10) days prior to such dividend payment date. The first
dividend, which will be paid on April 15, 1994, will be for less than a full
quarter and will be paid with respect to the period commencing on the issue date
of the Series A Preferred Stock and ending April 15, 1994 to holders of record
on the issue date.
Dividends on the Series A Preferred Stock will accrue regardless of whether
there are funds legally available for the payment of such dividends and whether
or not such dividends are declared. Accrued but unpaid dividends on the Series A
Preferred Stock will accumulate as of the dividend payment date on which they
first become payable, but no interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the Series A
Preferred Stock which may be in arrears. Except as set forth below, no dividends
shall be declared or paid or set apart for payment on any class or classes of
stock of the Corporation or any series thereof ranking, as to dividends, on a
parity with or junior to the Series A Preferred Stock (other than a dividend in
the Corporation's Common Stock or in any other class of stock ranking junior to
the Series A Preferred Stock as to dividends and liquidation preferences) for
any period unless full cumulative dividends on the Series A Preferred Stock have
been or contemporaneously are declared and paid or a sum sufficient for the
payment thereof set apart for such payment. When dividends are not so paid in
full (or a sum sufficient for full payment thereof is not so set apart) upon the
Series A Preferred Stock or any other shares of any class or classes of stock or
series thereof ranking on a parity as to dividends with the Series A Preferred
Stock, all dividends declared upon the Series A Preferred Stock and such other
shares shall be declared pro rata. Upon such pro rata declaration, the amount of
dividends declared per share on the Series A Preferred Stock and such other
shares shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of the Series A Preferred Stock and such other
shares bear to each other. Holders of shares of the Series A Preferred Stock
shall not be entitled to any dividend, whether payable in cash, property or
stock, in excess of full cumulative dividends on the Series A Preferred Stock.
Dividends payable on the Series A Preferred Stock for any period less than a
quarterly dividend period, and for the dividend period beginning on the date of
issuance of the Series A Preferred Stock, will be computed on the basis of a
360-day year consisting of twelve 30-day months.
Unless the cumulative dividends on the Series A Preferred Stock shall have
been declared and paid in full, or declared and a sum sufficient for payment
thereof set apart for payment, no shares of the Corporation's Common Stock or
class of stock ranking junior to or on a parity with the Series A Preferred
Stock as to dividends or liquidation preferences may be redeemed, purchased or
otherwise acquired by the Corporation except (i) by conversion into or exchange
for shares of the Corporation ranking junior to the Series A Preferred Stock as
to dividends and liquidation preferences and (ii) for repurchases of shares of
Common Stock at cost by the Corporation under employee stock plans and programs
approved by the Board of Directors of the Corporation. See "Description of the
Preferred Stock -- Dividends" in the accompanying Prospectus.
S-10
<PAGE> 11
REDEMPTION
The Series A Preferred Stock is not redeemable prior to April 1, 1999. On
and after April 1, 1999, the Corporation, at its option upon not less than 35
nor more than 60 days' notice, may redeem shares of the Series A Preferred Stock
(and the Depositary will redeem the number of Depositary Shares representing the
shares of Series A Preferred Stock so redeemed upon not less than 30 days'
notice to the holders thereof), as a whole or in part, at any time or from time
to time, at a redemption price per share of $100 (equivalent to $25 per
Depositary Share), plus accrued and unpaid dividends thereon to the date of
redemption. If less than all the outstanding shares of Series A Preferred Stock
are to be redeemed, the Corporation will select those to be redeemed pro rata,
by lot or by a substantially equivalent method. On and after the redemption
date, dividends will cease to accrue on the shares called for redemption, and
such shares will be deemed to cease to be outstanding, provided that the
redemption price (including any accrued and unpaid dividends to the date fixed
for redemption) has been duly paid or set aside for payment. The Series A
Preferred Stock will not be entitled to any sinking fund. See "Description of
the Preferred Stock -- Redemption of Depositary Shares" in the accompanying
Prospectus.
LIQUIDATION PREFERENCE
Upon any dissolution, liquidation or winding up of the affairs of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment has been made of the debts and other liabilities of the Corporation and
payment or provision for payment has been made on all amounts required to be
paid in respect of any senior classes or series of preferred stock, the holders
of the Series A Preferred Stock shall be entitled, subject to certain
exceptions, to receive the amount of $100 per share (equivalent to $25 per
Depositary Share), plus accrued and unpaid dividends thereon to the date of
final distribution. See "Description of the Preferred Stock -- Liquidation
Preference" in the accompanying Prospectus.
VOTING
The holders of the Series A Preferred Stock shall not have any voting
rights, except that if at any time the Corporation shall have failed to declare
and pay in full dividends for six quarterly periods, whether consecutive or not,
on the Series A Preferred Stock and all such preferred dividends remain unpaid
(a "Preferred Dividend Default"), the Board of Directors shall take such action
as may be necessary to increase the number of directors of the Corporation by
two, and the holders of the Series A Preferred Stock, voting together as a class
with all other series of Preferred Stock then entitled to vote on such election
of directors, shall be entitled to elect such two additional directors (each a
"Preferred Stock Director" and together the "Preferred Stock Directors") until
the full dividends accumulated on all outstanding shares of such series shall
have been declared and paid in full. Upon the occurrence of a Preferred Dividend
Default, the Board of Directors shall within twenty (20) business days of such
default call a special meeting of the holders of shares of all affected series
for which there is a Preferred Dividend Default for the purpose of electing the
Preferred Stock Directors. If and when all accumulated dividends on the Series A
Preferred Stock shall have been paid in full or set aside for payment in full,
the holders of shares of Series A Preferred Stock shall be divested of the
foregoing voting rights subject to revesting in the event of each and every
Preferred Dividend Default. Upon termination of such special voting rights
attributable to the Series A Preferred Stock (and all other series of Preferred
Stock) for which there has been a Preferred Dividend Default, the term of office
of each Preferred Stock Director so elected shall terminate and the Board of
Directors shall take such action as may be necessary to reduce the number of
directors of the Corporation by two, subject always to the increase in the
number of directors pursuant to the foregoing provisions in the case of a future
Preferred Dividend Default. Any Preferred Stock Director may be removed at any
time with or without cause by, and shall not be removed otherwise than by, the
vote of the holders of record of a majority of the outstanding shares of the
Series A Preferred Stock and all other series of Preferred Stock who are
entitled to participate in such director's election, voting together as a class,
at a meeting called for such purpose. So long as a Preferred Dividend Default
shall continue, any vacancy in the office of a Preferred Stock Director may be
filled by written consent of the Preferred Stock Director remaining in office,
or if none remains in office, by a vote of the holders of record of a majority
of the outstanding shares of Series A Preferred Stock and all other series of
Preferred Stock who are then entitled to participate in the election of such
Preferred Stock Directors. The Preferred Stock Directors shall each be entitled
to one vote per director on any matter.
S-11
<PAGE> 12
In addition, the affirmative vote of the holders of at least two-thirds of
the outstanding shares of the Series A Preferred Stock, voting together as a
class with all other series of Preferred Stock affected in the same manner, is
required to authorize any amendment, alteration or repeal of the Restated
Articles or of the Certificate of Designation which would adversely affect the
rights of such series of Preferred Stock, including authorizing any class or
series of stock with superior dividend rights or liquidation preferences. An
amendment which increases the number of authorized shares of or authorizes the
creation or issuance of other classes or series of preferred stock ranking
junior to or on a parity with the Series A Preferred Stock with respect to the
payment of dividends or rights upon liquidation shall not be considered to be
such an adverse change.
TRANSFER AGENT
The transfer agent and registrar for the Series A Preferred Stock will be
Citibank, N.A. or such other entity as may be appointed by the Corporation.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
consequences of the purchase and sale of the Depositary Shares by investors who
hold Depositary Shares as capital assets, and does not purport to be a complete
analysis of all potential tax effects relevant to a decision to purchase the
Depositary Shares. This summary is based on current laws, regulations, rulings
and decisions now in effect, all of which are subject to change. Investors
considering the purchase of Depositary Shares should consult their own tax
advisors with respect to the application of the federal income tax laws to their
particular situations as well as any tax consequences arising under the laws of
any state, local or foreign taxing jurisdiction.
Distributions with respect to the Depositary Shares will constitute
dividends for federal income tax purposes and will be taxable as ordinary income
to the extent made out of the Corporation's current or accumulated earnings and
profits, as calculated under federal income tax principles.
Any holder of Depositary Shares that is a corporation generally entitled to
the corporate dividends received deduction (the "Dividends-Received Deduction")
under Section 243(a)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), will be allowed that deduction with respect to dividends received on
the Depositary Shares, provided that such holder satisfies certain minimum
holding period requirements and certain other requirements, including the
debt-financed portfolio stock limitations, as contained in Sections 246 and 246A
of the Code. Under current law, the amount of the Dividends-Received Deduction
is equal to 70% of the dividends received. Prospective corporate investors in
the Depositary Shares also should consider the application of the "extraordinary
dividend" rules of Section 1059 of the Code as well as the possible reduction or
elimination of the benefit of the Dividends-Received Deductible by the corporate
alternative minimum tax. Individuals, partnerships, trusts and certain
corporations are not eligible for the Dividends-Received Deduction.
To the extent that distributions made by the Corporation with respect to
the Depositary Shares were to exceed the Corporation's current or accumulated
earnings and profits, they would not constitute dividends for federal income tax
purposes and therefore would not qualify for the Dividends-Received Deduction.
Rather, they would be treated as returns of capital, reducing a holder's
adjusted basis in its Depositary Shares (but not below zero). Such returns of
capital would be tax-free to such holder to the extent they do not exceed the
holder's adjusted basis in its Depositary Shares immediately before the
distribution. However, the reduction in adjusted basis would increase any gain,
or reduce any loss, realized by the holder on any subsequent sale, redemption or
other disposition of its Depositary Shares. Any such distributions in excess of
a holder's adjusted basis in its Depositary Shares would be treated as gain from
the sale of such shares.
THE PRECEDING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS IS
FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH INVESTOR
SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO PARTICULAR TAX CONSEQUENCES TO
HIM OR HER OF PURCHASING, HOLDING AND DISPOSING OF THE DEPOSITARY SHARES,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS,
AND OF ANY CHANGES IN APPLICABLE LAW.
S-12
<PAGE> 13
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among the
Corporation and Lehman Brothers Inc., CS First Boston Corporation, Dean Witter
Reynolds Inc., A.G. Edwards & Sons, Inc., Kidder, Peabody & Co. Incorporated,
PaineWebber Incorporated, Prudential Securities Incorporated and Smith Barney
Shearson Inc., as representatives of the several Underwriters (the
"Representatives"), the Corporation has agreed to sell to the Underwriters, and
each of the Underwriters has severally agreed to purchase from the Corporation
the respective number of Depositary Shares set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
DEPOSITARY
UNDERWRITERS SHARES
------------------------------------------------------------------------- ----------
<S> <C>
Lehman Brothers Inc...................................................... 1,235,000
CS First Boston Corporation.............................................. 1,235,000
Dean Witter Reynolds Inc................................................. 1,235,000
A.G. Edwards & Sons, Inc................................................. 1,235,000
Kidder, Peabody & Co. Incorporated....................................... 1,235,000
PaineWebber Incorporated................................................. 1,235,000
Prudential Securities Incorporated....................................... 1,235,000
Smith Barney Shearson Inc................................................ 1,235,000
Bear, Stearns & Co. Inc.................................................. 200,000
</TABLE>
<TABLE>
<S> <C>
Alex. Brown & Sons Incorporated.......................................... 200,000
Cowen & Company.......................................................... 200,000
Dillon, Read & Co. Inc................................................... 200,000
Donaldson, Lufkin & Jenrette Securities Corporation...................... 200,000
Goldman, Sachs & Co...................................................... 200,000
Kemper Securities, Inc................................................... 200,000
Lazard Freres & Co....................................................... 200,000
J. P. Morgan Securities Inc.............................................. 200,000
Morgan Stanley & Co. Incorporated........................................ 200,000
Oppenheimer & Co., Inc................................................... 200,000
Salomon Brothers Inc..................................................... 200,000
Wertheim Schroder & Co. Incorporated..................................... 200,000
Advest, Inc.............................................................. 80,000
William Blair & Company.................................................. 80,000
J. C. Bradford & Co...................................................... 80,000
BT Securities Corporation................................................ 80,000
Craigie Incorporated..................................................... 80,000
Crowell, Weedon & Co..................................................... 80,000
Dain Bosworth Incorporated............................................... 80,000
Daniels & Bell, Inc...................................................... 80,000
Davenport & Co. of Virginia, Inc......................................... 80,000
Doft & Co., Inc.......................................................... 80,000
Doley Securities, Inc.................................................... 80,000
Fahnestock & Co. Inc..................................................... 80,000
First Albany Corporation................................................. 80,000
First of Michigan Corporation............................................ 80,000
Furman Selz Incorporated................................................. 80,000
</TABLE>
S-13
<PAGE> 14
<TABLE>
<CAPTION>
NUMBER OF
DEPOSITARY
UNDERWRITERS SHARES
------------------------------------------------------------------------- ----------
<S> <C>
Gruntal & Co., Incorporated.............................................. 80,000
Hamilton Investments, Inc................................................ 80,000
Interstate/Johnson Lane Corporation...................................... 80,000
Janney Montgomery Scott Inc.............................................. 80,000
Edward D. Jones & Co..................................................... 80,000
Kennedy Cabot & Company, Inc............................................. 80,000
Ladenburg, Thalmann & Co. Inc............................................ 80,000
WR Lazard, Laidlaw & Mead Incorporated................................... 80,000
Legg Mason Wood Walker, Incorporated..................................... 80,000
Mabon Securities Corp.................................................... 80,000
McDonald & Company Securities, Inc....................................... 80,000
Morgan Keegan & Company, Inc............................................. 80,000
The Ohio Company......................................................... 80,000
Parker/Hunter Incorporated............................................... 80,000
Pennsylvania Merchant Group Ltd.......................................... 80,000
Piper Jaffray Inc........................................................ 80,000
Pryor, McClendon, Counts & Co., Inc...................................... 80,000
Rauscher Pierce Refsnes, Inc............................................. 80,000
The Robinson-Humphrey Company, Inc....................................... 80,000
Rodman & Renshaw, Inc.................................................... 80,000
Roney & Co............................................................... 80,000
Muriel Siebert & Co., Inc................................................ 80,000
Stifel, Nicolaus & Company, Incorporated................................. 80,000
Sutro & Co. Incorporated................................................. 80,000
Tucker Anthony Incorporated.............................................. 80,000
UBS Securities Inc....................................................... 80,000
Utendahl Capital Partners, L.P........................................... 80,000
Wedbush Morgan Securities................................................ 80,000
Wheat, First Securities, Inc............................................. 80,000
----------
TOTAL.......................................................... 16,000,000
==========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions.
The Corporation has been advised by the Representatives that the
Underwriters propose to offer the Depositary Shares directly to the public
initially at the offering price set forth on the cover page of this Prospectus
Supplement and, through the Representatives, to certain dealers at such price
less a concession not in excess of $0.50 per Depositary Share. The Underwriters
may allow and such dealers may reallow a concession not in excess of $0.25 per
Depositary Share to certain other dealers. After the initial offering, the
offering price and other selling terms may be changed by the Representatives.
The Corporation has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, and to
contribute to payments which the Underwriters may be required to make in respect
thereof.
Application has been made to list the Depositary Shares on the New York
Stock Exchange. The Corporation has been advised by the Representatives that the
Underwriters currently intend to make a market
S-14
<PAGE> 15
in the Depositary Shares, but that they are not obligated to do so and may
discontinue such market making at any time without notice.
The Underwriters and their affiliates may engage in transactions with and
perform services for the Corporation and its affiliates in the ordinary course
of their respective businesses, including, without limitation, commercial
banking and investment banking services.
The Corporation has agreed not to, directly or indirectly, sell, offer or
enter into any agreement to offer or sell, shares of Series A Preferred Stock,
or any security of the same class or series or ranking on a parity with the
Series A Preferred Stock, for 60 days from the date hereof without the prior
written consent of the Underwriters.
LEGAL OPINIONS
The validity of the Series A Preferred Stock and the Depositary Shares will
be passed upon for the Corporation by Testa, Hurwitz & Thibeault, Boston,
Massachusetts, and for the Underwriters by Goodwin, Procter & Hoar, Boston,
Massachusetts. Various attorneys in the firm of Testa, Hurwitz & Thibeault
beneficially own shares of the Common Stock of the Corporation. From time to
time Goodwin, Procter & Hoar serves as special counsel to the Corporation as to
certain environmental matters.
S-15
<PAGE> 16
PROSPECTUS
$1,000,000,000
DIGITAL EQUIPMENT CORPORATION
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
WARRANTS TO PURCHASE SECURITIES
------------------------
Digital Equipment Corporation (the "Corporation") may offer from time to
time together or separately up to $1,000,000,000 in the aggregate of (a) its
unsecured debt securities (the "Debt Securities"), which may be either senior
debt securities (the "Senior Debt Securities") or subordinated debt securities
(the "Subordinated Debt Securities"), (b) shares of preferred stock, par value
$1.00 per share (the "Preferred Stock"), of the Corporation in one or more
series, (c) depositary shares of the Corporation (the "Depositary Shares"), or
(d) warrants to purchase capital stock or Debt Securities of the Corporation
(the "Warrants"), each on terms to be determined at the time of sale. The
Subordinated Debt Securities may be issued as convertible debt securities which
may be convertible into shares of common stock of the Corporation, par value
$1.00 per share (the "Common Stock"), or other securities. The Debt Securities,
the Preferred Stock, the Depositary Shares and the Warrants are collectively
referred to herein as the "Securities."
When a particular series of Securities is offered, a supplement to this
Prospectus (each a "Prospectus Supplement") will be delivered with the
Prospectus. For Debt Securities, the Prospectus Supplement will set forth with
respect to such series (the "Offered Debt Securities"): the designation
(including whether senior or subordinated and whether convertible); aggregate
principal amount; authorized denominations; maturity; rate or rates (or method
of determining the same) and the time or times of payment of any interest;
purchase price; any optional or mandatory redemption provisions; any sinking
fund provisions; any terms regarding payment in or on the basis of currencies
other than U.S. dollars (including composite currencies); provisions relating to
any conversion feature of the Offered Debt Securities; and any other specific
terms of the Offered Debt Securities. For Preferred Stock and Depositary Shares,
the Prospectus Supplement will set forth with respect to such series (the
"Offered Preferred Stock" or the "Offered Depositary Shares"): the designation,
rights, preferences and limitations, including rate or rates (or method of
determining the same) and the time or times of payment of dividends; voting
rights, if any; liquidation preference; any conversion, redemption or sinking
fund provisions; and any other specific terms of the Offered Preferred Stock or
the Offered Depositary Shares. In addition, with respect to the Offered
Depositary Shares, the Prospectus Supplement will set forth the fraction of a
share of Preferred Stock represented by each of the Offered Depositary Shares.
For Warrants, the Prospectus Supplement will set forth with respect to such
series (the "Offered Warrants"): the description of the securities for which the
Offered Warrants will be exercisable and the offering price, exercise price,
duration, detachability, call provisions and any other specific terms of the
Offered Warrants.
The Securities may be sold directly by the Corporation, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If any such agents or underwriters are involved in the sale of
any Securities, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in the applicable Prospectus
Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by the applicable Prospectus Supplement.
The date of this Prospectus is March 11, 1994.
<PAGE> 17
AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Northwest Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can also be obtained upon written request from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, certain of the Corporation's securities
are listed on the New York Stock Exchange, the Pacific Stock Exchange, the
Chicago Stock Exchange and the Montreal Exchange, and the aforementioned
materials may also be inspected at the offices of such exchanges at 20 Broad
Street, New York, New York; 301 Pine Street, San Francisco, California; 440
South LaSalle Street, Chicago, Illinois; and La Tour de la Bourse, P.O. Box 61,
800 Victoria Square, Montreal, Quebec H4Z1A9 Canada, respectively.
The Corporation has filed with the Commission a registration statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities offered hereby (the "Registration Statement").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Securities and the Corporation, reference is made to the Registration
Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation's Annual Report on Form 10-K for the fiscal year ended July
3, 1993, as amended by Form 10-K/A dated March 11, 1994, the Corporation's
Quarterly Reports on Form 10-Q for the quarters ended October 2, 1993 and
January 1, 1994 filed with the Commission (File No. 1-5296) pursuant to the
Exchange Act and the documents incorporated by reference therein are
incorporated herein by reference.
All documents filed by the Corporation pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that is incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Corporation will provide, without charge, to each person to whom a copy
of this Prospectus is delivered, on the written or oral request of such person,
a copy of any or all of the documents incorporated herein by reference (other
than exhibits thereto, unless such exhibits are specifically incorporated by
reference into such documents). Written requests for such copies should be
directed to Inquiry Section, Digital Equipment Corporation, 44 Whitney Street
(NR02/H3), Northborough, MA 01532-2599. Telephone requests should be directed to
Investor Relations Department, Digital Equipment Corporation, 146 Main Street
(ML03-2/T98), Maynard, Massachusetts 01754, telephone (508) 493-7182.
2
<PAGE> 18
THE COMPANY
The Corporation is one of the world's largest suppliers of networked
computer systems, software and services and a leader in interactive, distributed
computing and multivendor systems integration in open computing environments.
The Corporation offers a full range of desktop, client-server and production
systems and related peripheral equipment, software and services used in a wide
variety of applications and industries. The Corporation conducts operations in
approximately 100 countries and derives more than 60% of its revenues from
outside of the United States.
The Corporation's principal executive offices are located at 146 Main
Street, Maynard, Massachusetts 01754-2571, and its telephone number is (508)
493-5111.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges of
the Corporation and its consolidated subsidiaries for each of the years in the
five year period ended July 3, 1993 and for the six months ended January 1, 1994
and December 26, 1992.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
-------------------------------------------------- -------------------------
JULY 3, JUNE 27, JUNE 29, JUNE 30, JULY 1, JANUARY 1, DECEMBER 26,
1993 1992 1991 1990 1989 1994 1992
------- -------- -------- -------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (unaudited)(a)......... (b) (c) (d) 1.6x(e) 8.5x (f) (g)
</TABLE>
- ---------------
(a) For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of income before income taxes and "fixed charges." "Fixed
charges" include interest on indebtedness and one-third of all rental expense,
excluding rent on capitalized leases (being deemed representative of the
interest factor in rental expense).
(b) Earnings were inadequate to cover fixed charges by $229 million.
(c) Earnings were inadequate to cover fixed charges by $2,078 million and
by $578 million excluding restructuring charges.
(d) Earnings were inadequate to cover fixed charges by $519 million; the
ratio would have been 3.6x excluding restructuring charges.
(e) The ratio would have been 4.3x excluding restructuring charges.
(f) Earnings were inadequate to cover fixed charges by $175 million.
(g) Earnings were inadequate to cover fixed charges by $316 million.
For the fiscal years 1991 through 1993 and for the six months ended January
1, 1994, the ratios of earnings to fixed charges were negative. This is a
continuation of a trend of declining fixed charge coverage ratios that has
occurred over the last several years. A negative ratio means that the
Corporation had insufficient earnings before taxes and fixed charges to cover
its fixed charges. This situation results from operating loss, including
restructuring charges, in recent periods. Continued poor operating results could
cause the ratio to remain negative.
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USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Corporation intends to use the net proceeds from the sale of the Securities for
working capital and for other general corporate purposes, which may include the
financing of capital expenditures and possible acquisitions of, or investments
in, businesses and assets.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Corporation may offer Debt Securities consisting of Senior Debt
Securities and/or Subordinated Debt Securities. Senior Debt Securities may be
issued from time to time in series under an indenture, dated as of September 15,
1992, as supplemented from time to time, between the Corporation and Citibank,
N.A., as trustee (the "Senior Trustee"), a copy of which is incorporated by
reference into the Registration Statement of which this Prospectus is a part
(the "Senior Indenture"). Subordinated Debt Securities may be issued from time
to time in series under an indenture between the Corporation and Bankers Trust
Company, as trustee (the "Subordinated Trustee"), a copy of which has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part
(the "Subordinated Indenture"). The Senior Indenture and the Subordinated
Indenture are sometimes referred to collectively as the "Indentures," and the
Senior Trustee and the Subordinated Trustee are sometimes referred to
collectively as the "Trustees." The Subordinated Debt Securities may be
convertible into shares of Common Stock of the Corporation. The Indentures do
not limit the aggregate principal amount of Debt Securities which may be issued
by the Corporation thereunder and provide that the Debt Securities may be issued
in one or more series. The statements under this caption are summaries of
certain provisions contained in the Indentures, do not purport to be complete
and are qualified in their entirety by reference to the Indentures. Capitalized
terms used herein and not defined shall have the meanings assigned to them in
the applicable Indenture. Section references referred to below, unless otherwise
noted, refer to the respective Sections of both Indentures. The following
summaries set forth certain general terms and provisions of the Indentures and
the Debt Securities. Further terms of the Offered Debt Securities will be set
forth in the applicable Prospectus Supplement.
The Debt Securities will be direct, unsecured obligations of the
Corporation. The indebtedness represented by the Senior Debt Securities will
rank on a parity with all other unsecured and unsubordinated indebtedness of the
Corporation. The indebtedness represented by the Subordinated Debt Securities
will be subordinated in right of payment to the prior payment in full of the
Senior Indebtedness of the Corporation as described under "Ranking of Debt
Securities." The particular terms of the Offered Debt Securities will be
described in the applicable Prospectus Supplement, along with any applicable
modifications of or additions to the general terms of the Debt Securities as
described herein and in the applicable Indenture and any applicable federal
income tax considerations. Accordingly, for a description of the terms of the
Offered Debt Securities, reference must be made to both the Prospectus
Supplement relating thereto and the description of the Debt Securities set forth
in this Prospectus.
The applicable Prospectus Supplement will describe the following terms of
the Offered Debt Securities: (a) the title of the Offered Debt Securities and
whether such Offered Debt Securities are Senior Debt Securities or Subordinated
Debt Securities; (b) any limit on the aggregate principal amount of the Offered
Debt Securities; (c) the price (expressed as a percentage of the aggregate
principal amount thereof) at which the Offered Debt Securities will be issued;
(d) the date or dates on which the principal of the Offered Debt Securities will
be payable; (e) the rate or rates (which may be fixed or variable) at which the
Offered Debt Securities will bear any interest (or the method of determining the
same) and the date or dates from which such interest will accrue; (f) the dates
on which any interest on the Offered Debt Securities will be payable and the
Regular Record Dates for the interest payable on such Interest Payment Dates;
(g) any mandatory or optional sinking fund or analogous provisions; (h) the
period or periods within which and the price or prices at which the Offered Debt
Securities may, pursuant to any optional or mandatory redemption provisions
(including any provisions for redemption or repurchase at the option of the
holder), be redeemed and the
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other terms and conditions of any such optional or mandatory redemption; (i) if
the Offered Debt Securities are Original Issue Discount Securities, the amount
of principal payable upon acceleration of such Original Issue Discount
Securities following an Event of Default; (j) the currency or currencies, which
may be a composite currency such as the European Currency Unit, in which payment
of the principal of (and premium, if any) and/or interest on the Offered Debt
Securities will be payable if other than the currency of the United States; (k)
any currency (including composite currencies) other than the stated currency of
the Debt Securities in which the principal of (and premium, if any) and/or
interest on the Offered Debt Securities may, at the election of the Corporation
or the holders, be payable, and the periods within which, and terms and
conditions upon which, such election may be made; (1) the manner in which the
amount of payments of principal of (and premium, if any) and/or interest on the
Offered Debt Securities is to be determined if such determination is to be made
with reference to an index; (m) whether the Offered Debt Securities are to be
issued in the form of one or more Global Securities, and, if so, the identity of
the depositary for such series (the "Debt Depositary"); (n) if the Offered Debt
Securities are to be issued upon the exercise of Warrants, the time, manner and
place for such Offered Debt Securities to be authenticated and delivered; (o)
any deletions from, modifications of or additions to the Events of Default or
covenants of the Corporation with respect to the Offered Debt Securities,
whether or not such Events of Default or covenants are consistent with the
Events of Default or covenants set forth in the general provisions of the
applicable Indenture, and any change in the right of any Trustee or any of the
holders to declare the principal amount of any of the Offered Debt Securities
due and payable; (p) if the Offered Debt Securities are Subordinated Debt
Securities, whether they will be convertible into Common Stock of the
Corporation or exchangeable for other securities, and, if so, the terms and
conditions upon which the Offered Debt Securities will be so convertible or
exchangeable, including the conversion or exchange price and the conversion or
exchange period; (q) any other terms of the Offered Debt Securities.
If so provided in the applicable Prospectus Supplement, Debt Securities may
be issued as Original Issue Discount Securities to be sold at a substantial
discount below their principal amount. In such cases, special Federal income tax
and other considerations applicable to such Original Issue Discount Securities
will be described in the applicable Prospectus Supplement.
EXCHANGE AND TRANSFER
At the option of the holder, subject to the terms of the applicable
Indenture and the limitations applicable to Global Securities, Debt Securities
of each series may be exchanged for other Debt Securities of the same series of
any authorized denomination and of a like tenor and aggregate principal amount.
Subject to the terms of the applicable Indenture and the limitations applicable
to Global Securities, Debt Securities issued in fully registered form may be
presented for exchange as provided above or for registration of transfer (duly
endorsed or with the form of transfer endorsed thereon duly executed) at the
office of the applicable Trustee or other security registrar or at the office of
any transfer agent designated by the Corporation for such purpose. No service
charge will be made for any registration of transfer or exchange of such Debt
Securities, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Such
transfer or exchange will be effected upon the security registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request.
If the Debt Securities of any series are to be redeemed in part, the
Corporation will not be required to (i) issue, register the transfer of, or
exchange any Debt Security of that series during a period beginning at the
opening of business 15 days before the day of mailing of a notice of redemption
of any such Debt Security that may be selected for redemption and ending at the
close of business on the day of such mailing, or (ii) register the transfer of
or exchange any Debt Security so selected for redemption, in whole or in part,
except the unredeemed portion of any such Debt Security being redeemed in part.
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities
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represented thereby. Each Global Security will be registered in the name of a
Debt Depositary or a nominee thereof identified in the applicable Prospectus
Supplement, will be deposited with such Debt Depositary or nominee or a
custodian therefor and will bear a legend regarding the restrictions on exchange
and registration of transfer thereof referred to below and any such other
matters as may be provided for pursuant to the applicable Indenture.
Notwithstanding any provision of the applicable Indenture or any security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Debt Depositary
for such Global Security or any nominee of such Debt Depositary, unless (i) the
Debt Depositary has notified the Corporation that it is unwilling or unable to
continue as Debt Depositary for such Global Security or has ceased to be
qualified to act as such as required by the applicable Indenture, (ii) there
shall have occurred and be continuing an Event of Default with respect to the
Debt Securities represented by such Global Security, or (iii) there shall exist
such circumstances, if any, in addition to or in lieu of those described above
as may be described in the applicable Prospectus Supplement. All Debt Securities
issued in exchange for a Global Security or any portion thereof will be
registered in such names as the Debt Depositary may direct.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Debt Depositary or its nominee
("participants") and to the persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the Debt
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Debt
Depositary (with respect to participants' interest) or any such participant
(with respect to interests of persons held by such participants on their
behalf). Payments, transfers, exchanges and other matters relating to beneficial
interests in a Global Security may be subject to various policies and procedures
adopted by the Debt Depositary from time to time.
As long as the Debt Depositary, or its nominee, is the registered holder of
a Global Security, the Debt Depositary or such nominee, as the case may be, will
be considered the sole owner and holder of such Global Security and the Debt
Securities represented thereby for all purposes under the terms of the Debt
Securities and the applicable Indenture. Except in the limited circumstances
referred to above, owners of beneficial interests in a Global Security will not
receive or be entitled to receive physical delivery of certificated Debt
Securities in exchange therefor and will not be considered to be the owners or
holders of such Global Security or any Debt Securities represented thereby for
any purpose under the Debt Securities or the applicable Indenture. All payments
of principal of and any premium and interest on a Global Security will be made
to the Debt Depositary or its nominee, as the case may be, as the holder
thereof. The Corporation expects that the Debt Depositary, upon receipt of any
payment of principal, premium or interest, will credit participants' accounts on
the payment date with payments in amounts proportionate to their respective
beneficial interest in the principal amount of a Global Security for such Debt
Securities as shown on the records of the Debt Depositary. The Corporation also
expects that payments by participants to owners of beneficial interests in such
Global Security held through them will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such participants. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security. None of the Corporation, any Trustee or any
agent of the Corporation or any Trustee will have any responsibility or
liability for any aspect of the Debt Depositary's or any participant's records
relating to, or for payments made on account of, beneficial interests in a
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial interest.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Security, in some cases, may trade in the Debt Depositary's same-day
funds settlement system, in which case, secondary market trading activity in
those beneficial interests would be required by the Debt Depositary to settle in
immediately available funds. There is no assurance as to the effect, if any,
that settlement in immediately available funds would have on trading
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activity in such beneficial interests. Also, settlement for purchases of
beneficial interests in a Global Security upon the original issuance thereof may
be required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any interest payment date will be made to the
Person in whose name such Debt Security is registered at the close of business
on the Regular Record Date for such interest. Unless otherwise indicated in the
applicable Prospectus Supplement, principal of and any premium and interest on
the Debt Securities of a particular series will be payable at the office of such
paying agent or paying agents as the Corporation may designate for such purpose
from time to time, except that, at the option of the Corporation, payment of any
interest may be made by check mailed to the address of the Person entitled
thereto as such address appears in the security register.
All moneys paid by the Corporation to a paying agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Corporation, and the holder of such
Debt Security thereafter may look only to the Corporation for payment thereof.
EVENTS OF DEFAULT
Unless otherwise set forth in the applicable Prospectus Supplement, the
following are Events of Default under the Indentures with respect to Debt
Securities of any series: (a) failure to pay any interest on any Debt Security
of that series when due, continued for 30 days; (b) failure to pay principal of
or any premium on any Debt Security of that series when due; (c) failure to
deposit any sinking fund payment when due in respect of any Debt Security of
that series; (d) failure to perform any other covenant of the Corporation in the
applicable Indenture (other than a covenant included in such Indenture solely
for the benefit of series of Debt Securities other than that series) continued
for 90 days after written notice as provided in the applicable Indenture; (e)
certain events in bankruptcy or of insolvency or reorganization involving the
Corporation; and (f) any other Event of Default provided with respect to Debt
Securities of that series in the applicable Prospectus Supplement. (Section 501)
If an Event of Default with respect to Debt Securities of any series occurs and
is continuing, either the Trustee or the holders of at least 25% in aggregate
principal amount of the outstanding Debt Securities of that series may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all of the Debt Securities of that
series to be due and payable immediately. At any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on acceleration has been obtained, the holders
of a majority in aggregate principal amount of outstanding Debt Securities of
that series may, under certain circumstances, rescind and annul such
acceleration. (Section 502)
The Indentures provide that, subject to the duty of the Trustees during
default to act with the required standard of care, the Trustees will be under no
obligation to exercise any of their respective rights or powers under the
Indentures at the request or direction of any of the holders of Debt Securities,
unless such holders shall have offered to the Trustees reasonable indemnity.
(Section 603) Subject to such provisions for the indemnification of the
Trustees, the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the applicable Trustee, or exercising any trust or power conferred on such
Trustee, with respect to the Debt Securities of that series. (Section 512)
The Corporation is required to furnish to the Trustees annually a statement
as to the performance by the Corporation of certain of its obligations under the
Indentures and as to any default in such performance. (Section 1007)
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COVENANTS OF THE CORPORATION
The applicable Prospectus Supplement will describe any material covenants
in respect of a series of Debt Securities. The general provisions of the
Indentures do not contain any provisions that would limit the ability of the
Corporation to incur indebtedness or that would afford holders of Debt
Securities protection in the event of a highly leveraged or similar transaction
involving the Corporation.
Unless otherwise indicated in the applicable Prospectus Supplement, Senior
Debt Securities will include the following covenants of the Corporation:
Limitation on Liens.
The Corporation will not issue, incur, create, assume or guarantee,
and will not permit any Restricted Subsidiary to issue, incur, create,
assume or guarantee, any debt for money borrowed secured by a mortgage,
security interest, pledge, lien, charge or other encumbrance ("Mortgages")
upon any Principal Property of the Corporation or any Restricted Subsidiary
or upon any shares of stock or indebtedness of any Restricted Subsidiary
(whether such Principal Property, shares or indebtedness are now existing
or owed or hereafter created or acquired) without in each such case
effectively providing concurrently with the issuance, incurrence, creation,
assumption or guaranty of any such secured debt, or the grant of a mortgage
with respect to any such indebtedness, that the Senior Debt Securities
(together with, if the Corporation shall so determine, any other
indebtedness of or guarantee by the Corporation or such Restricted
Subsidiary ranking equally with the Senior Debt Securities) shall be
secured equally and ratably with such secured debt. The foregoing
restriction, however, will not apply to: (a) Mortgages on property, shares
of stock or indebtedness or other assets of any corporation existing at the
time such corporation becomes a Restricted Subsidiary; (b) Mortgages
existing at the time of acquisition of such property by the Corporation or
a Restricted Subsidiary or Mortgages to secure the payment of all or any
part of the purchase price of such property upon the acquisition thereof or
to secure debt incurred prior to, at the time of, or within 180 days after,
the acquisition of such property for the purpose of financing all or part
of the purchase price thereof, or Mortgages to secure the cost of
improvements to such acquired property or the cost of construction of such
property; (c) Mortgages to secure indebtedness of a Restricted Subsidiary
owing to the Corporation or another Restricted Subsidiary; (d) Mortgages
existing at the date of the Senior Indenture; (e) Mortgages on property of
a corporation existing at the time such corporation is merged into or
consolidated with the Corporation or a Restricted Subsidiary or at the time
of a sale, lease or other disposition of the properties of a corporation as
an entirety or substantially as an entirety to the Corporation or a
Restricted Subsidiary; (f) certain Mortgages in favor of governmental
entities; or (g) extensions, renewals or replacements of any Mortgage
referred to in the foregoing clauses (a) through (f); provided, however,
that any Mortgages permitted by any of the foregoing clauses (a), (b), (c),
(d), (e) and (f) shall not extend to or cover any property of the
Corporation or such Restricted Subsidiary, as the case may be, other than
the property specified in such clauses and improvements thereto. (Section
1010)
Notwithstanding the restrictions outlined in the preceding paragraph,
the Corporation or any Restricted Subsidiary will be permitted to issue,
incur, create, assume or guarantee debt secured by a Mortgage which would
otherwise be subject to such restrictions, without equally and ratably
securing the Senior Debt Securities, provided that after giving effect
thereto, the aggregate amount of all debt so secured by Mortgages (not
including Mortgages permitted under clauses (a) through (g) above) does not
exceed 10% of the Consolidated Net Tangible Assets of the Corporation.
(Section 1010)
Limitation on Sale and Lease-Back.
The Corporation will not, nor will it permit any Restricted Subsidiary
to, enter into any sale and lease-back transaction with respect to any
Principal Property, other than any such transaction involving a lease for a
term of not more than three years or any such transaction between the
Corporation and a Restricted Subsidiary or between Restricted Subsidiaries,
unless: (a) the Corporation or such Restricted Subsidiary would be entitled
to incur indebtedness secured by a Mortgage on the Principal Property
involved in such transaction at least equal in amount to the Attributable
Debt with respect to such sale
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and lease-back transaction, without equally and ratably securing the Senior
Debt Securities, pursuant to the limitation in the Senior Indenture on
liens; or (b) the Corporation shall apply an amount equal to the greater of
the net proceeds of such sale or the Attributable Debt with respect to such
sale and lease-back transaction within 120 days to the retirement (other
than any mandatory retirement or by payment at maturity) of debt for money
borrowed of the Corporation or a Restricted Subsidiary that matures more
than twelve months after the creation of such indebtedness. (Section 1011)
DEFEASANCE AND DISCHARGE OF DEBT SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions will apply to Debt Securities under the Indentures: the
Corporation, at its option (a) will be discharged from any and all obligations
in respect to any series of Debt Securities (except for certain obligations to
register the transfer or exchange of such Debt Securities, to replace stolen,
lost or mutilated Debt Securities, to maintain paying agencies and to hold
monies for payment in trust and, with respect to Subordinated Debt Securities
which are convertible or exchangeable, the right to convert or exchange); or (b)
need not comply with certain restrictive covenants of the Indentures in respect
of such series of Debt Securities, in either case upon the deposit with the
Trustee (and in the case of a discharge, 91 days after such deposit), in trust,
of money and/or U.S. Government Obligations (as defined in the Indentures) which
through the payment of interest and principal in respect thereof in accordance
with their terms, without regard to any reinvestment thereof, will provide money
in an amount sufficient to pay the principal of and each installment of interest
on such Debt Securities on the Stated Maturity of such payments in accordance
with the terms of the applicable Indenture and such Debt Securities. In the case
of discharge under clause (a), such a trust may be established only if, among
other things, the Corporation has received from, or there has been published by,
the Internal Revenue Service a ruling, or there has otherwise been a change in
law, to the effect that holders of such Debt Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income tax on
the same amounts and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred. (Section
403) In the event of any such discharge under clause (a), the holders of such
Debt Securities would thereafter be able to look only to such trust fund for
payment of principal (and premium, if any) and interest.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures provide that the Corporation, without the consent of the
holders of any of the outstanding Debt Securities, may consolidate or merge with
or into, or transfer or lease its assets as an entirety or substantially as an
entirety to, any corporation or may acquire or lease the assets of any person,
provided that: (a) the corporation formed by such consolidation or into which
the Corporation is merged or which acquires or leases the assets of the
Corporation as an entirety or substantially as an entirety is organized under
the laws of any domestic jurisdiction and assumes the Corporation's obligations
on the Debt Securities and under the Indentures and, with respect to
Subordinated Debt Securities which are convertible or exchangeable, provides for
conversion or exchange rights in accordance with the Subordinated Indenture; (b)
immediately after giving effect to the transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing; and (c) certain other conditions
are met. Upon compliance with these provisions by a successor corporation, the
Corporation would be relieved of its obligations under the Indentures and the
Debt Securities. (Sections 801 and 802)
The Senior Indenture also provides that, if upon any such consolidation,
merger, sale, conveyance or lease, any Principal Property would become subject
to any Mortgage, the Corporation or such successor corporation will be obligated
under such Senior Indenture to cause the Senior Debt Securities to be secured
equally and ratably with (or, at the Corporation's or such successor
corporation's option, prior to) any indebtedness secured by such Mortgage.
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the
Corporation and the applicable Trustee with the consent of the holders of a
majority in aggregate principal amount of the outstanding Debt
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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: (a) change the stated
maturity date of the principal of, any installment of principal or interest on,
or sinking fund payments in respect of, such Debt Security; (b) alter the
redemption or conversion provisions of such Debt Security in a manner materially
adverse to the holder thereof; (c) reduce the principal amount of, or any
premium or interest on, such Debt Security; (d) reduce the amount of principal
of an Original Issue Discount Security payable upon acceleration of the maturity
thereof; (e) change the place or currency of payment of principal of, or any
premium or interest on, such Debt Security; (f) impair the right to institute
suit for the enforcement of any payment on or with respect to such Debt
Security; (g) with respect to Subordinated Debt Securities which are convertible
or exchangeable, adversely affect the right to convert or exchange any such
Subordinated Debt Security; (h) with respect to Subordinated Debt Securities,
modify the provisions of the Subordinated Indenture with respect to
subordination in a manner materially adverse to the Subordinated Debt
Securities; or (i) reduce the percentage in principal amount of outstanding Debt
Securities of any series the consent of the holders of which is required for
modification or amendment of the applicable Indenture or for waiver of
compliance with certain provisions of such Indenture or for waiver of certain
defaults. (Section 902)
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series, waive, insofar as that series is concerned: (a) compliance by
the Corporation with certain restrictive provisions of the applicable Indenture;
or (b) any past default under the applicable Indenture, except a default in the
payment of principal or any premium or interest and, with respect to any
Subordinated Debt Securities which are convertible, a default in respect of the
right to convert. (Sections 1008 and 513)
Modifications and amendments may be made by the Corporation and the Trustee
to the Indentures, without the consent of any holder of any Debt Security of any
series, to add covenants and Events of Default, and to make provisions with
respect to other matters and issues arising under the Indentures, provided that
any such provision does not adversely affect the rights of the holders of Debt
Securities of any series. (Section 901)
RANKING OF DEBT SECURITIES
The Senior Debt Securities will be unsecured and unsubordinated obligations
of the Corporation and will rank on a parity with all other unsecured and
unsubordinated indebtedness of the Corporation.
Unless otherwise provided in the applicable Prospectus Supplement,
Subordinated Debt Securities will be subject to the following subordination
provisions.
The payment of the principal of, interest on, or any other amounts due on,
the Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness (as defined below) of the
Corporation. (Section 1601) No payment on account of the principal of,
redemption of, interest on or any other amounts due on the Subordinated Debt
Securities and no redemption, purchase or other acquisition of the Subordinated
Debt Securities may be made, unless (i) full payment of amounts then due for
principal, sinking funds, interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Corporation, whether or not a claim for such post-petition interest is allowed
in such proceeding), penalties, reimbursement or indemnification amounts, fees
and expenses, and of all other amounts then due on all Senior Indebtedness shall
have been made or duly provided for pursuant to the terms of the instrument
governing such Senior Indebtedness, and (ii) at the time of, or immediately
after giving effect to, any such payment, redemption, purchase or other
acquisition, there shall not exist under any Senior Indebtedness or any
agreement pursuant to which any Senior Indebtedness has been issued, any default
which shall not have been cured or waived and which shall have resulted in the
full amount of such Senior Indebtedness being declared due and payable. In
addition, the Subordinated Indenture provides that, if holders of any Senior
Indebtedness notify the Corporation and the Subordinated Trustee that a default
has occurred giving the holders of such Senior Indebtedness the right to
accelerate the maturity thereof, no payment on account of principal, sinking
fund or other redemption, interest or any other amounts
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due on the Subordinated Debt Securities and no purchase, redemption or other
acquisition of the Subordinated Debt Securities will be made for the period (the
"Payment Blockage Period") commencing on the date such notice is received and
ending on the earlier of (A) the date on which such event of default shall have
been cured or waived or (B) 180 days from the date such notice is received.
(Section 1603) Notwithstanding the foregoing, only one payment blockage notice
with respect to the same event of default or any other events of default
existing and known to the person giving such notice at the time of such notice
on the same issue of Senior Indebtedness may be given during any period of 360
consecutive days. (Section 1603) No new Payment Blockage Period may be commenced
by the holders of Senior Indebtedness during any period of 360 consecutive days
unless all events of default which triggered the preceding Payment Blockage
Period have been cured or waived. (Section 1603) Upon any distribution of its
assets in connection with any dissolution, winding-up, liquidation or
reorganization of the Corporation, all Senior Indebtedness must be paid in full
before the holders of the Subordinated Debt Securities are entitled to any
payments whatsoever. (Section 1602)
The Subordinated Indenture does not restrict the amount of Senior
Indebtedness or other indebtedness of the Corporation or any subsidiary of the
Corporation. As a result of these subordination provisions, in the event of the
Corporation's insolvency, holders of the Subordinated Debt Securities may
recover ratably less than general creditors of the Corporation.
CONVERTIBLE SUBORDINATED DEBT SECURITIES
The terms and conditions, if any, on which any series of Subordinated Debt
Securities are convertible into Common Stock of the Corporation will be set
forth in the applicable Prospectus Supplement. Such terms will include the
conversion price, the conversion period and the manner in which the right to
convert may be exercised, the events requiring an adjustment of the conversion
price and provisions affecting conversion in the event of the redemption of the
convertible Subordinated Debt Securities. (Sections 1701, 1702 and 1704)
CERTAIN DEFINITIONS
"Attributable Debt" when used in connection with a sale and lease-back
transaction involving a Principal Property means, at the time of determination,
the lesser of: (a) the fair value of such property (as determined in good faith
by the Board of Directors of the Corporation); or (b) the present value of the
total net amount of rent required to be paid under such lease during the
remaining term thereof (including any renewal term or period for which such
lease has been extended), discounted at the rate of interest set forth or
implicit in the terms of such lease. For purposes of the foregoing definition,
rent shall not include amounts required to be paid by the lessee, whether or not
designated as rent or additional rent, on account of or contingent upon
maintenance and repair, insurance, taxes, assessments, water rates and similar
charges.
"Consolidated Net Tangible Assets" means, as of any particular time, the
aggregate amount of assets (less applicable reserves and other properly
deductible items) after deducting therefrom: (a) all current liabilities except
for: (1) notes and loans payable, (2) current maturities of long-term debt, and
(3) current maturities of obligations under capital leases; and (b) certain
intangible assets, to the extent included in said aggregate amount of assets,
all as set forth on the most recent consolidated balance sheet of the
Corporation and its consolidated subsidiaries and computed in accordance with
generally accepted accounting principles.
"Indebtedness" means, with respect to any person, (i) any obligation of
such person to pay the principal of, premium, if any, interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such person, whether or not a claim for such
post-petition interest is allowed in such proceeding), penalties, reimbursement
or indemnification amounts, fees, expenses or other amounts relating to any
indebtedness of such person (A) for borrowed money (whether or not the recourse
of the lender is to the whole of the assets, of such person or only to a portion
thereof), (B) evidenced by notes, debentures or similar instruments (including
purchase money obligations) given in connection with the acquisition of any
property or assets (other than inventory or similar property acquired in the
ordinary course of business), including securities, for the payment of which
such person is liable, directly or indirectly, or the payment of which is
secured by a lien, charge or encumbrance on property or assets of such person,
(C) for
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goods, materials or services purchased in the ordinary course of business (other
than trade accounts payable arising in the ordinary courses of business), (D)
with respect to letters of credit or bankers acceptances issued for the account
of such person or performance bonds, (E) for the payment of money relating to a
Capitalized Lease Obligation (as defined in the Indenture), or (F) under
interest rate swaps, caps or similar agreements and foreign exchange contracts,
currency swaps or similar agreements; (ii) any liability of others of the kind
described in the preceding clause (i) which such person has guaranteed or which
is otherwise its legal liability; and (iii) any and all deferrals, renewals,
extensions and refunding of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (i) or (ii).
"Principal Property" means the principal corporate office and any
manufacturing plant or manufacturing facility (whether now owned or hereafter
acquired) which: (a) is owned by the Corporation or any Restricted Subsidiary;
(b) is located within the United States of America; and (c) has not been
determined in good faith by the Board of Directors of the Corporation not to be
materially important to the total business conducted by the Corporation and its
subsidiaries taken as a whole.
"Restricted Subsidiary" means any Subsidiary which owns any Principal
Property; provided, however, that the term "Restricted Subsidiary" does not
include any Subsidiary which is principally engaged in leasing or in financing
receivables, or which is principally engaged in financing the Corporation's
operations outside the United States of America.
"Senior Indebtedness" means Indebtedness of the Corporation, whether
outstanding on the date of the Subordinated Indenture or thereafter created,
incurred, assumed or guaranteed by the Corporation, other than the following:
(1) any Indebtedness as to which, in the instrument evidencing such Indebtedness
or pursuant to which such Indebtedness was issued, it is expressly provided that
such Indebtedness is subordinate in right of payment to all indebtedness of the
Corporation not expressly subordinated to such Indebtedness; (2) any
Indebtedness which by its terms refers explicitly to the Subordinated Debt
Securities and states that such Indebtedness shall not be senior, shall be pari
passu or shall be subordinated in right of payment to the Subordinated Debt
Securities; and (3) with respect to any series of Subordinated Debt Securities,
any Indebtedness of the Corporation evidenced by Subordinated Debt Securities of
the same or of another series. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness shall not include: (a) Indebtedness of or amounts
owed by the Corporation for compensation to employees, or for goods or materials
purchased in the ordinary course of business, or for services, or (b)
Indebtedness of the Corporation to a subsidiary of the Corporation.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having the voting power to elect a majority of the board of
directors of such corporation is at the time owned, directly or indirectly, by
the Corporation or by one or more Subsidiaries, or by the Corporation and one or
more Subsidiaries.
CONCERNING THE TRUSTEES
Citibank, N.A. is the Senior Trustee under the Senior Indenture. Bankers
Trust Company is the Subordinated Trustee under the Subordinated Indenture. Each
of the Trustees has dealings with the Corporation in the ordinary course of
business and from time to time may also make loans to the Corporation and its
Subsidiaries. In addition, Citibank, N.A. has also been appointed as the
Preferred Stock Depositary. A Trustee may resign or be removed with respect to
one or more series of Debt Securities and a successor Trustee appointed with
respect to such series. (Section 610)
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The Corporation is authorized to issue up to 450,000,000 shares of Common
Stock and up to 25,000,000 shares of Preferred Stock which may be issued by the
Board of Directors of the Corporation from time to time. The particular terms of
any series of Preferred Stock offered hereunder will be described in the
applicable Prospectus Supplement. If so indicated in a Prospectus Supplement,
the terms of any such series may differ from the terms set forth below.
The following summary descriptions of capital stock and Rights (as defined
below) do not purport to be complete and are subject to, and qualified in their
entirety by reference to, the more complete descriptions thereof set forth in
the Corporation's Restated Articles of Organization, as amended (the "Restated
Articles"), the Certificate of Designation relating to each series of Preferred
Stock (the "Certificate of Designation"), the Corporation's By-laws, as amended,
and the Rights Plan (as defined below). The applicable Certificate of
Designation will be filed as an exhibit to or incorporated by reference in the
Registration Statement of which this Prospectus is a part at or prior to the
time of issuance of the Offered Preferred Stock.
DESCRIPTION OF COMMON STOCK
The Corporation's Restated Articles authorize the issuance of up to
450,000,000 shares of Common Stock. Each share of the Common Stock is entitled
to one vote at all meetings of stockholders for the election of directors and on
all other matters. Dividends may be paid to the holders of the Common Stock when
and if declared by the Board of Directors out of funds legally available
therefor. The Common Stock has no pre-emptive or similar rights. The holders are
not liable to further call or assessment. Upon liquidation, dissolution or
winding up of the affairs of the Corporation, its assets remaining after
provision for payment of creditors would be distributed pro rata among holders
of the Common Stock, subject to the preferential rights of any then outstanding
Preferred Stock.
The Common Stock is listed on the New York Stock Exchange, the Chicago
Stock Exchange, the German Stock Exchanges of Frankfurt, Munich and Berlin, the
Montreal Exchange, the Pacific Stock Exchange and the Swiss Exchanges of Zurich,
Geneva and Basel, and is admitted to unlisted trading privileges on the Boston
Stock Exchange, Cincinnati Stock Exchange, Luxembourg Stock Exchange and
Philadelphia Stock Exchange.
First Chicago Trust Company of New York is the transfer agent for the
Common Stock. The Corporation also serves as a co-transfer agent in connection
with the Corporation's various employee stock programs.
DESCRIPTION OF PREFERRED STOCK
The following sets forth certain general terms and provisions of the
Preferred Stock which would be offered hereby. Further terms of the Offered
Preferred Stock will be set forth in the applicable Prospectus Supplement.
The Corporation's Restated Articles authorize the issuance of up to
25,000,000 shares of Preferred Stock. As of the date of this Prospectus, no
shares of Preferred Stock are currently outstanding, and no shares are reserved
for issuance. Subject to limitations prescribed by law, the Board of Directors
is authorized at any time to issue one or more series of Preferred Stock; to
determine all designations, preferences and limitations for any such series; and
to determine the number of shares in any such series.
The Board of Directors is authorized to determine for each series of
Preferred Stock, and the Prospectus Supplement will set forth with respect to
such series, the following designations, preferences and limitations, if any:
the dividend rights, the redemption provisions, the rights upon liquidation,
dissolution or winding up of the Corporation, the conversion or exchange rights,
the sinking fund provisions, the voting rights, provided that the holders of
shares of Preferred Stock will not be entitled to more than one vote per share
when voting as a class with the holders of shares of Common Stock; and the other
preferences, powers, qualifications, special or
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relative rights and privileges and limitations or restrictions of such
preferences or rights, if any. No holders of shares of the capital stock of the
Corporation have any pre-emptive rights to acquire any securities of the
Corporation.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds of the Corporation
legally available for payment, dividends payable at such dates and at such rates
per share as set forth in the applicable Prospectus Supplement. The Prospectus
Supplement will also state applicable record dates regarding the payment of
dividends.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the related Prospectus
Supplement.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the related Prospectus Supplement.
LIQUIDATION
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, holders of any series of Preferred Stock will be entitled to
receive the liquidation preference per share specified in the Prospectus
Supplement, if any, in each case together with any applicable accrued and unpaid
dividends and before any distribution to holders of the Common Stock or any
class of stock ranking junior to the Preferred Stock as to dividends and
liquidation preferences. In the event there are insufficient assets to pay such
liquidation preferences for all classes of Preferred Stock in full, the
remaining assets shall be allocated ratably among all series of Preferred Stock
based upon the aggregate liquidation preference for all outstanding shares for
such series. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of shares of Preferred Stock will not be
entitled to any further participation in any distribution of assets by the
Corporation unless otherwise provided in a Prospectus Supplement, and, in such
case, the remaining assets of the Corporation shall be distributable exclusively
among the holders of the Common Stock and any class of stock ranking junior to
the Preferred Stock as to dividends and liquidation preferences, according to
their respective interests.
VOTING
No series of Preferred Stock will be entitled to vote except as provided
below or in the related Prospectus Supplement. The holders of shares of
Preferred Stock will not be entitled to more than one vote per share when voting
as a class with the holders of shares of Common Stock. Unless otherwise
specified in a Prospectus Supplement, the affirmative vote of the holders of
two-thirds of the outstanding shares of a series of Preferred Stock voting
separately is required to authorize any amendment, alteration or repeal of the
Restated Articles or of the Certificate of Designation which would adversely
affect the rights of any such class or series of Preferred Stock.
MISCELLANEOUS
Preferred Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable. Neither the par value nor the
liquidation preference is indicative of the price at which the Preferred Stock
will actually trade on or after the date of issuance. Payment of dividends on
any series of Preferred Stock may be restricted by loan agreements, indentures
and other transactions entered into by the Corporation. The transfer agent for
each series of Preferred Stock will be specified in the related Prospectus
Supplement.
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DESCRIPTION OF RIGHTS
On December 11, 1989, the Board of Directors unanimously adopted a
Stockholder Rights Plan (the "Rights Plan"). Under the Rights Plan, the
Corporation distributed to its stockholders a dividend of one Common Stock
Purchase Right (a "Right" and collectively, the "Rights") for each outstanding
share of the Corporation's Common Stock. Initially, each Right will entitle
holders of Common Stock to buy one share of Common Stock of the Corporation at
an exercise price of $400, subject to adjustment. The Rights will become
exercisable only if a person or group acquires 20% or more of the Common Stock,
or announces a tender or exchange offer which would result in its ownership of
30% or more of the Common Stock, or a person owning 10% or more of the Common
Stock is determined by the Board of Directors to be an "Adverse Person," as
defined in the Rights Plan.
If any person or group becomes the beneficial owner of 25% or more of the
Common Stock except pursuant to a tender offer for all shares which the
directors determine to be at a fair price and in the best interests of the
Corporation; a 20% or more stockholder engages in a merger with the Corporation
in which the Corporation survives and its Common Stock remains outstanding and
unchanged; certain other events involving the Corporation and a 20% or more
stockholder occur; or, under certain circumstances, the Board of Directors
determines a 10% or more stockholder to be an Adverse Person, each Right not
then held by such person or related parties will entitle its holder to purchase,
at the Right's then current exercise price, Common Stock of the Corporation (or,
in certain circumstances as determined by the Board of Directors, a combination
of cash, property, Common Stock or other securities) having a value of twice the
Right's exercise price. In addition, at any time after a stockholder acquires a
20% or more equity interest in the Corporation, if the Corporation is involved
in a merger or other business combination transaction with another person in
which its Common Stock is changed or converted, or sells or transfers more than
50% of its assets or earning power to another person, each Right that has not
previously been exercised or voided will entitle its holder to purchase, at the
Right's then current exercise price, shares of common stock of such other person
having a value of twice the Right's exercise price. The Corporation generally is
entitled to redeem the Rights at $.01 per Right at any time until the Board of
Directors determines a 10% or more stockholder to be an Adverse Person or the
tenth day following public announcement that a 20% equity interest in the
Corporation has been acquired. The Rights Plan will expire on December 21, 1999
unless the Rights are earlier redeemed by the Corporation.
The adoption of the Rights Plan has the effect of making an unsolicited
takeover of the Corporation more difficult and more costly to any potential
acquiror in circumstances in which the Board of Directors determines that such
an unsolicited takeover is not in the best interests of the Corporation's
stockholders.
ANTI-TAKEOVER NATURE OF CERTAIN RESTATED ARTICLES, BY-LAWS AND MASSACHUSETTS LAW
PROVISIONS
Massachusetts General Laws Chapter 156B, Section 50A requires that
publicly-held Massachusetts corporations have a classified board of directors
consisting of three classes as nearly equal in size as possible, unless the
corporation elects not to be covered by Section 50A. Consequently, the Board of
Directors of the Corporation is divided into three classes, with each class
serving three years and with the terms of office of the respective classes
expiring in successive years. The Corporation's By-laws contain provisions which
give effect to Section 50A.
The Corporation's By-laws also provide that special meetings of
stockholders may be called upon written application of one or more stockholders
who hold at least 90% of the capital stock entitled to vote at the meeting. The
effect of this provision is to make it more difficult for the stockholders to
call a special meeting of stockholders. In addition, the Corporation's By-laws
require advance notice (i) for any business to be properly brought before a
stockholders' meeting by a stockholder and (ii) of nominations of persons for
election to the Board of Directors at the annual meeting.
The Corporation is subject to the provisions of Chapter 110F of the
Massachusetts General Laws, the so-called Business Combination Statute. Under
Chapter 110F, a Massachusetts corporation with over 200 stockholders, such as
the Corporation, may not engage in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person becomes an interested stockholder, unless (i) the interested
stockholder obtains the approval of the Board of Directors
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prior to becoming an interested stockholder, (ii) the interested stockholder
acquires 90% of the outstanding voting stock of the corporation (excluding
shares held by certain affiliates of the corporation) at the time it becomes an
interested stockholder, or (iii) the business combination is approved by both
the Board of Directors and the holders of two-thirds of the outstanding voting
stock of the corporation (excluding shares held by the interested stockholder).
An "interested stockholder" is a person who, together with affiliates and
associates, owns (or at any time within the prior three years did own) 5% or
more of the outstanding voting stock of the corporation. A "business
combination" includes a merger, a stock or assets sale, and other transactions
resulting in a financial benefit to the stockholders.
By vote of the Board of Directors, the Corporation has elected to be exempt
from the applicability of Massachusetts General Laws, Chapter 110D, entitled
"Regulation of Control Share Acquisitions." In general, this statute provides
that any stockholder of a corporation subject to this statute who acquires 20%
or more of the outstanding voting stock of a corporation (except in certain
transactions) may not vote such stock unless the stockholders of the corporation
so authorize. The Board of Directors may amend the Corporation's By-laws at any
time to subject the Corporation to this statute prospectively.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Corporation may, at its option, elect to offer Depositary Shares rather
than full shares of Preferred Stock. In the event such option is exercised, each
of the Depositary Shares will represent ownership of and entitlement to all
rights and preferences of a fraction of a share of Preferred Stock of a
specified series (including dividend, voting, redemption and liquidation
rights). The applicable fraction will be specified in the applicable Prospectus
Supplement. The shares of Preferred Stock represented by the Depositary Shares
will be deposited with a depositary (the "Preferred Stock Depositary") named in
the applicable Prospectus Supplement, under a deposit agreement (the "Deposit
Agreement") among the Corporation, Citibank, N.A. or another financial
institution, as Depositary, and the holders of certificates evidencing
Depositary Shares ("Depositary Receipts"). Depositary Receipts will be delivered
to those persons purchasing Depositary Shares in the offering. The Preferred
Stock Depositary will be the transfer agent, registrar and dividend disbursing
agent for the Depositary Shares. Holders of Depositary Receipts agree to be
bound by the Deposit Agreement, which requires holders to take certain actions
such as filing proof of residence and paying certain charges.
The description set forth herein and in any Prospectus Supplement of
certain provisions of the Deposit Agreement and of the Depositary Shares and
Depositary Receipts does not purport to be complete and is subject to and
qualified in its entirety by reference to the forms of Deposit Agreement and
Depositary Receipts and the Certificate of Designation relating to each series
of Preferred Stock which have been or will be filed as exhibits to or
incorporated by reference into the Registration Statement of which this
Prospectus is a part, at or prior to the issuance of Depositary Shares.
Upon surrender of Depositary Receipts at the office of the Preferred Stock
Depositary and upon payment of the charges provided in the Deposit Agreement and
subject to the terms thereof, a holder of Depositary Shares is entitled to have
the Preferred Stock Depositary deliver to such holder the whole shares of
Preferred Stock underlying the Depositary Shares evidenced by the surrendered
Depositary Receipts. Partial shares of Preferred Stock will not be issued. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
whole shares of Preferred Stock to be withdrawn, the Preferred Stock Depositary
will deliver to such holder at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares. Holders of Preferred Stock thus
withdrawn will not thereafter be entitled to deposit such shares under the
Deposit Agreement or to receive Depositary Receipts evidencing Depositary Shares
therefor.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the series of Preferred Stock
represented by the Depositary Shares to the record holders of
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Depositary Receipts relating to such Preferred Stock in proportion to the
respective number of Depositary Shares owned by such holders on the relevant
record date, which will be the same record date as the record date fixed by the
Corporation for the applicable series of Preferred Stock. The Preferred Stock
Depositary shall distribute only such amount, however, as can be distributed
without attributing to any holder of Depositary Shares a fraction of one cent,
and any balance not so distributed shall be added to and treated as part of the
next sum received by the Preferred Stock Depositary for distribution to record
holders of Depositary Shares.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, in proportion, as nearly as practicable,
to the respective number of Depositary Shares owned by such holders on the
relevant record date. If the Preferred Stock Depositary, after consultation with
the Corporation, determines that it is not feasible to make such distribution,
the Preferred Stock Depositary may, with the approval of the Corporation, adopt
any other method for such distribution as it deems appropriate, including the
sale of such property and distribution of the net proceeds from such sale to
such holders.
LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the affairs
of the Corporation, whether voluntary or involuntary, the holders of each
Depositary Share will be entitled to the fraction of the liquidation preference
accorded each share of the applicable series of Preferred Stock, as set forth in
the related Prospectus Supplement.
REDEMPTION OF DEPOSITARY SHARES
If a series of Preferred Stock represented by the applicable series of
Depositary Shares is subject to redemption, such Depositary Shares will be
redeemed from the proceeds received by the Preferred Stock Depositary resulting
from the redemption, in whole or in part, of such series of Preferred Stock held
by the Preferred Stock Depositary. The redemption price per Depositary Share
will be equal to the applicable fraction of the redemption price per share
payable with respect to such series of Preferred Stock. Whenever the Corporation
redeems shares of Preferred Stock held by the Preferred Stock Depositary, the
Preferred Stock Depositary will redeem as of the same redemption date the number
of Depositary Shares representing the shares of Preferred Stock so redeemed. The
Preferred Stock Depositary will mail the notice of redemption promptly upon
receipt of such notice from the Corporation and not less than 35 nor more than
60 days prior to the date fixed for redemption of the Preferred Stock and the
Depositary Shares to the record holders of the Depositary Receipts. If less than
all of the Depositary Shares are to be redeemed, the Depositary Shares to be
redeemed will be selected by lot or pro rata as may be determined by the
Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of such Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Preferred Stock Depositary of the Depositary Receipts
evidencing such Depositary Shares.
VOTING
Promptly upon receipt of notice of any meeting at which the holders of the
series of Preferred Stock represented by an applicable series of Depositary
Shares are entitled to vote, the Preferred Stock Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts relating to such Preferred Stock. Each record holder of such
Depositary Receipts on the record date (which will be the same date as the
record date for the related Preferred Stock) will be entitled to instruct the
Preferred Stock Depositary as to the exercise of the voting rights pertaining to
the number of shares of Preferred Stock underlying such holder's Depositary
Shares. The Preferred Stock Depositary will endeavor, insofar as practicable, to
vote the number of shares of Preferred Stock underlying such Depositary Shares
in accordance with such instructions, and the Corporation will agree to take all
action which may be deemed necessary by the Preferred Stock Depositary in order
to enable the Preferred Stock Depositary to do so. The
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Preferred Stock Depositary will abstain from voting shares of Preferred Stock to
the extent it does not receive specific instructions from the holders of
Depositary Receipts relating to such Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Corporation and the Preferred Stock Depositary. However, unless
otherwise indicated in the applicable Prospectus Supplement, any amendment which
materially and adversely alters the rights of the existing holders of Depositary
Shares will not be effective unless such amendment has been approved by the
record holders of a majority of the Depositary Shares then outstanding. No such
amendment may impair the rights, subject to the terms of the Deposit Agreement,
of any owner of any Depositary Shares to surrender the Depositary Receipts
evidencing such Depositary Shares with instructions to the Preferred Stock
Depositary to deliver to the holder the Preferred Stock and all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law. A Deposit Agreement may be terminated by the
Corporation or the Preferred Stock Depositary only if (i) all outstanding
Depositary Shares relating thereto have been redeemed or surrendered by the
holders thereof or (ii) there has been a final distribution in respect of the
Preferred Stock of the relevant series in connection with any liquidation,
dissolution or winding up of the Corporation and such distribution has been
distributed to the holders of the related Depositary Shares.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Corporation will pay all transfer and other taxes and governmental
charges arising solely from the existence of the Preferred Stock Depositary
arrangements. The Corporation will pay charges of the Preferred Stock Depositary
in connection with the initial deposit of the Preferred Stock and any redemption
of the Preferred Stock and all withdrawals of Preferred Stock by owners of
Depositary Shares. Holders of Depositary Shares will pay transfer and other
taxes and governmental charges and such other charges as are expressly provided
in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Preferred Stock Depositary will forward to the holders of Depositary
Shares all reports and communications from the Corporation which are delivered
to the Preferred Stock Depositary and which the Corporation is required to
furnish to the holders of Preferred Stock. In addition, the Preferred Stock
Depositary will make available for inspection by holders of Depositary Receipts
at the principal office of the Preferred Stock Depositary, and at such other
places as it may from time to time deem advisable, any reports and
communications received from the Corporation which are received by the Preferred
Stock Depositary as the holder of Preferred Stock.
Neither the Preferred Stock Depositary nor the Corporation will be liable
if it is prevented or delayed by law or any circumstance beyond its control in
performing its respective obligations under the Deposit Agreement. Neither the
Preferred Stock Depositary nor the Corporation shall be liable under the Deposit
Agreement except for its negligence or willful misconduct. The obligations of
the Corporation and the Preferred Stock Depositary under the Deposit Agreement
will be limited to performance in good faith of their duties thereunder and they
will not be obligated to prosecute or defend any legal proceeding in respect of
any Depositary Shares or Preferred Stock unless satisfactory indemnity is
furnished. In the performance of their duties, the Corporation and the Preferred
Stock Depositary may rely upon (a) written advice of counsel or accountants, (b)
information provided by persons presenting Preferred Stock for deposit, by
holders of Depositary Shares or by other persons believed to be competent, and
(c) documents believed by them to be genuine.
RESIGNATION AND REMOVAL OF PREFERRED STOCK DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Corporation notice of its election to do so, and the Corporation may at any time
remove the Preferred Stock Depositary, any such resignation or removal to take
effect upon the appointment of a successor Preferred Stock Depositary and its
acceptance of such appointment. Such successor Preferred Stock Depositary must
be appointed within 90
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days after delivery of the notice of resignation or removal and must be a bank
or trust company having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the Depositary Shares will be treated for federal income tax
purposes as if they were owners of the Preferred Stock represented by such
Depositary Shares. Accordingly, such owners will be entitled to take into
account for federal income tax purposes income and deductions to which they
would be entitled if they were holders of such Preferred Stock. In addition, (i)
no gain or loss will be recognized for federal income tax purposes upon the
withdrawal of Preferred Stock in exchange for Depositary Shares, (ii) the tax
basis of each share of Preferred Stock to an exchanging owner of Depositary
Shares will, upon such exchange, be the same as the aggregate tax basis of the
Depositary Shares exchanged therefor, and (iii) the holding period for Preferred
Stock in the hands of an exchanging owner of Depositary Shares will include the
period during which such person owned such Depositary Shares.
DESCRIPTION OF WARRANTS
GENERAL
The Corporation may issue warrants ("Warrants"), including Warrants to
purchase Debt Securities or Warrants to purchase Common Stock. Warrants may be
issued independently or together with Debt Securities, Preferred Stock or
Depositary Shares offered by any Prospectus Supplement and may be attached to or
separate from such Debt Securities, Preferred Stock or Depositary Shares. Each
series of Warrants will be issued under a separate warrant agreement (each a
"Warrant Agreement" and collectively, the "Warrant Agreements") to be entered
into between the Corporation and a warrant agent (the "Warrant Agent"), all as
set forth in the applicable Prospectus Supplement. The Warrant Agent will act
solely as an agent of the Corporation in connection with the Warrant
certificates relating to the Warrants and will not assume any obligation or
relationship of agency or trust for or with any holders of Warrant certificates
or beneficial owners of Warrants.
The following summaries of certain provisions of the Warrant Agreements and
the Warrants do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Warrant Agreement
and the Warrant certificates relating to each series of Warrants which will be
filed as an exhibit or incorporated by reference into the Registration Statement
of which this Prospectus is a part at or prior to the time of the issuance of
such series of Warrants.
If Warrants are offered, the applicable Prospectus Supplement will describe
the terms of such Warrants, including the following, where applicable: (i) the
offering price; (ii) the number, amount, designation, exercise price and terms,
as the case may be, of Common Stock or Debt Securities purchasable upon exercise
of such Warrants (the "Warrant Securities"); (iii) the designation and terms of
any series of Debt Securities, Preferred Stock or Depositary Shares with which
Warrants are being offered and the number of such Warrants being offered with
each such Debt Security, share of Preferred Stock or Depositary Share; (iv) the
date, if any, on and after which such Warrants and the related series of Debt
Securities, Preferred Stock or Depositary Shares will be transferable
separately; (v) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire (the "Expiration Date");
(vi) whether the Warrants will be issued in registered or bearer form; (vii) any
special federal income tax consequences; (viii) the terms, if any, on which the
Corporation may accelerate the date by which the Warrants must be exercised; and
(ix) any other terms of such Warrants.
Warrant certificates may (i) be exchanged for new Warrant certificates of
different denominations, (ii) if in registered form, be presented for
registration of transfer, and (iii) be exercised at the corporate trust office
of the Warrant Agent or any other office indicated in the applicable Prospectus
Supplement. Prior to the exercise of any Warrant to purchase Debt Securities,
holders of such Warrants will not have any of the rights of holders of Debt
Securities purchasable upon such exercise, including the right to receive
payments of principal of, premium, if any, or interest, if any, on such Debt
Securities or to enforce covenants in the
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applicable Indenture. Prior to the exercise of any Warrants to purchase Common
Stock, holders of such Warrants will not have any rights of holders of such
Common Stock, including the right to receive payments of dividends, if any, or
to exercise voting rights.
Any Warrants issued by the Corporation will involve a certain degree of
risk, including risks arising from fluctuations in the price of the underlying
securities and general risks applicable to the securities market (or markets) on
which the underlying securities are traded. These risks reflect the nature of a
Warrant as an asset which, other factors held constant, tends to decline in
value over time and which becomes worthless upon expiration. Prospective
purchasers of the Warrants should be experienced with respect to options and
option transactions and understand the risks associated with options.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase such principal
amount of Debt Securities or number of shares of Common Stock, as the case may
be, at such exercise price as shall in each case be set forth in, or calculable
from, the applicable Prospectus Supplement. After the close of business on the
Expiration Date (or such later date to which such Expiration Date may be
extended by the Corporation), unexercised Warrants will become void.
Warrants may be exercised by delivering to the Warrant Agent payment as
provided in the applicable Prospectus Supplement of the amount required to
purchase the Debt Securities or Common Stock, as the case may be, purchasable
upon such exercise, together with certain information set forth on the reverse
side of the Warrant certificate. Warrants will be deemed to have been exercised
upon receipt of payment of the exercise price, subject to receipt within 5
business days of the Warrant certificate evidencing such Warrants. Upon receipt
of such payment and the Warrant certificate properly completed and duly executed
at the office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement, the Corporation will, as soon as practicable,
issue and deliver the Debt Securities or Common Stock, as the case may be,
purchasable upon such exercise. If fewer than all of the Warrants represented by
such Warrant certificate are exercised, a new Warrant certificate will be issued
for the remaining Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENTS
The Warrant Agreements may be amended or supplemented without the consent
of the holders of the Warrants issued thereunder to effect changes that are not
inconsistent with the provisions of the Warrants and that do not adversely
affect the interests of the holders of the Warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise specified in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of Common Stock purchasable upon
exercise of a Warrant to purchase Common Stock will be subject to adjustment in
certain events as set forth in the applicable Prospectus Supplement.
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<PAGE> 36
PLAN OF DISTRIBUTION
The Corporation may sell Securities (1) through underwriters or dealers,
(2) directly to one or more purchasers, or (3) through agents. The applicable
Prospectus Supplement will set forth the terms of the Securities offered
thereby, including the name or names of any underwriters, the purchase price of
the Securities, and the proceeds to the Corporation from the sale, any
underwriting discounts and other items constituting underwriters' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers, and any securities exchange or market on which the
Securities may be listed.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the Securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all the Securities of the series offered by the applicable Prospectus Supplement
if any of the Securities are purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Securities may also be sold directly by the Corporation through agents
designated by the Corporation from time to time. Any agent involved in the
offering and sale of Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Corporation to such agent will
be set forth, in the applicable Prospectus Supplement. Unless otherwise
indicated in the applicable Prospectus Supplement, any such agent will be acting
on a best-efforts basis for the period of its appointment.
The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, at prices
related to prevailing market prices at the time of sale or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Corporation or from purchasers of Securities for
whom they may act as agent, in the form of discounts, concessions or
commissions. Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be underwriters within the meaning
of the Securities Act, and any discounts or commissions received by them from
the Corporation and any profit on the resale of Securities by them may be deemed
to be underwriting discounts and commissions under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Corporation
will authorize underwriters, agents or dealers to solicit offers by certain
institutions to purchase Securities from the Corporation at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts ("Contracts") providing for payment and delivery on the date or dates
stated in the applicable Prospectus Supplement. There may be limitations on the
minimum amount which may be purchased by any such institutional investor or on
the portion of the aggregate amount of the particular Securities which may be
sold pursuant to such arrangements. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but will in all cases be subject to the
approval of the Corporation. Contracts will not be subject to any conditions
except: (a) the purchase by an institution of the Securities covered by its
Contract shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject; and (b)
if the Securities are being sold to underwriters, the Corporation shall have
sold to such underwriters the total amount of the Securities less the amount
thereof covered by Contracts. The underwriters will not have any responsibility
in respect of the validity or performance of the Contracts.
Unless otherwise indicated in the applicable Prospectus Supplement, all
Securities offered will be a new issue of securities with no established trading
market. Any underwriters to whom such Securities are sold by the Corporation for
public offering and sale may make a market in such Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or the trading markets for any such Securities.
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Agents and underwriters may engage in transactions with, or perform
services for, the Corporation in the ordinary course of business.
Under agreements which may be entered into by the Corporation, dealers and
agents who participate in the distribution of Securities may be entitled, and
the Corporation has agreed that underwriters, if any, will be entitled, to
indemnification by the Corporation against certain liabilities, including
liabilities under the Securities Act.
LEGAL OPINIONS
The validity of the Offered Securities will be passed upon for the
Corporation by Testa, Hurwitz & Thibeault, Boston, Massachusetts, and for any
underwriters, dealers or agents by Goodwin, Procter & Hoar, Boston,
Massachusetts. From time to time, Goodwin, Procter & Hoar serves as special
counsel to the Corporation as to certain environmental matters.
EXPERTS
The consolidated balance sheets of the Corporation as of July 3, 1993 and
June 27, 1992, and the related consolidated statements of operations, cash
flows, and stockholders' equity for each of the three years in the period ended
July 3, 1993, and the related financial statement schedules, all included in the
Corporation's Annual Report on Form 10-K for the fiscal year ended July 3, 1993,
as amended by Form 10-K/A dated March 11, 1994, incorporated by reference in
this Prospectus, have been incorporated herein in reliance on the report, which
includes an explanatory paragraph indicating that the Corporation changed its
method of accounting for post retirement benefits other than pensions in 1992,
of Coopers & Lybrand, independent accountants, given on the authority of that
firm as experts in accounting and auditing.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE CORPORATION OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................... S-3
Use of Proceeds....................... S-4
Capitalization........................ S-5
Summary Financial Information......... S-6
Supplemental Information Concerning
the Corporation..................... S-7
Description of Series A Preferred
Stock and Depositary Shares......... S-9
Certain Federal Income Tax
Considerations...................... S-12
Underwriting.......................... S-13
Legal Opinions........................ S-15
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Ratio of Earnings to Fixed Charges.... 3
Use of Proceeds....................... 4
Description of Debt Securities........ 4
Description of Capital Stock.......... 13
Description of Depositary Shares...... 16
Description of Warrants............... 19
Plan of Distribution.................. 21
Legal Opinions........................ 22
Experts............................... 22
</TABLE>
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16,000,000
DEPOSITARY SHARES
DIGITAL EQUIPMENT
CORPORATION
EACH REPRESENTING ONE-FOURTH
OF A SHARE OF SERIES A 8 7/8%
CUMULATIVE PREFERRED STOCK
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PROSPECTUS SUPPLEMENT
March 21, 1994
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LEHMAN BROTHERS
CS FIRST BOSTON
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
KIDDER, PEABODY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY SHEARSON INC.
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