<PAGE>
Filed pursuant to Rule 424(b)(2)
Registration No. 333-01303
PROSPECTUS SUPPLEMENT
(To Prospectus Dated April 23, 1996)
[LOGO]
$300,000,000
DRESSER INDUSTRIES, INC.
7.60% DEBENTURES DUE 2096
The 7.60% Debentures Due 2096 (the "Debentures") of Dresser Industries, Inc.
(the "Company") will mature on August 15, 2096. Interest on the Debentures is
payable semi-annually on February 15 and August 15 of each year, commencing
February 15, 1997. The Debentures are not redeemable prior to maturity and will
not be entitled to any sinking fund.
The Debentures will be represented by one or more Global Securities registered
in the name of the nominee of The Depository Trust Company, which will act as
the Depositary. Interests in the Debentures represented by Global Securities
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its direct and indirect participants. Except as
described herein, Debentures in definitive form will not be issued. Settlement
will be made in immediately available funds. The Global Securities will trade in
the Depositary's Same-Day Funds Settlement System until maturity, and secondary
market trading activity in the Global Securities will therefore settle in
immediately available funds.
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>
<CAPTION>
- --------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per Debenture......................... 99.709% 1.125% 98.584%
Total................................. $299,127,000 $3,375,000 $295,752,000
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from August 9, 1996.
(2) Before deducting expenses payable by the Company estimated at $250,000.
The Debentures are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Debentures will be made through the
facilities of The Depository Trust Company on or about August 9, 1996.
SALOMON BROTHERS INC MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus Supplement is August 6, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The net proceeds from the sale of the Debentures are estimated to be
approximately $295.5 million (after deducting underwriting discounts and
estimated offering expenses to be paid by the Company). The Company intends to
use the net proceeds from the sale of the Debentures offered hereby for the
repayment of commercial paper and for general corporate purposes, including,
without limitation, acquisitions and the repurchase from time to time of
outstanding shares of the Company's common stock pursuant to the Company's
common stock repurchase program. Between May 1, 1996 and July 31, 1996, the
Company repurchased 4,068,000 shares of its common stock at an average cost of
$28.76 per share (for total purchases of $117.0 million) pursuant to the
Company's common stock repurchase program. The Company, under its current
authorization to purchase up to $400 million of its outstanding shares of common
stock, had repurchased approximately $200 million of its shares of common stock
through July 31, 1996. The Company financed a portion of such common stock
repurchases by issuing commercial paper. Commercial paper outstanding as of July
31, 1996 amounted to $242.0 million and had a weighted average interest rate of
5.45 percent per annum. Prior to such use, the net proceeds from the sale of the
Debentures will be placed in temporary investments.
S-2
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of April 30, 1996, and as adjusted to give effect
to the repurchases of the Company's common stock as described in "Use of
Proceeds" above and the issuance of commercial paper in connection therewith
through July 31, 1996, and to give effect to the issuance of the Debentures
offered hereby.
<TABLE>
<CAPTION>
APRIL 30, 1996
------------------------
ACTUAL AS ADJUSTED
---------- ------------
(MILLIONS OF DOLLARS)
<S> <C> <C>
Cash and cash equivalents.................................................... $ 198.0 $ 251.5
---------- ------------
---------- ------------
Short-term debt
U.S. commercial paper (1).................................................. $ 208.0 $ --
Other-primarily foreign bank loans......................................... 98.2 98.2
---------- ------------
Total short-term debt...................................................... $ 306.2 $ 98.2
---------- ------------
---------- ------------
Long-term debt including current portion
Notes, 6.25% due 2000...................................................... $ 300.0 $ 300.0
Senior notes, 8% due 2003.................................................. 149.3 149.3
Debentures, 7.60% due 2096................................................. -- 300.0
Other...................................................................... 14.9 14.9
---------- ------------
Total long-term debt including current portion............................. $ 464.2 $ 764.2
---------- ------------
---------- ------------
Shareholders' Equity......................................................... $ 1,722.8 $ 1,722.8
Less: Treasury shares, at cost (2)......................................... (106.1) (217.1)
---------- ------------
Total shareholders' equity................................................. $ 1,616.7 $ 1,505.7
---------- ------------
---------- ------------
</TABLE>
- ------------------------
(1) The above adjusted U.S. commercial paper amount gives effect to the
application of a portion of the net proceeds to repay U.S. commercial paper
outstanding in the amount of $242.0 million as of July 31, 1996.
(2) Between May 1, 1996 and July 31, 1996, the Company purchased 4,068,600 of
its shares of common stock at a cost of $117.0 million. The impact of such
purchases, net of Treasury shares issued for benefit plans, are reflected in
the as adjusted Treasury shares amount.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the Company for each of the five
years in the period ended October 31, 1995 and for the six months ended April
30, 1996 are as follows:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED OCTOBER 31,
ENDED APRIL 30, -----------------------------------------------------
1996 1995 1994 1993 1992 1991
----------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...................... 5.49 6.29 10.90* 4.77 2.96 4.08
</TABLE>
- ------------------------
* Ratio of 6.43 excluding gain on the sale of Western Atlas International, Inc.
For information regarding the method of computing such ratio, see "Ratio of
Earnings to Fixed Charges" in the accompanying Prospectus.
S-3
<PAGE>
DESCRIPTION OF THE DEBENTURES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE DEBENTURES OFFERED
HEREBY SUPPLEMENTS, AND TO THE EXTENT INCONSISTENT THEREWITH REPLACES, THE
DESCRIPTION OF THE GENERAL TERMS AND PROVISIONS OF THE DEBT SECURITIES SET FORTH
IN THE PROSPECTUS, TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE. THE STATEMENTS
HEREIN DO NOT PURPORT TO BE COMPLETE. ALL SUCH STATEMENTS ARE QUALIFIED IN THEIR
ENTIRETY BY REFERENCE TO THE ACCOMPANYING PROSPECTUS AND THE PROVISIONS OF THE
INDENTURE, AS SUPPLEMENTED, THE FORMS OF WHICH HAVE BEEN OR WILL BE FILED ON OR
BEFORE AUGUST 9, 1996 WITH THE SECURITIES AND EXCHANGE COMMISSION.
GENERAL
The Debentures will be limited to $300,000,000 aggregate principal amount
and will mature on August 15, 2096. The Debentures will bear interest at the
rate per annum shown on the cover of this Prospectus Supplement from August 9,
1996 or from the most recent Interest Payment Date to which interest has been
paid or provided for, payable semiannually on February 15 and August 15 of each
year, commencing February 15, 1997, to the persons in whose names Debentures are
registered at the close of business on the February 1 or August 1, as the case
may be, next preceding such Interest Payment Date. The principal of and interest
on the Debentures is payable only in U.S. dollars. The Debentures are not
redeemable prior to maturity and will not be entitled to any sinking fund.
Settlement for the Debentures will be made in immediately available federal
funds, and all secondary trading in the Debentures through The Depository Trust
Company will settle in immediately available, federal funds.
DEFEASANCE AND COVENANT DEFEASANCE
Under certain circumstances, the Company will be deemed to have discharged
the entire indebtedness on all of the outstanding Debentures by defeasance. See
"Description of Debt Securities -- Defeasance of the Indenture and Debt
Securities" in the accompanying Prospectus for a description of the terms and
conditions of any such defeasance. On substantially the same terms and
conditions, the Company may be relieved from the obligation to comply with
certain covenants in the Indenture, including those described in the Prospectus
under the heading "Description of Debt Securities -- Restrictions on Secured
Debt", "-- Restrictions on Sale and Leaseback Transactions", and "--
Restrictions on Mergers, Consolidations and Transfers of Assets." (Sections
8.01, 8.02 and 8.03).
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
among the Company, Salomon Brothers Inc and Morgan Stanley & Co. Incorporated,
as Underwriters (the "Underwriting Agreement"), the Company has agreed to sell
to each of the Underwriters, and each of the Underwriters has severally agreed
to purchase, the principal amount of Debentures set forth opposite its name
below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF DEBENTURES
- ------------------------------------------------------------------------------------- -----------------
<S> <C>
Salomon Brothers Inc ................................................................ $ 150,000,000
Morgan Stanley & Co. Incorporated.................................................... 150,000,000
-----------------
Total.............................................................................. $ 300,000,000
-----------------
-----------------
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all the Debentures
offered hereby if any Debentures are purchased. In the event of default by any
Underwriter, the Underwriting Agreement provides that, in certain circumstances,
the Underwriting Agreement may be terminated.
The Underwriters have advised the Company that they propose initially to
offer the Debentures to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession of not more than 0.625% of the principal amount of the
S-4
<PAGE>
Debentures. The Underwriters may allow, and such dealers may reallow, a
concession of not more than 0.250% of the principal amount of the Debentures to
certain other dealers. After the initial public offering, the public offering
price and concessions may be changed from time to time.
The Debentures are a new issue of securities with no established trading
market and will not be listed on any national securities exchange. The Company
has been advised by the Underwriters that they intend to make a market in the
Debentures, but they are not obligated to do so and may discontinue such market
making at any time without notice. No assurance can be given as to the liquidity
of, or trading markets for, the Debentures.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, or
contribute to payments which the Underwriters may be required to make in respect
thereof.
LEGAL MATTERS
The validity of the Debentures offered hereby will be passed upon by Rebecca
R. Morris, Esq., Vice President -- Corporate Counsel and Secretary of the
Company. Mrs. Morris beneficially owns 9,200 shares of the Company's common
stock and holds options to purchase an additional 24,750 shares of such common
stock and restrictive incentive stock awards covering 4,909 shares of such
common stock. Certain legal matters in connection with the offering of the
Debentures will be passed upon for the Underwriters by Cravath, Swaine & Moore,
New York, New York.
S-5
<PAGE>
PROSPECTUS
$500,000,000
DRESSER INDUSTRIES, INC.
DEBT SECURITIES
------------------
Dresser Industries, Inc. (the "Company" or "Dresser") may offer from time to
time unsecured debt securities (the "Debt Securities") consisting of debentures,
notes or other evidences of indebtedness with an aggregate initial offering
price not to exceed $500,000,000. The Debt Securities may be offered as separate
series in amounts, at prices and on terms to be determined at the time of sale.
The specific designation, aggregate principal amount, rate (or method of
calculation) and time of payment of interest, if any, authorized denominations,
maturity, ranking, any redemption terms, any listing on a securities exchange,
the initial public offering price and other specific terms in connection with
the offering and sale of the Debt Securities in respect of which this Prospectus
is being delivered will be set forth in an 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.
------------------------
The Debt Securities will be sold either through underwriters, dealers or
agents, or directly by the Company. The applicable Prospectus Supplement will
set forth the names of any underwriters or agents involved in the sale of the
Debt Securities in respect of which this Prospectus is being delivered, if any,
the proposed amounts, if any, to be purchased by underwriters and the
compensation, if any, of such underwriters or agents.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
------------------------
The date of this Prospectus is April 23, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports 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 offices of the Commission, 450
5th Street, N.W., Washington, D.C. 20549, Room 1024; CITICORP Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621-2511; and Seven World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 5th Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 at prescribed rates. Additionally,
reports, proxy statements and other information concerning Dresser can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 and at the offices of the Pacific Stock Exchange,
Incorporated, 301 Pine Street, San Francisco, California 94014, on which
Exchanges the Company's Common Stock is listed.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments, supplements, and exhibits thereto, referred
to as the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Debt Securities offered hereby. This
Prospectus, which forms a part of the Registration Statement, does not contain
all 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, reference is hereby made to the
Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for its fiscal year ended
October 31, 1995; and
2. The Company's Quarterly Report on Form 10-Q for the period ended January
31, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination of
the offering of the Debt Securities offered hereby shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents.
Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein (or in any other subsequently filed document which
also is incorporated by reference herein) modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents incorporated herein by reference (not including exhibits to such
documents, unless such exhibits are specifically incorporated by reference in
such documents). Requests should be addressed to: The Secretary, Dresser
Industries, Inc., P. O. Box 718, Dallas, Texas 75221, (Telephone No.
214/740-6000).
2
<PAGE>
THE COMPANY
Dresser Industries, Inc., together with its subsidiaries (hereinafter
"Dresser" or "Registrant" or the "Company"), is a supplier of highly engineered
products, technical services and project management for hydrocarbon
energy-related activities that are primarily utilized in oil and gas drilling,
production and transmission; gas distribution; power generation; gas processing;
petroleum refining and marketing; and petrochemical production. Demand for
Dresser's products and services is generally determined by global demand for
energy and oil and gas by-products. Dresser was incorporated under the laws of
Delaware in 1956 as a successor to a Pennsylvania corporation organized in 1938
by the consolidation of S. R. Dresser Manufacturing Company and Clark Bros.
Company. Both were carrying on businesses founded in 1880. Dresser's executive
offices are located at 2001 Ross Avenue, Dallas, Texas 75201 (telephone number
214/740-6000).
USE OF PROCEEDS
Unless otherwise stated in the applicable Prospectus Supplement, the Company
will use the net proceeds from the sale of Debt Securities for general corporate
purposes, including acquisitions, the reduction of short-term and long-term
borrowing, repurchase of Company securities and for other business
opportunities. Any specific allocation of the net proceeds of an offering of
Debt Securities will be described in the applicable Prospectus Supplement. The
precise amount and timing of sales of the Debt Securities will be dependent on
the Company's capital requirements, market conditions and the availability and
cost of other funds to the Company.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges for the Company for the periods indicated. For purposes of computing
such ratio, earnings consist of income before (i) taxes, (ii) minority
interests, (iii) extraordinary items, (iv) amortization of capitalized interest
and (v) fixed charges (adjusted to exclude capitalized interest) and after
adjustment for unremitted earnings of less than majority owned subsidiaries.
Fixed charges consist of interest on all indebtedness, amortization and debt
expense, discount and premium and a portion of rentals deemed to represent an
interest factor.
<TABLE>
<CAPTION>
3 MONTHS
ENDED JANUARY 31 YEAR ENDED OCTOBER 31
- --------------------- -----------------------------------------------------
1996 1995 1994 1993 1992 1991
- --------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
4.90 6.29 10.90* 4.77 2.96 4.08
</TABLE>
- ------------------------
* Ratio of 6.43 excluding gain on sale of Western Atlas International, Inc.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (the "Indenture"),
dated as of April 18, 1996 between the Company and Texas Commerce Bank National
Association, as Trustee (the "Trustee"). A copy of the Indenture is filed as an
exhibit to the Registration Statement. The following summaries of certain
provisions of the Indenture do not purport to be complete, and are subject to
and are qualified in their entirety by reference to all of the provisions of the
Indenture, including the definitions of certain terms used therein. Wherever
particular sections or defined terms of the Indenture are referred to, it is
intended that such sections or defined terms shall be incorporated herein by
reference in their entirety. Capitalized terms not defined herein shall have the
meanings given to them in the Indenture. Further terms of the Debt Securities in
respect of which this Prospectus is being delivered will be set forth in the
applicable Prospectus Supplement.
3
<PAGE>
GENERAL
Debt Securities consisting of debentures, notes and other evidences of
indebtedness ranking on a parity with all other unsecured and unsubordinated
indebtedness of the Company may be issued from time to time in series under the
Indenture. The Indenture does not limit the aggregate principal amount of Debt
Securities or of any particular series of Debt Securities which may be issued
thereunder.
Reference is made to the applicable Prospectus Supplement for the following
terms and other information with respect to the Debt Securities being offered
hereby: (i) the title of such Debt Securities; (ii) any limit on the aggregate
principal amount of such Debt Securities; (iii) the date or dates (or manner of
determining the same) on which such Debt Securities will mature; (iv) the rate
or rates (or manner of determining the same) at which such Debt Securities will
bear interest, if any, and the date or dates from which such interest will
accrue; (v) the dates (or manner of determining the same) on which such interest
will be payable and the Regular Record Dates for such Interest Payment Dates;
(vi) the place or places where the principal of and premium, if any, and
interest, if any, on such Debt Securities will be payable; (vii) the obligation
of the Company, if any, to redeem or purchase Debt Securities pursuant to any
mandatory or optional sinking fund or analogous provisions; (viii) the date, if
any, after which, and the price or prices at which, such Debt Securities are
payable pursuant to any optional or mandatory redemption provisions; (ix) the
denominations in which such Debt Securities will be issuable, if other than
denominations of $1,000 and any integral multiple thereof; (x) whether such Debt
Securities are to be issued as discounted Debt Securities; (xi) any "Events of
Default" with respect to such Debt Securities in addition to those described
herein; (xii) whether such Debt Securities are to be issued in whole or in part
in the form of one or more global securities ("Global Securities") and, if so,
the identity of the depositary, if any, for such Global Securities; and (xiii)
the identity of any trustee, authenticating agent, paying agent or registrar
with respect to such Debt Securities, if other than the Trustee; and (xiv) other
specific terms of such Debt Securities.
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and premium, if any, and interest, if any, on the Debt Securities
will be payable, and the transfer of the Debt Securities will be registrable, at
the office or agency of the Trustee in Dallas, Texas or New York, New York,
except that, at the option of the Company, interest may be paid by mailing a
check to the person entitled thereto as it appears on the Security Register.
(SECTIONS 2.03, 4.06 AND 10.11) No service charge will be made to any Holder for
any transfer or exchange of Debt Securities, except that the Company may require
payment of a sum sufficient to cover any tax or other governmental charge which
may be imposed in relation thereto. (SECTION 2.06)
Some or all of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or bearing interest at a rate which at the time
of issuance is below market rates) to be sold at a substantial discount below
their stated principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the applicable Prospectus Supplement.
There are no covenants or provisions contained in the Indenture which may
afford Holders of Debt Securities protection in the event of a restructuring or
other highly leveraged transaction involving the Company.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with or on behalf
of a depositary located in the United States (a "Depositary") identified in the
Prospectus Supplement relating to such series. (SECTIONS 1.01 AND 2.01)
BOOK-ENTRY DEBT SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of a Global
Security in registered form, the Depositary for such Global Security will
credit, on its book-entry
4
<PAGE>
registration and transfer system, the respective principal amounts of the Debt
Securities represented by such Global Security to the accounts of institutions
that have accounts with such Depositary or its nominee ("participants"). The
accounts to be credited shall be designated by the underwriters or agents of
such Debt Securities or by the Company, if such Debt Securities are offered and
sold directly by the Company. Ownership of beneficial interests in such Global
Securities will be limited to participants or persons that may hold interests
through participants. Ownership of beneficial interests by participants in such
Global Securities will be shown on, and the transfer of such ownership interests
will be effected only through, records maintained by the Depositary or its
nominee for such Global Security. Ownership of beneficial interests in Global
Securities by persons that hold through participants will be shown on, and the
transfer of such ownership interests within such participant will be effected
only through records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security in registered form, or its
nominee, is the registered owner of such Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture governing such Debt Securities. Except as set forth below, owners
of beneficial interests in such Global Securities will not be entitled to have
Debt Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debt Securities of such series in definitive form and will not be considered the
owners or holders thereof under the Indenture.
Payment of principal of and premium, if any, and interest, if any, on Debt
Securities registered in the name of or held by a Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the registered
owner or holder of the Global Security representing such Debt Securities. None
of the Company, the Trustee, any Paying Agent or the Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depositary for Debt Securities of a particular
series, upon receipt of any payment of principal of and premium, if any, and
interest, if any, on a Global Security, will immediately credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Security as shown on the
records of such Depositary. The Company also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such participants. However, the Company has no control over
the practices of the Depositary or the participants and there can be no
assurance that these practices will not be changed.
A Global Security may not be transferred except as a whole by the Depositary
for such Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee of
such successor. If a Depositary for Debt Securities of a particular series is at
any time unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the Company within 90 days, the Company will
issue Debt Securities in definitive registered form in exchange for the Global
Security or Securities representing such Debt Securities. In addition, the
Company may at any time and in its sole discretion determine not to have any
Debt Securities represented by one or more Global Securities and, in such event,
will issue Debt Securities in definitive registered form in exchange for the
Global Securities representing such Debt Securities. In any such instance, an
owner of a beneficial interest in a Global Security will be entitled to physical
delivery in definitive form of Debt Securities of the series represented by such
Global Security equal in principal amount to such beneficial interest and to
have such Debt Securities registered in its name. (SECTION 2.10)
5
<PAGE>
RESTRICTED SUBSIDIARIES
The various restrictive provisions of the Indenture apply to the Company and
its Restricted Subsidiaries. The term "Restricted Subsidiary" is defined under
the Indenture to include any Subsidiary existing as of the date of the Indenture
or any corporation that is the successor to such a Subsidiary. The term
"Subsidiary" is defined under the Indenture to mean any corporation of which at
least a majority of the outstanding capital stock having ordinary voting power
to elect a majority of the board of directors of said corporation is at the time
owned by the Company or by the Company and one or more Subsidiaries or by one or
more Subsidiaries. (SECTION 1.01) As a result of the definitions of the terms
"Restricted Subsidiary" and "Subsidiary" in the Indenture, the restrictive
provisions of the Indenture will not apply to (i) any corporation coming into
existence or acquired after the date of the Indenture or (ii) any partnership or
other entity that is not organized as a corporation, in each case regardless of
whether such corporation, partnership or other entity is controlled by the
Company or whether the Company owns a majority of the outstanding capital stock
of or other equity interests in such corporation, partnership or other entity.
As of the date of this Prospectus, a material portion of the business of the
Company is conducted through partnerships.
RESTRICTIONS ON SECURED DEBT
The Indenture provides that the Company will not, and will not cause or
permit a Restricted Subsidiary to, create, incur, assume or guarantee any
Secured Debt unless the Debt Securities will be secured equally and ratably with
(or prior to) such Secured Debt, with certain exceptions. The foregoing
restrictions do not prohibit the creation, incurrence, assumption or guarantee
of Secured Debt which is secured by (i) certain Security Interests to secure
payment of the cost of acquisition, construction, development or improvement of
property, (ii) Security Interests on property at the time of its acquisition by
the Company or a Restricted Subsidiary, which Security Interests secure
obligations assumed by the Company or a Restricted Subsidiary, or on the
property of a corporation or other entity at the time it is merged into the
Company or a Restricted Subsidiary (other than any Security Interests created in
contemplation of the acquisition of such property or the consummation of such a
merger), (iii) Security Interests arising from conditional sales agreements or
title retention agreements with respect to property acquired by the Company or a
Restricted Subsidiary and (iv) Security Interests securing Indebtedness of a
Restricted Subsidiary owing to the Company or to another Restricted Subsidiary.
Additionally, such permitted Secured Debt includes any extension, renewal or
refunding, in whole or in part, of Secured Debt permitted at the time of the
original incurrence thereof. (SECTION 4.03)
In addition to the foregoing, the Company and its Restricted Subsidiaries
may create, incur, assume or guarantee Secured Debt, without equally and ratably
securing the Debt Securities, if immediately thereafter the sum of (i) the
aggregate principal amount of all Secured Debt outstanding (excluding Secured
Debt permitted under clauses (i) through (iv) of the immediately preceding
paragraph) and (ii) all Attributable Debt (as hereinafter defined) in respect of
Sale and Leaseback Transactions (as hereinafter defined) as of the date of
determination would not exceed 10% of Consolidated Net Tangible Assets. (SECTION
4.03)
The term "Consolidated Net Tangible Assets" is defined under the Indenture
to mean the total amount of assets which would be included on a consolidated
balance sheet of the Company and its subsidiaries under generally accepted
accounting principles (less applicable reserves and other properly deductible
terms) after deducting therefrom: (i) all short-term liabilities, except for
liabilities payable by their terms more than one year from the date of
determination (or renewable or extendible at the option of the obligor for a
period ending more than one year after such date) and liabilities in respect of
retiree benefits other than pensions and postemployment benefits for which the
Company is required to accrue pursuant to Statement of Financial Accounting
Standards No. 106 and No. 112, respectively, and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount, unamortized expense incurred in
the issuance of debt and other intangible assets. (SECTION 1.01) The term
"Consolidated Net Tangible Assets" includes the assets of majority owned
partnerships that do not constitute Restricted Subsidiaries. See "-- Restricted
Subsidiaries."
6
<PAGE>
The term "Secured Debt" is defined under the Indenture to include any
indebtedness for borrowed money of, or upon which interest is payable by, the
Company or any Restricted Subsidiary or any such indebtedness of others
guaranteed by the Company or any Restricted Subsidiary which is secured by (i) a
Security Interest in any property of the Company or any Restricted Subsidiary or
(ii) a Security Interest in shares of stock owned by the Company or a Restricted
Subsidiary in a corporation or in equity interests owned by the Company or a
Restricted Subsidiary in a partnership or other entity not organized as a
corporation or in the rights of the Company or a Restricted Subsidiary in
respect of indebtedness for money borrowed by a corporation, partnership or
other entity in which the Company or a Restricted Subsidiary has an equity
interest. The securing in the foregoing manner of any such indebtedness which
immediately prior thereto was not Secured Debt shall be deemed to be the
creation of Secured Debt at the time security is given.
RESTRICTIONS ON SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, enter into any Sale and Leaseback Transaction, unless
(i) the Company or such Restricted Subsidiary would be entitled to incur Secured
Debt permitted by the Indenture (other than by reason of provisions described in
clauses (i) through (iv) of the first paragraph under "-- Restrictions on
Secured Debt") in an amount equal to the Attributable Debt in respect of such
Sale and Leaseback Transaction without equally and ratably securing the Debt
Securities or (ii) notice is promptly given to the Trustee of the Sale and
Leaseback Transaction, fair value is received by the Company or a Restricted
Subsidiary for the property sold (as determined in good faith pursuant to a
Board Resolution delivered to the Trustee) and the Company or a Restricted
Subsidiary applies or commits to apply an amount equal to the net proceeds of
the property sold pursuant to the Sale and Leaseback Transaction to the
redemption of Debt Securities of any series or the retirement of other Funded
Debt of the Company or any Restricted Subsidiary not subordinate or junior in
right of payment to the Debt Securities. In lieu of applying all or any part of
such amount to the redemption of Debt Securities or the retirement of Funded
Debt, the Company may deliver Debt Securities to the Trustee for cancellation
and thereby reduce the amount to be applied to the redemption of Debt Securities
or retirement of Funded Debt by an amount equal to the aggregate principal
amount of Debt Securities delivered. (SECTION 4.04)
The term "Attributable Debt" is defined under the Indenture to mean, in
respect of a Sale and Leaseback Transaction, the present value (discounted at
the weighted average effective interest rate per annum of the outstanding Debt
Securities, of all series, compounded semi-annually) of the obligation of the
lessee for rental payments during the remaining term of the lease included in
such transaction, including any period for which such lease has been extended or
may, at the option of the lessor, be extended or, if earlier, until the earliest
date on which the lessee may terminate such lease upon payment of a penalty (in
which case the obligation of the lessee for rental payments shall include such
penalty), after excluding all amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water and utility rates
and similar charges. (SECTION 1.01)
The term "Sale and Leaseback Transaction" is defined under the Indenture to
include a sale or transfer made by the Company or a Restricted Subsidiary
(except a sale or transfer made to the Company or another Restricted Subsidiary)
of any property if such sale or transfer is made with the intention of leasing
such property to the Company or a Restricted Subsidiary, except (i) a lease for
a period not exceeding 60 months and (ii) a lease that secures or relates to
certain governmental obligations issued in connection with the financing of the
cost of construction or acquisition of such property. (SECTION 1.01)
RESTRICTIONS ON MERGERS, CONSOLIDATIONS AND TRANSFERS OF ASSETS
The Indenture provides that the Company will not consolidate or merge into
or sell, assign, transfer or lease all or substantially all of its assets to
another person unless (i) the person is a corporation organized under the laws
of the United States of America or any state thereof, (ii) the person assumes by
supplemental indenture all the obligations of the Company relating to the Debt
Securities and the Indenture and (iii) immediately after the transactions no
Default exists. Upon any such consolidation,
7
<PAGE>
merger, sale, assignment or transfer, the successor corporation will be
substituted for the Company under the Indenture. The successor corporation may
then exercise every power and right of the Company under the Indenture, and the
Company will be released from all of its liabilities and obligations in respect
of the Debt Securities and the Indenture. In the event the Company leases all or
substantially all of its assets, the lessee corporation will be the successor to
the Company and may exercise every power and right of the Company under the
Indenture, but the Company will not be released from its obligations to pay the
principal of and premium, if any, and interest, if any, on the Debt Securities.
(SECTION 5.01)
AMENDMENTS OF THE INDENTURE
Amendments of the Indenture or the Debt Securities of any series may be made
by the Company and the Trustee without the consent of the Holders of such Debt
Securities (i) to cure any ambiguity, defect or inconsistency or to make such
provisions with respect to matters or questions arising under the Indenture as
may be necessary or desirable and not inconsistent with the Indenture or with
any indenture supplemental thereto or any Board Resolution establishing any
series of Debt Securities, provided that such amendment does not adversely
affect the rights of the Holders thereof, (ii) to comply with the merger or sale
of assets provision in the Indenture, (iii) to add additional covenants, (iv) to
establish the form or terms of Debt Securities of any additional series, (v) to
provide for the acceptance of appointment of a successor Trustee or (vi) to
provide for the issuance of Debt Securities with interest coupons with respect
to any such series or (vii) to provide for the exchange of Global Securities for
Debt Securities issued in definitive form and to make all appropriate changes
for such purpose. (SECTION 9.01)
Amendments of the Indenture affecting the Debt Securities of any series or
amendments of the Debt Securities themselves of such series may be made by the
Company and the Trustee with the consent of the Holders of 66 2/3% in aggregate
principal amount of the Debt Securities of such series, provided that, without
the consent of each Holder affected, no such amendment shall be made which will
(i) reduce the percentage in principal amount of the Debt Securities whose
Holders must consent to an amendment, (ii) reduce the rate of or change the time
for payment of interest on any Debt Security, (iii) reduce the principal of,
change the Stated Maturity of, reduce the amount payable on redemption of or
alter the requirements with respect to the mandatory redemption, if any, of any
Debt Security, (iv) make any Debt Security payable in money other than that
stated in such Debt Security or (v) make any change in the Indenture provisions
with respect to waiver of existing Defaults, rights of Holders to receive
payment and to bring suit for the enforcement of such rights, or the requirement
of obtaining the written consent of each affected Holder to certain amendments
of the Indenture or any Debt Security. (SECTION 9.02)
EVENTS OF DEFAULT
An "Event of Default" with respect to any series of Debt Securities is
defined under the Indenture to include: (i) failure for 30 days to pay any
interest on any Debt Security of such series when due, (ii) failure to pay the
principal of and premium, if any, of any Debt Security of such series when due,
(iii) failure for 90 days after receipt of notice to perform any other agreement
of the Company with respect to Debt Securities of such series or the Indenture
for the benefit of Debt Securities of such series, (iv) a default under any
bond, indenture, note or other evidence of indebtedness for money borrowed by
the Company or a Restricted Subsidiary or under any mortgage, indenture or
instrument under which there may be issued, or by which there may be secured or
evidenced, any such indebtedness with a principal amount then outstanding in
excess of $25,000,000, which default shall constitute a failure to pay any
portion of the principal of such indebtedness when due or shall result in the
acceleration of such indebtedness, (v) certain events of bankruptcy, insolvency
or reorganization of the Company or a Material Subsidiary and (vi) any other
event established as an event of default in accordance with the Indenture with
respect to Debt Securities of such series. (SECTION 6.01)
The term "Material Subsidiary" is defined under the Indenture to mean any
consolidated subsidiary of the Company (whether a corporation or a partnership
or other entity not organized as a corporation) if such consolidated subsidiary
would be deemed as of the date of determination a "significant subsidiary" under
the rules of the Securities and Exchange Commission. (SECTION 1.01)
8
<PAGE>
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a Default in respect of any series of Debt Securities, give to the
Holders of the Debt Securities of such series notice of all uncured and unwaived
Defaults known to it; provided, however, that, except in the case of a Default
in the payment of the principal of or any interest on any of the Debt Securities
of such series, such Trustee may withhold such notice if it in good faith
determines that the withholding of such notice is in the interest of the Holders
of the Debt Securities of such series. (SECTION 7.05)
If an Event of Default shall occur and be continuing with respect to any
series of Debt Securities, the Trustee may proceed to protect and enforce its
rights and those of the Holders of Debt Securities of such series. (SECTION
6.03) If any Event of Default shall occur and be continuing with respect to any
series of Debt Securities, either the Trustee or the Holders of at least 25% in
principal amount of the Debt Securities of such series may declare the principal
of and accrued interest on all the Debt Securities of such series to be due and
payable. The Holders of a majority in principal amount of the Debt Securities of
such series may rescind an acceleration and its consequences, but only if all
existing Events of Default with respect to the Debt Securities of such series
have been cured or waived, except nonpayment of principal or interest that has
become due solely because of the acceleration. (SECTION 6.02) The Holders of a
majority in principal amount outstanding of the Debt Securities of such series
may direct the Trustee as to the time, method and place of pursuing any remedy
available to it or exercising any trust or power conferred on it with respect to
the Debt Securities of such series and may waive any existing Default with
respect to the Debt Securities of such series, except a Default in the payment
of principal of or interest on any Debt Security of such series. (SECTIONS 6.04
AND 6.05)
The Company is required to furnish to the Trustee annually a statement as to
the absence of a Default. (SECTION 4.05)
DEFEASANCE OF THE INDENTURE AND DEBT SECURITIES
The Company may at any time satisfy its obligations with respect to payments
of principal of and premium, if any, and interest, if any, on the Debt
Securities of any series by irrevocably depositing in trust with the Trustee
money or U.S. Government Obligations or a combination thereof sufficient to make
such payments when due without reinvestment thereof. If such a deposit is
sufficient to make all payments of (i) interest, if any, on the Debt Securities
of such series prior to and on their redemption or maturity, as the case may be,
and (ii) principal of and premium, if any, on the Debt Securities of such series
when due upon redemption or at Stated Maturity, as the case may be, then all the
obligations of the Company with respect to the Debt Securities of such series
and the Indenture insofar as it relates to the Debt Securities of such series
will be satisfied and discharged (except as otherwise provided in the
Indenture). In the event of any such defeasance, Holders of the Debt Securities
of such series would be able to look only to such trust fund for payment of
principal of and premium, if any, and interest, if any, on the Debt Securities
of such series until Stated Maturity or redemption. (SECTIONS 8.01, 8.02 AND
8.03)
Such a Trust may only be established if, among other things, (i) the Company
has obtained an opinion of legal counsel (which may be based on a ruling from,
or published by, the Internal Revenue Service) to the effect that Holders of the
Debt Securities of such series 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 and (ii) at that time, with
respect to any series of Debt Securities then listed on The New York Stock
Exchange, the rules of The New York Stock Exchange do not prohibit such deposit
with the Trustee. (SECTION 8.02)
ANNUAL REPORTS BY THE TRUSTEE
To the extent required by the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), the Trustee shall, within 60 days after May 15 in each
year, furnish to each Holder of Debt Securities an annual report that complies
with Section 313 of the Trust Indenture Act. (SECTION 7.06) The Indenture does
not require that the Company or the Trustee furnish any other reports, documents
or information to the Holders of Debt Securities.
9
<PAGE>
NOTICES AND COMMUNICATIONS
Notices or communications to Holders of Debt Securities will be given by
first-class mail or by overnight air courier to the addresses of such Holders as
they appear in the Security Register. (SECTION 10.02)
Holders of Debt Securities may communicate with other Holders with respect
to their rights under the Indenture or the Debt Securities pursuant to the
provisions of Section 312(b) of the Trust Indenture Act which require a trustee
to provide security holders access to information regarding the addresses of
other security holders in certain situations. (SECTION 10.03)
GOVERNING LAW
The Indenture and the Debt Securities will be governed by and construed in
accordance with the laws of the State of Texas. (SECTION 10.13)
INFORMATION CONCERNING THE TRUSTEE
The Trustee under the Indenture is Texas Commerce Bank National Association.
The Company maintains deposit accounts and banking relations with Texas Commerce
Bank National Association.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby: (i) directly
to purchasers, (ii) through agents, (iii) through underwriters, (iv) through
dealers, or (v) through a combination of any such methods of sale.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions either (i) at a fixed price or prices, which may be
changed, (ii) at market prices prevailing at the time of sale; (iii) at prices
related to such prevailing market prices; or (iv) at negotiated prices.
Offers to purchase Debt Securities may be solicited directly by the Company
or by agents designated by the Company from time to time. Any such agent, which
may be deemed to be an underwriter, as that term is defined in the Securities
Act, involved in the offer or sale of the Debt Securities in respect of which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement or the
Pricing Supplement. Unless otherwise indicated in the Prospectus Supplement or
the Pricing Supplement, any such agent will be acting on a best efforts basis
for the period of its appointment. Agents may be customers of, engaged in
transactions with, or perform services for, the Company in the ordinary course
of business.
If an underwriter or underwriters are utilized in the sale, the Company will
execute an underwriting agreement with such underwriter or underwriters at the
time of sale to them and the names of the underwriters and the terms of the
transactions will be set forth in the Prospectus Supplement, which will be used
by the underwriters to make resales of the Debt Securities.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
Underwriters, dealers, agents, and other persons may be entitled, under
agreements which may be entered into with the Company, to indemnification
against, or contribution with respect to, certain civil liabilities, including
liabilities under the Securities Act.
Underwriters and agents may engage in transactions with, or perform services
for, the Company in the ordinary course of business.
10
<PAGE>
LEGAL MATTERS
The validity of the Debt Securities offered hereby will be passed upon by
Rebecca R. Morris, Vice President -- Corporate Counsel and Secretary of the
Company (who owns 9,200 shares of the Company's Common Stock and holds options
to purchase an additional 24,750 shares of such common stock coupled with 4,909
restrictive incentive stock awards.).
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Dresser Industries, Inc. and its
subsidiaries for the year ended October 31, 1995 have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
11
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Use of Proceeds................................ S-2
Capitalization................................. S-3
Ratio of Earnings to Fixed Charges............. S-3
Description of the Debentures.................. S-4
Underwriting................................... S-4
Legal Matters.................................. S-5
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
The Company.................................... 3
Use of Proceeds................................ 3
Ratio of Earnings to Fixed Charges............. 3
Description of Debt Securities................. 3
Plan of Distribution........................... 10
Legal Matters.................................. 11
Experts........................................ 11
</TABLE>
$300,000,000
DRESSER INDUSTRIES, INC.
7.60% DEBENTURES DUE 2096
[LOGO]
SALOMON BROTHERS INC
MORGAN STANLEY & CO.
INCORPORATED
PROSPECTUS SUPPLEMENT
DATED AUGUST 6, 1996
