<PAGE>
PURSUANT TO RULE 424(B)(5)
REGISTRATION NO. 33-62415
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS SUBJECT TO +
+COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE +
+SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE +
+SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE +
+TIME THAT A FINAL PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PRELIMINARY +
+PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN +
+OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY +
+SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR +
+SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE +
+SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUPPLEMENT (Subject to Completion, Issued June 25, 1996)
(To Prospectus dated November 20, 1995)
$100,000,000
FMC Corporation
LOGO
% SENIOR DEBENTURES DUE
--------
Interest payable January and July
--------
THE SENIOR DEBENTURES WILL NOT BE REDEEMABLE PRIOR TO MATURITY AND WILL NOT
BE SUBJECT TO ANY SINKING FUND. THE SENIOR DEBENTURES WILL BE REPRESENTED
BY GLOBAL DEBENTURES REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY ("DTC") OR ITS NOMINEE. BENEFICIAL INTERESTS IN THE GLOBAL
DEBENTURES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE
EFFECTED THROUGH, RECORDS MAINTAINED BY DTC OR ITS
PARTICIPANTS. EXCEPT AS DESCRIBED HEREIN, SENIOR
DEBENTURES IN DEFINITIVE FORM WILL NOT BE ISSUED. SEE
"DESCRIPTION OF SENIOR DEBENTURES."
--------
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 ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------
PRICE % AND ACCRUED INTEREST, IF ANY
--------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
---------- -------------- -------------
<S> <C> <C> <C>
Per Senior Debenture.................... % % %
Total................................... $ $ $
</TABLE>
- -----
(1) Plus accrued interest, if any, from July , 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deduction of estimated expenses of $ payable by the
Company.
--------
The Senior Debentures are offered, subject to prior sale, when, as and if
accepted by the Underwriters and subject to approval of certain legal matters
by Mayer, Brown & Platt, counsel for the Underwriters. It is expected that
delivery of the Senior Debentures will be made on or about July , 1996
through the book-entry facilities of DTC against payment therefor in
immediately available funds.
--------
MORGAN STANLEY & CO. SALOMON BROTHERS INC
Incorporated
June , 1996
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR DEALER. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING 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 AN OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
TABLE OF CONTENTS
----------------
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
The Company............................................................... S-3
Recent Developments....................................................... S-3
Use of Proceeds........................................................... S-3
Summary Financial Information............................................. S-4
Capitalization............................................................ S-5
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-6
Description of Senior Debentures.......................................... S-16
Underwriting.............................................................. S-17
Legal Matters............................................................. S-18
Experts................................................................... S-18
PROSPECTUS
Available Information..................................................... 2
Documents Incorporated by Reference....................................... 3
The Company............................................................... 4
Use of Proceeds........................................................... 5
Ratio of Earnings to Fixed Charges........................................ 5
General Description of the Offered Securities............................. 5
Description of the Common Stock........................................... 5
Description of the Preferred Stock........................................ 7
Description of Depository Shares.......................................... 8
Description of the Debt Securities........................................ 11
Description of the Warrants to Purchase Common Stock or Preferred Stock... 20
Description of the Warrants to Purchase Debt Securities................... 22
Plan of Distribution...................................................... 23
Legal Matters............................................................. 24
Experts................................................................... 24
</TABLE>
----------------
IN CONNECTION WITH THIS OFFFERING THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR
DEBENTURES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
S-2
<PAGE>
THE COMPANY
The Company is one of the world's leading producers of chemicals and
machinery for industry, agriculture and government. The Company, incorporated
in 1928, operates on a worldwide basis in five broad markets: Performance
Chemicals, Industrial Chemicals, Machinery and Equipment, Defense Systems and
Precious Metals. The Company operates 113 manufacturing facilities and mines
in 24 states and 24 countries. Performance Chemicals businesses develop,
manufacture and market proprietary specialty chemicals, including agricultural
chemicals, pharmaceutical products, food ingredients, water additives, flame
retardants and lithium-based chemicals. Industrial Chemicals businesses
manufacture a wide variety of chemicals including soda ash, phosphates,
hydrogen peroxide and a range of other industrial chemicals. Major customers
include glass, paper and detergent producers, as well as food processors and
other chemical companies. Machinery and Equipment businesses provide
specialized machinery and services to the energy, transportation, food, and
food handling industries. Defense Systems develops, manufactures and supplies
ground combat vehicles and armament systems to the armed forces of the United
States and other governments. In the first quarter of 1994, the Company and
Harsco Corporation ("Harsco") announced the establishment of a joint venture,
United Defense, L.P., which was a combination of certain assets and
liabilities of the Company's Defense Systems Group and Harsco's BMY Combat
Systems Division and pursuant to which the Company is the Managing General
Partner with a 60% equity interest. The Precious Metals business focuses on
the mining of gold in the western United States and the exploration for
precious metals in Latin America and North America and is conducted by FMC
Gold Company. The Company owns 80% of FMC Gold Company's outstanding common
stock. See "Recent Developments."
The Company is a corporation organized under the laws of the State of
Delaware. As used hereunder, "FMC" or the "Company" refers to FMC Corporation
and its subsidiaries, unless otherwise indicated by the context. The Company's
principal executive offices are located at 200 East Randolph Drive, Chicago,
Illinois 60601 (telephone number: (312) 861-6000).
RECENT DEVELOPMENTS
On June 21, 1996, a registration statement was filed with the Securities and
Exchange Commission relating to the possible reincorporation of FMC Gold
Company (to be renamed Meridian Gold Inc.) in Canada. In addition, on June 10,
1996, FMC Gold Company filed preliminary documents with securities regulators
in Canada relating to a possible secondary public offering of the Company's
80% equity interest in FMC Gold Company. The reincorporation and offering
transactions would be subject to approval of a definitive merger agreement by
the board of directors and stockholders of FMC Gold Company, to the successful
marketing of the Company's equity interest in FMC Gold Company and to other
conditions. As a result, there is no assurance that the transactions will be
completed. FMC Gold Company had previously announced that it was reviewing
several alternatives to maximize its value to its stockholders, including the
secondary public offering described above and the sale of some or all of its
stock or assets. Investment advisors have been retained to assist in this
process, which may or may not result in the consummation of one or more
transactions.
On June 20, 1996, the Company purchased Frigoscandia Equipment Holding AB
("Frigoscandia") from ASG AB for approximately $160 million in cash plus the
assumption of certain indebtedness. Frigoscandia, headquartered in
Helsingborg, Sweden, is the global leader in equipment for industrial in-line
freezing and has a strong market position in additional food processing
equipment, such as fryers, ovens and portioners.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Senior
Debentures to repay outstanding short-term borrowings with interest rates
ranging from 5.40% to 5.75% and having maturities of less than 90 days. Such
short-term borrowings were incurred for general corporate purposes, including
the financing of capital expenditures and acquisitions.
S-3
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following table sets forth summary financial information of the Company
and its consolidated subsidiaries and is qualified in its entirety by, and
should be read in conjunction with, the consolidated financial statements and
notes thereto and management's discussion and analysis included elsewhere
herein or incorporated into this Prospectus by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995. The
balance sheet data as at December 31 of the years set forth below and the
income statement data for the years then ended have been extracted from
financial statements of the Company and its consolidated subsidiaries which
were audited by KPMG Peat Marwick LLP ("KPMG"), independent certified public
accountants, whose report, with respect to United Defense, L.P. for the years
ended December 31, 1995 and 1994, is based on the report of Ernst & Young LLP
("Ernst & Young"), independent auditors.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
-------------------------- ---------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ------------ -------- -------- -------- -------- --------
(UNAUDITED; IN MILLIONS,
EXCEPT RATIOS) (IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales............... $ 1,112.1 $ 1,015.5 $4,509.8 $4,010.8 $3,753.9 $3,973.7 $3,899.4
Income from continuing
operations before
restructuring and other
charges, the gain on
sale of FMC Wyoming
Corp. stock and income
taxes.................. 77.8 74.9 297.2(/1/) 252.3 210.1(/1/) 279.6 255.9
Income from continuing
operations before
income taxes........... 77.8 74.9 246.9 252.3 37.8 279.6 255.9
Net income (loss)....... 55.2 52.4 215.6 173.4 36.3(/2/) (75.7)(/2/) 163.9
BALANCE SHEET
Total assets............ $ 4,479.0 $ 3,561.1 $4,301.1 $3,351.5 $2,845.1 $2,856.6 $2,774.2
Total debt.............. 1,626.1 1,202.1 1,425.0 1,009.4 831.8 906.9 992.2
Total stockholders'
equity................. 705.7 473.5 653.4 416.5 216.9 219.0 309.8
OTHER DATA
Ratio of earnings to
fixed charges(/3/)..... 4.1x 4.5x 3.4x(/4/) 4.4x 1.5x(/5/) 3.4x 2.8x
</TABLE>
- --------
(/1/)Restructuring and other charges in 1995 consisted of increases in
environmental reserves ($82.5 million), charges related to the shift of
lithium-based production to Argentina ($35.0 million), asset write-downs
and other charges ($17.0 million) and the write-off of acquired in-process
research and development related to the Moorco International Inc.
acquisition ($15.5 million). The gain on sale of FMC Wyoming stock was
$99.7 million in 1995. Restructuring and other charges in 1993 consisted of
$172.3 million (net of $12.7 million of minority interest) related
primarily to restructuring costs associated with the Machinery and
Equipment and Industrial Chemicals segments, expenses to restructure
companywide functional support staffs and a write-down of FMC Gold
Company's investment in the Beartrack development property.
(/2/)Extraordinary charges of $4.7 million and $11.4 million (net of tax) were
recorded in 1993 and 1992, respectively, related to early debt retirements,
and in 1992 a provision of $73.2 million (net of tax) was recorded for
discontinued operations.
(/3/)The ratios of earnings to fixed charges have been determined by dividing
fixed charges into earnings. Earnings consist of income from continuing
operations before income taxes and extraordinary items, plus minority
interests, less undistributed earnings (and plus losses) of affiliates,
plus interest expense and amortization of debt discount, fees and expenses,
plus amortization of capitalized interest, plus one-third of rentals. Fixed
charges consist of interest expense and amortization of debt discount, fees
and expenses, interest capitalized as part of fixed assets and interest
included in rental expense.
(/4/)The ratio of earnings to fixed charges for the year ended December 31,
1995 before the gain on sale of FMC Wyoming stock, restructuring and other
charges and write-off of acquired in-process research and development was
3.9x.
(/5/)The ratio of earnings to fixed charges for the year ended December 31,
1993 before restructuring and other charges was 3.3x.
S-4
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its subsidiaries at March 31, 1996 and as adjusted to give effect
to the sale of the Senior Debentures offered hereby and the application of the
estimated net proceeds therefrom. From time to time, the Company may issue
additional debt or equity securities. The following information should be read
in conjunction with the Company's consolidated financial statements for the
quarter ended March 31, 1996, including the notes thereto, and management's
discussion and analysis which are included elsewhere herein or incorporated
herein by reference. See "Documents Incorporated by Reference."
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------
HISTORICAL AS ADJUSTED
---------- -----------
(UNAUDITED; IN
MILLIONS)
<S> <C> <C>
INDEBTEDNESS*
Short-term borrowings................................. $ 650.9 $ 551.8
Current maturities of long-term debt.................. 16.2 16.2
Long-term debt, less current maturities............... 959.0 959.0
Senior Debentures offered hereby...................... -- 100.0
-------- --------
Total indebtedness.................................. 1,626.1 1,627.0
-------- --------
STOCKHOLDERS' EQUITY*
Common stock, $0.10 par value, authorized 60,000,000
shares; issued 37,228,971 shares..................... 3.7 3.7
Capital in excess of par value of capital stock....... 109.1 109.1
Retained earnings..................................... 651.3 651.3
Foreign currency translation adjustment............... (49.2) (49.2)
Treasury stock, common, at cost; 300,447 shares....... (9.2) (9.2)
-------- --------
Total stockholders' equity.......................... 705.7 705.7
-------- --------
Total capitalization................................ $2,331.8 $2,332.7
======== ========
</TABLE>
- --------
*For additional information regarding long-term debt (including repayment
requirements) and stockholders' equity, see Note 2 to the unaudited
consolidated financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996 and Notes 5, 6, 8,
9, 10 and 11 to the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
S-5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information set forth below consists of management's discussion and
analysis contained or incorporated by reference in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996 and the Company's
Annual Report on Form 10-K for the year ended December 31, 1995. Such
information is presented in this Prospectus Supplement for convenience of
reference and has not been updated in any material respect since the dates of
such documents.
GENERAL
Quarter Ended March 31, 1996 Compared with Quarter Ended March 31, 1995
Sales increased 10 percent to $1.1 billion, driven by continuing growth in
Machinery and Equipment, Performance Chemicals and Industrial Chemicals as
well as the acquisition of Moorco International Inc.
Net income was $55 million and earnings per share were $1.45, compared with
$52 million and $1.40, respectively, in last year's period.
1995 Compared with 1994
Sales in 1995 were $4.5 billion, an increase of 12 percent from 1994. Sales
in the United States increased 13 percent during the year, while sales outside
the United States increased 12 percent from 1994.
Before restructuring and other charges of $80 million after tax (discussed
further below), a $100 million non-taxable gain on the sale of FMC Wyoming
stock and a $15.5 million write-off of acquired in-process research and
development costs, consolidated net income of $212 million, or $5.63 per
share, increased 22 percent. Including these items, the Company earned $216
million, or $5.72 per share.
Results for 1995 were the best in FMC's history. On an overall basis,
improving markets and the benefits of the Company's restructuring programs, as
well as strategic acquisitions, more than offset significantly higher interest
expense related to acquisition and expansion efforts.
1994 Compared with 1993
Sales increased 7 percent in 1994 to $4 billion, mainly due to increases in
the Defense Systems, Machinery and Equipment, and Performance Chemicals
segments. While sales in the United States remained flat in 1994, sales
outside the United States grew 18 percent, driven by an increase in export
sales of $256 million. Net income in 1994 was $173 million, or $4.66 per
share.
Net income in 1993 included after-tax restructuring and other charges, net
of minority interest, of $123 million, or $3.34 per share. An after-tax
extraordinary charge of about $5 million was also recorded in 1993 for debt
restructuring. After these charges, net income for 1993 was $36 million, or
$0.98 per share.
Taxes
The effective tax rate in 1995 was 13 percent. This rate reflects the tax-
free gain on sale of a minority interest in FMC's soda ash business as well as
depletion and foreign sales corporation benefits. The Company's effective tax
rate, excluding the impact of restructuring and other charges and the gain on
the sale of FMC Wyoming stock, was 29 percent. The effective tax rate for 1994
was 31 percent, primarily reflecting depletion and foreign sales corporation
benefits. Income from foreign operations taxed at rates lower than the U.S.
statutory rate also contributed to lower effective rates in 1995, 1994 and
1993. In 1993, the Company reported a credit for income taxes of $3 million on
pretax income of $38 million. This unusually low rate was driven primarily by
the low level of pretax income in 1993.
S-6
<PAGE>
Restructuring and Other Charges
FMC recorded restructuring and other charges of $35 million ($20 million
after tax) in the third quarter of 1995 covering asset writedowns and related
exit liabilities for the expected shift in 1997 of lithium-based production
from North Carolina to a new lower-cost, higher quality mineral resource in
Argentina. Other charges of $17 million ($10 million after tax) related
primarily to asset write-downs. In addition, the Company increased its
environmental reserves by $83 million, or $51 million after tax, as part of
its ongoing assessment of sites with known environmental issues. See Note 14
to the Company's consolidated financial statements for the year ended December
31, 1995 and "Environmental" below for a discussion of FMC's environmental
reserves.
In 1993, FMC recorded restructuring and other charges of $172 million, net
of minority interest ($123 million after tax). These charges primarily related
to restructuring costs associated with the Machinery and Equipment and
Industrial Chemical segments, expenses to restructure companywide functional
support staffs and a write-down of the investment in the Beartrack property in
the Precious Metals segment.
During 1995 and 1994, approximately 1,100 employee positions were
eliminated. (Additionally, 500 positions were eliminated at United Defense,
L.P., that were not covered by the 1993 restructuring program.) FMC's programs
to reorganize functional support staffs throughout the Company to align their
activities more closely with the Company's growth initiatives, as well as
severance programs within the Industrial Chemical and Machinery and Equipment
segments designed to improve operating performance, resulted in the majority
of the eliminated positions. Cash payments related to these separations were
approximately $16 million and $32 million in 1995 and 1994, respectively.
Approximately $34 million and $40 million of spending in 1995 and 1994,
respectively, related to the consolidation of manufacturing facilities, the
exiting of unprofitable product lines and other restructuring activities was
charged to the restructuring reserve.
Environmental
FMC, like other industrial manufacturers, is involved with a variety of
environmental matters in the ordinary course of conducting its business that
are subject to federal, state and local environmental laws. FMC feels strongly
about its responsibility to protect the environment, public health and
employee safety. This includes cooperating with other parties to resolve
issues created by past and present handling of wastes. When issues arise,
including notices from the Environmental Protection Agency or other government
agencies identifying FMC as a Potentially Responsible Party, the Company
utilizes multifunctional advisory teams comprising environmental, legal,
financial and communications management to ensure that the Company's actions
are consistent with its responsibilities to the environment and public health,
as well as to employees and shareholders.
Additional information regarding the Company's environmental accounting
policies and its potential environmental liability (including additional
amounts recorded in 1995) is included in Note 1 and Note 14, respectively, to
the Company's consolidated financial statements for the year ended December
31, 1995. Information regarding environmental obligations associated with the
Company's discontinued operations is included in Note 3 to the consolidated
financial statements for the year ended December 31, 1995. Estimates of 1996
environmental spending are included under Liquidity and Capital Resources
herein. No significant adjustments to accruals, recovery estimates or spending
estimates occurred during the three months ended March 31, 1996.
PERFORMANCE CHEMICALS
Quarter Ended March 31, 1996 Compared with Quarter Ended March 31, 1995
Performance Chemicals sales of $304 million increased 7 percent compared
with results of $285 million in last year's period, reflecting continued
market growth across most product lines. Earnings of $39 million in the 1996
quarter decreased compared with $43 million in last year's period. The lower
results were due primarily to a decline in North American sales of food
ingredients, significantly higher costs for carrageenan and wood pulp
S-7
<PAGE>
(key raw materials in the food and pharmaceutical businesses) and weather-
related manufacturing difficulties in the lithium business.
Sales and earnings related to insecticides and herbicides increased on
continued higher volumes in North America, Europe and Asia-Pacific, reflecting
increased market demand, new product registrations and label expansions.
Sales of food ingredients, pharmaceutical, and BioProducts increased
slightly in the first quarter 1996 but earnings declined due to higher costs
for carrageenan, wood pulp, and other key raw materials.
Lithium sales increased in first quarter 1996, due to higher volumes and
price increases. However, earnings decreased from first quarter 1995's record
level due mainly to weather-related manufacturing difficulties, higher
maintenance spending and other reductions from production shortfalls.
1995 Compared with 1994
Performance Chemicals 1995 sales of $1.2 billion increased 11 percent from
sales of $1.1 billion in 1994, reflecting the continued worldwide growth in
these businesses. Operating profits improved to $162 million from $154 million
in the prior year as a result of increased volume and pricing and a favorable
mix of products, partially offset by unfavorable raw material prices, higher
distribution and marketing costs, and record expenditures for research and
development.
Sales of insecticides, herbicides and agricultural intermediates increased
from 1994. Sales gains across a range of products worldwide accounted for the
improvement. Insecticides were the principal contributor in North America and
in Asia-Pacific. A variety of products accounted for the sales increases in
the European, Middle Eastern and South American markets. Operating profits
improved in 1995, but not in proportion to the increase in sales. Profit
margins were lowered as a result of increased expenditures for research and
development and higher marketing expenses associated with preparing for new
herbicide introductions. The Company continues to take actions to offset the
effects of the continued weakening of the Mexican peso against the U.S.
dollar, including tightening credit policies, implementing price increases for
certain products and adjusting the Mexican company's borrowing structure.
Sales of water additives and flame retardant products improved in 1995.
Nearly all of this improvement was achieved in the flame retardant line,
primarily from price increases and volume gains. Operating profits from these
products declined in 1995, however, due to operating difficulties at the
Company's phosphate esters plant and price competition in the Middle East
desalination market.
Food ingredient and pharmaceutical sales increased in 1995 primarily as the
result of price increases for most products and increased pharmaceutical sales
in Europe. Operating profits were lower, however, due to higher prices of key
raw materials, primarily wood pulp and Philippine-harvested seaweed, partially
offset by manufacturing efficiencies. Higher marketing and research and
development costs associated with the launch of five new pharmaceutical
products late in 1995 also affected earnings.
Lithium product sales increased in 1995 from higher volumes in products used
in specialty applications, offset to some extent by declines in sales of basic
products. Operating profits also increased due to favorable sales volumes and
pricing, offset partially by increased spending on research and development.
1994 Compared with 1993
Sales of $1.1 billion in 1994 represented an increase of 9 percent over 1993
sales, and profits increased 11 percent to $154 million. Performance Chemicals
showed strong worldwide growth in all businesses.
Sales of insecticides, herbicides and agricultural intermediates increased
in 1994 as a result of improvements in both the domestic and export markets.
The domestic increase was primarily due to sales of insecticides, while
S-8
<PAGE>
the export increase was due to greater sales of herbicides and insecticides in
various foreign markets. Operating profits also increased from the improvement
in sales.
Sales of food ingredients and pharmaceutical products increased versus 1993
due to growth in demand for water dessert gel, confectionery, and low-fat
cookie and cracker applications. Pharmaceutical volumes increased in emerging
markets due to improved customer relations, and in the European and North
American markets due to Europe's economic recovery and applications
development. Higher volumes and a favorable sales mix in North America drove
higher profits for the year.
Sales of lithium products increased versus 1993 as the worldwide markets for
the products rebounded. Operating profits increased due to the increased
volume and lower manufacturing costs. These factors were partially offset by
higher exploration spending associated with FMC's new lithium resource in
Argentina.
Although sales of water additives and flame retardant products were up from
1993, operating profits declined. Flame retardant volume and revenue increased
due to strong sales, but water additives volume was down due to intensified
competition in the Middle East desalination market. Increased raw material
prices contributed to the reduced profitability.
Outlook for Performance Chemicals
FMC's focus on developing specialty products and herbicides will result in
new applications and products over the next several years. A manufacturing
facility to produce a new family of herbicides is scheduled to be completed in
the third quarter of 1996. Registration of these products was completed in
Paraguay and Brazil and is proceeding in the United States and other foreign
markets.
The water additives and flame retardant business is expected to benefit in
1996 from the restructuring effort that began in the fourth quarter of 1995
and from investments to improve manufacturing efficiencies. However, price
competition in the desalination market in the Middle East is expected to
continue as a challenge for the water additives business.
The outlook for food ingredients and pharmaceutical products in 1996 is
positive. A number of new food product applications were developed in 1995,
and this process is expected to continue in 1996. Alternative sources for the
supply of seaweed are being sought in order to reduce the high cost of this
key raw material. Growth in sales of pharmaceutical products is expected to
continue as the result of the introduction of five new products in 1995 and
from long-term commitments from global customers.
The outlook for lithium products in 1996 remains strong, with continuing
sales gains expected in Europe and Asia. A new, low-cost source for lithium
production is expected to be completed in early 1997 in Argentina.
INDUSTRIAL CHEMICALS
Quarter Ended March 31, 1996 Compared with Quarter Ended March 31, 1995
During first quarter 1996, Industrial Chemicals sales of $242 million
increased 6 percent compared with 1995 sales of $228 million, primarily
reflecting the benefit of price increases across major product lines. The
decline in earnings from $40 million in the first quarter of 1995 to $38
million in the 1996 quarter reflects the reduction for the 20 percent minority
interest in the soda ash joint venture (formed in the third quarter of 1995),
expenses related to the Company's major cost reduction and expansion projects,
and lower hydrogen peroxide volumes resulting from the slowdown in demand from
pulp and paper producers.
First quarter 1996 sales of alkali products increased over first quarter
1995 sales due mainly to price increases, partly offset by lower volumes due
to the impact of pre-price increase buying. Earnings were down slightly,
primarily due to the minority interest reduction reflected in 1996 first
quarter results.
S-9
<PAGE>
Phosphorus sales increased significantly in the first quarter 1996,
reflecting higher volumes, as well as the benefit of higher prices across
major product lines. However, earnings increased at a slower rate over the
same period due to higher production costs.
Peroxygen sales increased slightly from the year-ago period due to improved
hydrogen peroxide pricing, partly offset by lower sales volumes into the pulp
and paper market. Earnings remained flat due to costs associated with
expansions of facilities incurred during the 1996 first quarter.
Sales in the 1996 first quarter of FMC Foret, FMC's European industrial
chemicals subsidiary, were down slightly due to lower domestic and export
volume, partly offset by increases in domestic and export prices. Earnings
remained consistent with the same period in 1995, although the 1995 period
included the favorable impact of certain reversals of previously accrued
expenses.
1995 Compared with 1994
Industrial Chemicals 1995 sales of $977 million increased 13 percent from
$867 million in 1994, and operating profits of $162 million were up 36
percent, reflecting improved pricing, higher capacity utilization across key
product lines and the benefits of cost improvements throughout manufacturing
operations.
Alkali chemicals recorded an increase in sales from the prior year.
Increased volumes for all product lines, particularly soda ash and cyanide, as
well as price increases for soda ash, were the drivers of improved sales and
profitability. Export sales increased 22 percent, particularly to Latin
American and Asian markets. Sales increases, combined with cost improvement
efforts, resulted in a significant improvement in operating profit. In July
1995, FMC sold a 20 percent interest in its soda ash business to Nippon Sheet
Glass Co., Ltd., and Sumitomo Corporation for $150 million in cash. The
nontaxable gain of $100 million on this transaction is not reflected in 1995
segment earnings.
Sales of peroxygen products increased from 1994, and operating earnings
increased as well. Volume improvements in most products accounted for the
increases. The persulfates manufacturing process was interrupted by a fire in
the Company's Tonawanda, New York, warehouse in August 1995. The impact on
1995 earnings was not material. The continued decline in the peso did not have
a significant impact on FMC's Mexican peroxygen operations, primarily due to
actions taken to mitigate the exchange rate impact. These actions included
tightening credit policies and adjusting the Company's local borrowing
structure.
Sales of phosphorus chemicals increased in 1995, but operating profits
declined. The sales increase occurred despite a loss of export business in
Mexico. Profits were adversely affected by raw material price increases and
manufacturing issues in the fourth quarter of 1995.
FMC Foret reported a significant improvement in sales in 1995, and profits
increased correspondingly. Pricing improvements in most product lines were
driven by earlier restructuring of the European industry and overall market
conditions. Volumes were favorably affected by strong demand for pulp and
paper and for conventional solid detergents in Europe, North Africa and the
Middle East. Revenue increases and a gain of $3 million from the sale of a
sulfuric acid plant were partially offset by hydrogen peroxide plant start-up
costs in Delfzijl, Netherlands, and a decrease in equity earnings from FMC
Foret's Venezuelan affiliate, largely due to the devaluation of the bolivar.
1994 Compared with 1993
Sales of $867 million were the same as in 1993. Operating profits, however,
doubled to $119 million. This increase in profits was the result of
significant cost improvement programs.
Alkali sales declined from 1993 as the result of lower soda ash volume and
prices in the domestic market, offset to some extent by increased export
sales. Although sales declined, operating profits improved considerably in
1994 as a result of strong manufacturing performance.
S-10
<PAGE>
Sales of phosphorus chemicals were down slightly from 1993 as the result of
lower domestic sales volume, partially offset by increased exports into the
Mexican market. Favorable manufacturing performance resulted in improvements
to operating profits during 1994.
Peroxygen chemicals sales increased in 1994 and operating profits also
improved. This was achieved by an increase of domestic sales, which was
partially diminished by overall sales price decreases. The domestic hydrogen
peroxide industry experienced growth and high capacity utilization as the pulp
and paper industry continued to move toward hydrogen peroxide as a replacement
for chlorine.
FMC Foret sales decreased slightly in 1994 due to the effects of currency
translations, although overall domestic and export volume increased.
Outlook for Industrial Chemicals
FMC continues to expand its industrial chemical capacity to meet expected
strong demand in domestic and international markets. The Company's soda ash
investments are expected to result in a more than 30 percent reduction in soda
ash cash manufacturing costs at operations that use the new lower-cost,
proprietary solution mining technique, and to increase the Company's soda ash
capacity by 700,000 tons to 3.55 million tons. In addition, soda ash price
increases announced in 1995 are expected to significantly increase 1996
revenues.
In 1995, peroxygen sales and profits were favorably affected by the strength
of the North American pulp and paper market. Any significant reduction in this
market in 1996 could have a negative impact on peroxygen revenues. FMC's $65
million expansion at Bayport, Texas, is expected to begin production in late
1996 using higher-efficiency technology. Continued instability in the Mexican
economy could affect future earnings from the Company's Mexican peroxygen
operation.
In anticipation of additional demand, FMC Foret continues to expand its
hydrogen peroxide manufacturing capacity. The Delfzijl plant came on stream in
October 1995.
Significant growth is expected in 1996 in the phosphorus business primarily
as a result of FMC's efforts to diversify away from home laundry detergent
applications plus the full year impact of the supply contract with Rhone-
Poulenc.
MACHINERY & EQUIPMENT
Quarter Ended March 31, 1996 Compared with Quarter Ended March 31, 1995
Machinery and Equipment sales of $323 million increased 22 percent from $264
million in the 1995 quarter, and profits of $14 million increased
significantly compared with $8 million in the prior-year period. These results
reflect a recovery in food processing markets, improving energy equipment
margins, and the impact of acquisitions, net of increased amortization of
goodwill and other intangible assets resulting from acquisitions.
Petroleum equipment sales increased in first quarter 1996 primarily due to
higher western region subsea sales and increased sales to Statoil. Earnings
increased slightly due to these sales increases offset partially by the
absence of favorable one-time 1995 items at FMC's Kongsberg operation.
Sales of energy and transportation measurement equipment in first quarter
1996 increased due to the acquisition of Moorco's Smith Meter division in June
1995 while earnings remained flat compared to the same period in 1995.
Moorco's Crosby Valve and Gage operations, also acquired in June 1995,
contributed to the overall increase in Machinery and Equipment sales.
S-11
<PAGE>
The sale of FMC's Automotive Service Equipment Division to Snap-on Inc.,
effective March 31, 1996, resulted in an immaterial gain on the sale,
favorably affecting Machinery and Equipment earnings. However, operating
losses during 1996 for the division partially offset the gain.
Food processing systems sales increased significantly from the year-ago
period due to improved volumes in most product lines as well as the positive
impact from sales at FranRica, which was acquired in the third quarter of
1995. Earnings also increased in the first quarter 1996, driven essentially by
higher sales. On April 15, 1996, the Company acquired Sandei SRL, a leading
manufacturer of tomato harvesters.
1995 Compared with 1994
Sales of FMC's Machinery and Equipment segment increased to $1.4 billion in
1995 from $973 million in 1994, and operating profits were up 50 percent to
$50 million. These results reflect the performance of a number of newly
acquired businesses, market share gains in oil field systems and ongoing cost
improvements.
A significant increase in sales of energy equipment in 1995 included full-
year sales of businesses acquired in 1994 and sales of Moorco International
Inc. since June 30, 1995. In addition to the increased sales resulting from
the acquired businesses, significant gains occurred in petroleum equipment and
systems, primarily from continued growth in subsea business in the North Sea
region. SOFEC also realized sales gains arising from additional volume in the
floating production and storage and offloading vessel markets. Operating
profits of energy equipment businesses increased only slightly from 1994,
reflecting increasing price competition in certain markets and the
amortization of costs related to the acquisitions.
Transportation equipment operations benefited from the inclusion of full-
year results of Jetway Systems, acquired in May 1994, as well as increased
shipments of the Commander 30 main deck loader. Operating profits of the
transportation equipment operations improved from 1994 primarily due to
increased sales volumes.
Sales of food processing systems, packaging and material handling equipment,
and agricultural machinery decreased in 1995 due to the absence of sales of
product lines divested in 1994. Operating profits of the food machinery
operations improved from 1994 primarily as a result of favorable mix and
manufacturing cost savings.
1994 Compared with 1993
Machinery and Equipment sales were up 12 percent in 1994 to $973 million,
and operating profits also rose substantially to $33 million. Most of the
improvement in sales resulted from the businesses acquired in 1993 and 1994
and from improved operating results for some product lines.
Sales of airport products and systems increased significantly in 1994 due to
the 1994 acquisition of Jetway Systems and the successful introduction of a
new main-deck cargo loader. Sales of energy equipment increased from 1993 due
to increased demand and the 1993 acquisition of Kongsberg Offshore, partially
offset by declines in orders for fluid control products. Sales of food
machinery operations improved slightly from 1993 despite the strategic
divestiture in 1994 of three non-core product lines with annual sales of
approximately $40 million.
Operating profits were favorably affected by the Kongsberg acquisition,
other sales growth and the benefits of restructuring and cost reduction
programs. Partially offsetting these improvements were costs of acquisitions
and new project development and higher research and development expenditures.
Outlook for Machinery and Equipment
The order backlog for Machinery and Equipment was $557 million at December
31, 1995 compared with $480 million at the end of the prior year. Most of the
increase reflects the backlog for businesses acquired from Moorco
International Inc. Significant increases were also recorded by SOFEC for
floating production storage and offloading vessels and for boarding bridges in
the airport products business. Not included in backlog at
S-12
<PAGE>
December 31, 1995, is a five-year agreement with Statoil for the delivery of
up to $450 million of subsea systems. An increase in backlog to $923 million
at March 31, 1996 includes the recognition of orders representing a portion of
the Statoil agreement.
Increasing competition in many markets and resulting pricing pressures could
affect future earnings. However, with lower product costs resulting from cost
reduction and restructuring actions and from improvements in market positions
as the result of strategic acquisitions, growth in the Machinery and Equipment
segment is expected to continue.
DEFENSE SYSTEMS
Quarter Ended March 31, 1996 Compared with Quarter Ended March 31, 1995
Defense Systems sales of $233 million were even with last year's period, as
increased development-related revenues on the Crusader program and higher
shipments on the Paladin program offset lower production-related volumes.
Profits of $37 million increased 30 percent compared with $28 million in last
year's quarter. The higher profits reflect increased dividends from the
Company's joint venture in Turkey, and improved contract performance. Income
from the Turkish joint venture is recognized as dividends and royalties are
received, and management does not anticipate that 1996's high dividend level
will reoccur in 1997, as the joint venture recovers from an insured warehouse
fire which occurred in 1996.
Ground Systems first quarter 1996 sales were lower than the same period in
1995 primarily due to lower volumes and the completion of certain contracts
during 1995. However, lower sales were offset by contract settlements which
produced level earnings for the first quarter 1996 as compared to the same
period a year ago.
Armament sales and earnings increased during first quarter 1996 as compared
to 1995. Sales benefited from Crusader program revenues partially offset by
lower volumes of other products. Increased Crusader and aftermarket sales
positively impacted earnings during the quarter.
The Paladin production operation experienced a strong rise in sales
reflecting higher vehicle deliveries in the first quarter 1996 as compared to
the same period in 1995. Earnings also increased during 1996 as a result of
higher sales.
First quarter 1996 sales of steel products were up slightly from 1995 due to
full production on the M113 overhaul program. Earnings increased in 1996 due
to the absence of M113 start up costs incurred in the first quarter 1995.
1995 Compared with 1994
Sales of the Defense Systems segment declined to $968 million in 1995 from
$1.1 billion in 1994 while operating profits, after deducting minority
interest, improved to $107 million from approximately $100 million in 1994.
The sales decline resulted primarily from lower volumes of Bradley Fighting
Vehicles and naval weapons systems, partially offset by $84 million of
increased revenue from the Crusader development contract and increases of $53
million in deliveries of Paladin self-propelled vehicles. The increase in
operating profits primarily resulted from favorable cost performance
throughout the business, strong international results, including an increase
in royalty and dividend income from the Turkish joint venture, and the
recognition in the second quarter of 1995 of a significant portion of a $17.8
million judgment against a subcontractor.
1994 Compared with 1993
Effective January 1, 1994, FMC completed the transaction to combine its
defense business with Harsco Corporation's BMY Combat Systems Division. The
combined company, United Defense, L.P., operates as a limited partnership. FMC
is the general partner with a 60 percent equity interest and responsibility
for managing the operation. Sales in 1994 included sales of the former Harsco
BMY Combat Division and sales of the Paladin self-propelled howitzer business.
Sales of FMC businesses alone were $950 million in 1993. Segment profits,
S-13
<PAGE>
net of minority interest, were approximately $100 million in 1994. In 1993,
profits of FMC's Defense Systems Group were $162 million.
Sales of the businesses Harsco contributed to the partnership more than
offset declines in Bradley Fighting Vehicle deliveries, Vertical Launching
Systems and an engineering contract for the Armored Gun System in 1994. Other
product sales were generally flat from 1993 to 1994, and segment profits were
down in 1994 due to the lower volume, a favorable insurance settlement in
1993, and start-up costs relating to overhaul and conversion of armored
personnel carriers.
International defense sales and operating profits were up in 1994. The sales
increase was driven largely by the deliveries of M113 upgrade kits to
Singapore. An increase in international operating profits was largely the
result of increased royalties and dividends from the Turkish joint venture.
Outlook for Defense Systems
The order backlog of the Defense Systems segment increased to $1.7 billion
at March 31, 1996, from $1.5 billion at December 31, 1995 and $1.4 billion at
the end of 1994. The backlog increase results primarily from new orders for
upgrading Bradley Fighting Vehicles, cannisters for the U.S. Navy, M113
vehicles for Thailand and Amphibious Assault Vehicle kits for Korea.
U.S. government budgetary pressures are likely to result in reduced defense
spending in the coming years, and lower-margin research programs are replacing
some production. As a result, Defense Systems' earnings may decline. In the
second quarter of 1996, United Defense was notified that its contract with the
U.S. Army for the Armored Gun System will be terminated. While Defense Systems
will be affected by such a cancellation, no immediate material impact is
likely to occur to FMC's financial position or results of operations. Because
Defense Systems is the prime supplier for the early-phase developmental work
on the U.S. Army's Crusader and Bradley A3 programs, the business is in a key
position to benefit from follow-on production contract awards. Defense Systems
also continues to pursue international opportunities and system upgrades.
PRECIOUS METALS
Quarter Ended March 31, 1996 Compared with Quarter Ended March 31, 1995
Precious Metals sales of $18 million increased from $9 million in last
year's period. Losses of $2 million compared with a loss of $4 million in the
first quarter of 1995. Results primarily reflect the benefits of production
from the Beartrack mine, which started up in the 1995 third quarter, and lower
exploration spending. As previously announced, FMC Gold Company is pursuing
the possible sale of the company via a number of alternatives to maximize
shareholder value. See "Recent Developments."
1995 Compared with 1994
Precious Metals sales in 1995 were $59 million, approximately level with
1994. The operating loss declined to $5.7 million compared with a $9 million
loss in the prior year. Lower cash production costs at the Jerritt Canyon
operations and the start-up of the Beartrack mine were the primary
contributors to the improvement. Gold production declined to 151,000 ounces
from 163,000 ounces in 1994. Silver production, at 27,000 ounces, was only 15
percent of 1994's output. The increasing output from the Beartrack mine, which
began production in the third quarter of 1995, did not wholly offset the
elimination of production from the Company's Royal Mountain King and Paradise
Peak mines.
In the fourth quarter of 1995, the Company sold its 100 percent interest in
Paradise Peak Corporation to Arimetco, Inc. for $4 million. In addition,
Arimetco assumed all site reclamation liabilities. A pretax gain of $1.7
million was recognized on the sale, and $4.5 million of reclamation reserves
were reversed to cost of sales.
Net exploration expense of $11 million, approximately even with 1994, was
focused primarily on development projects at the El Penon property in northern
Chile and the Rossi property in Nevada.
S-14
<PAGE>
1994 Compared with 1993
Due to decreased production, sales of the Precious Metals segment declined
by more than 50 percent from 1993 to $61 million. Gold production declined to
163,000 ounces, approximately half of the gold production in 1993, and silver
production declined to 154,000 ounces, about 18 percent of 1993's total.
Decreased production resulted from the closure of the Paradise Peak mine in
May 1993 and the Royal Mountain King mine in July 1994. This reduction in
sales, as well as disappointing ore grades and recoveries at Jerritt Canyon,
and spending on exploration, resulted in an operating loss of $9 million for
the year.
Beartrack Legal Proceedings
See Note 15 to FMC's consolidated financial statements for the year ended
December 31, 1995 for a description of legal proceedings related to the
Beartrack mine. No significant changes in the information presented therein
occurred during the three months ended March 31, 1996.
Outlook for Precious Metals
Continued operation of the Beartrack mine should increase gold production,
further reduce cash costs and improve the segment's profitability in 1996.
Exploration at both the Chilean and Rossi properties has been successful in
delineating mineralization and is expected to continue in 1996. As discussed
in Note 15 to the Company's consolidated financial statements for the year
ended December 31, 1995, FMC Gold Company is pursuing the possible sale of
such company or its assets. See "Recent Developments."
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1996, the Company had total borrowings of $1.6 billion, up
from $1.4 billion at December 31, 1995. The increase in debt resulted
primarily from capital expenditures and working capital requirements. Advances
under uncommitted facilities totaled $310 million and commercial paper
borrowings were $384 million at March 31, 1996 (net of discount).
Capital and acquisition spending of $123 million for the three months ended
March 31, 1996 increased $30 million versus the first three months of 1995.
The increase is primarily driven by spending in the Company's chemical
businesses, largely for the expansion of the Green River soda ash facility, a
plant to manufacture a new family of herbicides, and the development of a new
lithium resource in Argentina.
Cash generated from operations and available credit facilities provided the
resources to meet 1995 operating needs and fund capital expenditures and
acquisitions. Debt levels increased by $416 million in 1995 as a result of
higher capital and acquisition spending. Interest expense increased by $19
million in 1995, primarily due to higher debt levels. Capital expenditures
excluding acquisitions approximated $494 million.
At December 31, 1995, the Company had borrowed $272 million (net of a $3
million discount) under a commercial paper program that began in November
1995. The Company borrowed an additional $125 million under uncommitted bank
facilities during 1995.
In 1995, the Company filed a universal shelf registration under which $500
million of debt and/or equity securities may be publicly offered. At March 31,
1996, no securities had been offered under this registration.
Expected cash requirements for the remainder of 1996 include approximately
$325 million to $375 million for planned capital expenditures, excluding
potential acquisitions, and net after-tax interest payments of approximately
$40 million based on current debt levels and interest rates. Cash to meet
these requirements will be provided primarily by the Company's operations and,
if necessary, by existing cash balances and available short or long-term
credit facilities.
S-15
<PAGE>
Projected full year 1996 spending also includes approximately $50 million
for environmental compliance at current operating sites, plus approximately
$35 million of remediation spending and $10 million for study costs at current
operating, previously operated and other sites.
Working Capital
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
---------------- -------------------------
1996 1995 1995 1994 1993
------- ------- ------- ------- -------
(UNAUDITED; IN (IN MILLIONS)
MILLIONS)
<S> <C> <C> <C> <C> <C>
Operating working capital:
Trade receivables............... $ 827.2 $ 695.6 $ 837.8 $ 642.8 $ 573.2
Inventories..................... 700.4 455.5 615.0 403.9 268.1
Accounts payable................ (779.0) (676.7) (848.5) (676.9) (501.2)
Accrued payroll and other
current liabilities............ (398.7) (358.4) (419.4) (405.9) (390.9)
------- ------- ------- ------- -------
Total operating working capital... 349.9 116.0 184.9 (36.1) (50.8)
Cash and cash equivalents......... 107.6 146.0 70.9 98.4 77.5
Other............................. (423.5) (15.8) (243.7) 45.1 12.9
------- ------- ------- ------- -------
Total working capital......... $ 34.0 $ 246.2 $ 12.1 $ 107.4 $ 39.6
======= ======= ======= ======= =======
</TABLE>
Operating working capital increased by $221 million in 1995 compared with
1994. The increases in the components of operating working capital are
primarily due to higher sales volumes and the acquisition of Moorco. The
decrease in net other current assets and liabilities ("Other") of $289 million
is primarily due to higher short-term debt levels.
Dividends
No dividends were paid during the first three months of 1996 or in 1995,
1994 and 1993, and no dividends are expected to be paid in the remainder of
1996.
DESCRIPTION OF SENIOR DEBENTURES
The following description of the particular terms of the Senior Debentures
offered hereby (referred to in the accompanying Prospectus as the "Offered
Securities") supplements and, to the extent inconsistent therewith, supersedes
the description of the general terms and provisions of the Offered Securities
set forth in the Prospectus, to which description reference is hereby made.
The Senior Debentures constitute a series of Senior Debt Securities described
in the accompanying Prospectus under "Description of the Debt Securities."
GENERAL
The Senior Debentures will be issued under an Indenture, dated as of July
, 1996 (the "Senior Indenture"), between the Company and Harris Trust and
Savings Bank, as trustee, will be limited to $100 million aggregate principal
amount and will mature on July , . Each Senior Debenture will bear
interest at the rate set forth on the cover page of this Prospectus Supplement
from July , 1996, payable semi-annually on January and July , beginning
January , 1997, to persons in whose names the Senior Debentures are
registered at the close of business on the next preceding December and June
.
The Senior Debentures may not be redeemed by the Company or any holder prior
to maturity, and do not provide for any sinking fund.
BOOK-ENTRY SYSTEM
The Senior Debentures will be represented by global securities (the "Global
Debentures"). The Global Debentures will be deposited with, or on behalf of,
The Depository Trust Company ("DTC") and registered in
S-16
<PAGE>
the name of a nominee of DTC. Except under circumstances described in the
Prospectus, the Senior Debentures will not be issuable in definitive form.
A further description of DTC's procedures with respect to the Global
Debentures is set forth in the Prospectus under "Description of the Debt
Securities--Global Debt Securities."
DEFEASANCE AND COVENANT DEFEASANCE
The provisions of the Senior Indenture relating to defeasance and covenant
defeasance described under the caption "Description of the Debt Securities--
Defeasance and Covenant Defeasance" in the accompanying Prospectus will apply
to the Senior Debentures.
UNDERWRITING
Subject to the terms and conditions contained in an Underwriting Agreement
dated the date hereof, the Company has agreed to sell to each of the
Underwriters named below, severally, and each of the Underwriters has
severally agreed to purchase, the respective principal amount of Senior
Debentures set forth below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
SENIOR
NAME DEBENTURES
---- ------------
<S> <C>
Morgan Stanley & Co. Incorporated........................... $
Salomon Brothers Inc........................................
------------
Total................................................... $100,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligation of the several
Underwriters to pay for and accept delivery of the Senior Debentures are
subject to the approval of certain legal matters by their counsel and to
certain other conditions. The Underwriters are committed to take and pay for
all of the Senior Debentures if any are taken.
The Underwriters initially propose to offer the Senior Debentures directly
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
not in excess of % of the principal amount of the Senior Debentures. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of % of the principal amount of the Senior Debentures to certain
other dealers. After the initial public offering, the public offering price
and such concessions may be changed by the Underwriters.
The Company does not intend to apply for listing of the Senior Debentures on
a national securities exchange. The Underwriters presently intend to make a
market in the Senior Debentures in the secondary trading market. However, the
Underwriters are not obligated to make a market in the Senior Debentures and
any such market making may be discontinued at any time at the sole discretion
of the Underwriters. No assurance can be given as to the liquidity of, or the
trading markets for, the Senior Debentures.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
The Underwriters and certain of their affiliates have from time to time
performed various investment banking services for the Company and its
subsidiaries, for which compensation has been received.
S-17
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the validity of the Senior Debentures
will be passed upon for the Company by Winston & Strawn, Chicago, Illinois.
The Chairman of the Executive Committee of Winston & Strawn, Governor James R.
Thompson, serves as a member of the Company's Board of Directors and as of
June 1, 1996 beneficially owned 1,607 shares of common stock of the Company.
Certain legal matters with respect to the Senior Debentures will be passed
upon for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt from time to time acts as counsel in certain matters for the
Company.
EXPERTS
The consolidated financial statements of the Company and its consolidated
subsidiaries as of December 31, 1995 and 1994 and for the years ended December
31, 1995, 1994 and 1993 incorporated by reference herein and elsewhere in the
Registration Statement have been audited by KPMG as set forth in their report
thereon incorporated by reference herein which, as to 1995 and 1994, is based
in part on the report of Ernst & Young that also is incorporated by reference
herein. The financial statements referred to above are incorporated by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing. To the extent that KPMG audits and
reports on consolidated financial statements of the Company and consolidated
subsidiaries issued at future dates, and consents to the use of their reports
thereon, such consolidated financial statements also will be incorporated by
reference in the Registration Statement in reliance upon their reports given
upon the authority of such firm as experts in accounting and auditing. To the
extent that Ernst & Young audits and reports on financial statements of United
Defense, L.P., a limited partnership that is 60% owned by the Company, issued
at future dates, and consents to the use of their reports thereon, such
reports also will be incorporated by reference in the Registration Statement
in reliance upon such reports given upon the authority of such firm as experts
in accounting and auditing.
With respect to the unaudited interim financial information of the Company
and its consolidated subsidiaries as of and for the periods ended March 31,
1996 and March 31, 1995, incorporated by reference herein, KPMG has reported
that they applied limited procedures in accordance with professional standards
for a review of such information. The reports of KPMG for such periods state
that such reports are based on the reports of other accountants with respect
to interim financial information of United Defense, L.P. With respect to the
unaudited interim financial information of United Defense, L.P., as of and for
the periods ended March 31, 1996 and March 31, 1995, Ernst & Young has
reported that they applied limited procedures in accordance with professional
standards for a review of such information. However, the separate reports of
KPMG and Ernst & Young included in the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1996, and incorporated by reference herein,
state that they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the limited
nature of the review procedures applied. Neither KPMG nor Ernst & Young is
subject to the liability provisions of Section 11 of the Securities Act for
their reports on the unaudited interim financial information because neither
report is a "report" or a "part" of the Registration Statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.
S-18
<PAGE>
PROSPECTUS
$500,000,000
FMC CORPORATION
COMMON STOCK, PREFERRED STOCK, DEPOSITORY SHARES, DEBT SECURITIES, WARRANTS TO
PURCHASE COMMON STOCK, WARRANTS TO PURCHASE PREFERRED STOCK AND WARRANTS TO
PURCHASE DEBT SECURITIES
FMC Corporation, a Delaware corporation (the "Company"), may from time to
time offer in one or more series (i) shares of Common Stock, $.10 par value
per share ("Common Stock"), (ii) whole or fractional shares of Preferred
Stock, no par value (collectively, "Preferred Stock"), (iii) Preferred Stock
represented by depository shares ("Depository Shares"), (iv) unsecured debt
securities ("Debt Securities"), which may be senior debt securities ("Senior
Debt Securities") or subordinated debt securities ("Subordinated Debt
Securities"), (v) warrants to purchase Common Stock ("Common Stock Warrants"),
(vi) warrants to purchase Preferred Stock ("Preferred Stock Warrants"), and
(vii) warrants to purchase Debt Securities ("Debt Warrants"), with an
aggregate public offering price of up to $500,000,000, on terms to be
determined at the time or times of offering. The Common Stock, Preferred
Stock, Depository Shares, Debt Securities, Common Stock Warrants, Preferred
Stock Warrants and Debt Warrants (collectively referred to herein as the
"Offered Securities") may be offered, separately or together, in separate
classes or series, in amounts, at prices and on terms to be set forth in one
or more supplements to this Prospectus (each, a "Prospectus Supplement").
All specific terms of the offering and sale of the Offered Securities in
respect of which this Prospectus is being delivered will be set forth in the
applicable Prospectus Supplement and will include, when applicable: (i) in the
case of Common Stock, any public offering price and the aggregate number of
shares offered; (ii) in the case of Preferred Stock, the specific class,
series, title and stated value, any dividend, liquidation, redemption,
conversion, voting and other rights, any dividend payment dates, any sinking
fund provisions, the aggregate number of shares offered and any public
offering price; (iii) in the case of Depository Shares, the aggregate number
of shares offered, the shares of whole or fractional Preferred Stock
represented by each such Depository Share and any public offering price; (iv)
in the case of Debt Securities, the specific title, aggregate principal
amount, ranking as Senior Debt Securities or as Subordinated Debt Securities,
currency, form (which may be registered or bearer or certificated or global),
authorized denominations, maturity, rate (or manner of calculation thereof)
and time of payment of interest, if any, terms for redemption at the option of
the Company or repayment at the option of the holder thereof, terms for
sinking fund payments, terms for conversion into Common Stock or Preferred
Stock and any public offering price; (v) in the case of Common Stock Warrants,
the duration, offering price, exercise price and detachability features; (vi)
in the case of Preferred Stock Warrants, description of the Preferred Stock
for which each warrant will be exercisable and the duration, offering price,
exercise price and detachability features; and (vii) in the case of Debt
Warrants, description of the Debt Securities for which each warrant will be
exercisable and the duration, offering price, exercise price and detachability
features.
The applicable Prospectus Supplement will also contain information, when
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered
Securities covered by that Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Company, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names and any applicable purchase price, fee, commission or
discount arrangement between or among them will be set forth in or will be
calculable from the information set forth in the applicable Prospectus
Supplement. No Offered Securities may be sold without delivery of the
applicable Prospectus Supplement describing the method and terms of the
offering of those Offered Securities. See "Plan of Distribution" for possible
indemnification arrangements with underwriters, dealers and agents.
----------------
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 the Offered Securities
unless accompanied by a Prospectus Supplement.
----------------
November 20, 1995
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR AN APPLICABLE PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER,
DEALER OR AGENT. THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS SUPPLEMENT DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
IN CONNECTION WITH THIS OFFERING, UNDERWRITERS, IF ANY, MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
OFFERED SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE,
IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZATION, IF COMMENCED,
MAY BE DISCONTINUED AT ANY TIME.
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"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 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
Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material can be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, reports, proxy statements and other
information concerning the Company may be inspected and copied at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York
10005, the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois
60605, and the Pacific Stock Exchange, Inc., 301 Pine Street, San Francisco,
California 94104 or 618 South Spring Street, Los Angeles, California 90014.
The Company has filed with the Commission on September 7, 1995 a
Registration Statement on Form S-3 under the Securities Act of 1933, as
amended (the "Securities Act"), which relates to the Offered Securities (the
"Registration Statement"). This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto as permitted by the rules and regulations of the Commission.
For information with respect to the Company and the Offered Securities,
reference is hereby made to such Registration Statement, exhibits and
schedules. The Registration Statement may be inspected without charge by
anyone at the office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies of all or any part thereof may be obtained from the
Commission upon payment of the prescribed fees. Statements contained in this
Prospectus as to the contents of any contract or other document referred to
are not necessarily complete, and in each instance reference is made to the
copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in all
respects by such reference.
2
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission (File No. 1-2376) are
incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the year ended December
31, 1994;
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995; and
(iii) the Company's Current Reports on Form 8-K dated February 6, 1995,
April 4, 1995, September 1, 1995 and September 12, 1995.
A description of the Common Stock is incorporated by reference to Item 1 of
the Company's Registration Statement on Form 8-A dated May 12, 1986. A
description of the Company's Preferred Stock Purchase Rights is incorporated
by reference to Item 1 of the Company's Registration Statement on Form 8-A
dated March 6, 1986, as amended.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Offered Securities shall be deemed to be
incorporated in this Prospectus by reference 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 by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in the applicable Prospectus
Supplement) or in any other subsequently filed document which also is or is
deemed to be 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 Company will provide, without charge to any person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person,
a copy of any document incorporated by reference herein other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
in such document. Requests should be directed to Robert L. Day, Secretary, FMC
Corporation, 200 East Randolph Drive, Chicago, Illinois 60601 (telephone:
(312) 861-6000).
3
<PAGE>
THE COMPANY
The Company is one of the world's leading producers of chemicals and
machinery for industry, agriculture and government. The Company, incorporated
in 1928, operates on a worldwide basis in selected segments of five broad
markets: Performance Chemicals, Industrial Chemicals, Machinery and Equipment,
Defense Systems and Precious Metals. The Company operates 102 manufacturing
facilities and mines in 25 states and 21 countries. Performance Chemicals
develops, manufactures and markets proprietary specialty chemicals for the
agricultural, food and pharmaceutical industries. Industrial Chemicals
businesses manufacture a wide variety of chemicals including soda ash,
phosphates, hydrogen peroxide and lithium. Major customers include detergent,
glass and paper producers, as well as food processors and other chemical
companies. Machinery and Equipment businesses provide specialized machinery to
the food, petroleum, transportation and material handling industries. Defense
Systems develops, manufactures and supplies ground combat vehicles and naval
weapons systems to the armed forces of the United States and other
governments. In the first quarter of 1994 the Company and Harsco Corporation
("Harsco") announced the establishment of a joint venture, United Defense,
L.P., which was a combination of certain assets and liabilities of the
Company's Defense Systems Group and Harsco's BMY Combat Systems Division and
pursuant to which the Company is the Managing General Partner with a 60%
equity interest. The Precious Metals business focuses on the exploration of
precious metals in Latin America and the western United States and is
conducted by FMC Gold Company. The Company owns 80% of FMC Gold Company's
outstanding Common Stock.
The Company is a corporation organized under the laws of the State of
Delaware. As used hereunder, "FMC" or the "Company" refers to FMC Corporation
and its subsidiaries, unless otherwise indicated by the context. The Company's
principal executive offices are located at 200 East Randolph Drive, Chicago,
Illinois 60601 (telephone number: (312) 861-6000).
4
<PAGE>
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Offered
Securities for general corporate purposes, which may include the repayment of
existing indebtedness and the financing of capital expenditures and
acquisitions.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Company for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------- --------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
3.7(/1/)x 4.9x 4.4x 1.5(/2/)x 3.4x 2.8x 2.3x
</TABLE>
- --------
(/1/The)ratio of earnings to fixed charges for the nine months ended September
30, 1995 before the gain on sale of FMC Wyoming stock, restructuring and
other charges and write-off of acquired in-process research and
development was 4.2x.
(/2/)The ratio of earnings to fixed charges for the year ended December 31,
1993 before restructuring and other charges was 3.3x.
For purposes of calculating this ratio, earnings consist of income from
continuing operations before income taxes and extraordinary items, plus
minority interests, less undistributed earnings (and plus losses) of
affiliates, plus interest expense and amortization of debt discount, fees and
expenses, plus amortization of capitalized interest, plus one-third of
rentals. Fixed charges consist of interest expense and amortization of debt
discount, fees and expenses, interest capitalized as part of fixed assets and
interest included in rental expense.
GENERAL DESCRIPTION OF THE OFFERED SECURITIES
The Company may offer under this Prospectus Common Stock, Preferred Stock,
Depository Shares, Debt Securities, Common Stock Warrants, Preferred Stock
Warrants, or Debt Warrants or any combination of the foregoing, either
individually or as units consisting of two or more Offered Securities. The
aggregate offering price of Offered Securities offered by the Company under
this Prospectus will not exceed $500,000,000. If Offered Securities are
offered as units, the terms of the units will be set forth in a Prospectus
Supplement.
DESCRIPTION OF THE COMMON STOCK
GENERAL
Under the Company's Restated Certificate of Incorporation (the "Certificate
of Incorporation"), the Company is authorized to issue up to 60,000,000 shares
of Common Stock. As of September 30, 1995, there were 36,696,286 shares of
Common Stock issued and outstanding. In addition, up to 3,087,992 shares have
been reserved as of September 30, 1995 for issuance upon the exercise of
options and awards under the Company's incentive compensation plans. The
shares of Common Stock are listed on the New York Stock Exchange under the
symbol "FMC". Harris Trust and Savings Bank, Chicago, Illinois, is the
transfer agent and registrar of the shares of Common Stock.
The Common Stock is not redeemable, does not have any conversion rights and
is not subject to call. Holders of shares of Common Stock have no preemptive
rights to maintain their percentage of ownership in future offerings or sales
of stock of the Company. Holders of shares of Common Stock have one vote per
share in all elections of directors and on all other matters submitted to a
vote of stockholders of the Company. The holders of Common Stock are entitled
to receive dividends, if any, as and when declared from time to time by
5
<PAGE>
the Board of Directors of the Company out of funds legally available therefor.
Upon liquidation, dissolution or winding up of the affairs of the Company, the
holders of Common Stock will be entitled to participate equally and ratably,
in proportion to the number of shares held, in the net assets of the Company
available for distribution to holders of Common Stock. The shares of Common
Stock currently outstanding are fully paid and nonassessable. The shares of
Common Stock offered hereby, upon issuance against full payment of the
purchase price therefor, will be fully paid and nonassessable.
CERTAIN CERTIFICATE OF INCORPORATION PROVISIONS
General Effect
The Company has adopted a number of provisions in its Certificate of
Incorporation that might discourage certain types of transactions that involve
an actual or threatened change of control of the Company. The provisions may
make it more difficult and time-consuming to change majority control of the
Board of Directors and thus reduce the vulnerability of the Company to an
unsolicited offer, particularly an offer that does not contemplate the
acquisition of all of the Company's outstanding shares.
These provisions are intended to encourage persons seeking to acquire
control of the Company to initiate such an acquisition through arm's-length
negotiations with the Company's management and Board of Directors.
Additionally, such provisions provide management with the time and information
necessary to evaluate a takeover proposal and to study alternative proposals.
Nonetheless, the provisions could have the effect of discouraging a third
party from making a tender offer or otherwise attempting to obtain control of
the Company, even though such an attempt might be beneficial to the Company
and its stockholders.
Business Combination
The Certificate of Incorporation provides that significant asset sales,
dispositions of stock, liquidations, mergers and certain other business
combinations ("Business Combinations") involving the Company and persons
beneficially owning 10% or more of the voting power of the outstanding shares
of Common Stock (an "Interested Stockholder") must be approved by the holders
of at least 80% of the voting power of the Company's outstanding voting stock
("Voting Stock"). The Certificate of Incorporation requires the affirmative
vote of the holders of 80% or more of the outstanding Voting Stock to amend,
alter or repeal, or to adopt any provisions inconsistent with, such
provisions.
Stockholders' Meetings
The Certificate of Incorporation provides that special meetings of the
stockholders may only be called pursuant to a resolution approved by a
majority of the Board of Directors. This limitation prevents a stockholder or
group of stockholders from forcing the Company to conduct a stockholders'
meeting at any time not sanctioned by the Board of Directors, regardless of
the number of shares of Common Stock held by such stockholder or group of
stockholders.
No Action by Stockholder Consent
The Company's Certificate of Incorporation prohibits action that is required
or permitted to be taken at any annual or special meeting of stockholders of
the Company from being taken by the written consent of stockholders without a
meeting. This provision may be altered, amended or repealed only if the
holders of 80% or more of Voting Stock vote in favor of such action.
PREFERRED STOCK PURCHASE RIGHTS
The Company has adopted a preferred stock purchase rights plan and has
distributed preferred stock purchase rights (the "Rights") to holders of the
Company's Common Stock. The preferred stock purchase rights
6
<PAGE>
plan enables the holder of such Rights to purchase, under certain
circumstances, one one-hundredth (1/100) of a share of Junior Participating
Preferred Stock, Series A, without par value (the "Series A Preferred Stock"),
of the Company at a price of $75 per one one-hundredth (1/100) of a share,
subject to certain adjustments. The Rights are intended to deter attempts to
acquire the Company on terms not approved by the Company's Board of Directors.
DESCRIPTION OF THE PREFERRED STOCK
Under the Certificate of Incorporation, the Board of Directors of the
Company may direct the issuance of up to 5,000,000 shares of Preferred Stock
in one or more series and with rights, preferences, privileges and
restrictions, including dividend rights, voting rights, conversion rights,
terms of redemption and liquidation preferences, that may be fixed or
designated by the Board of Directors pursuant to a certificate of designation
without any further vote or action by the Company's stockholders. As of June
30, 1995 the Board of Directors had designated 400,000 shares of the Preferred
Stock as Series A Preferred Stock for possible issuance in connection with the
Rights. The issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company. Preferred Stock,
upon issuance against full payment of the purchase price therefor, will be
fully paid and nonassessable. The specific terms of a particular series of
Preferred Stock will be described in the Prospectus Supplement relating to
that series. The description of Preferred Stock set forth below and the
description of the terms of a particular series of Preferred Stock set forth
in the related Prospectus Supplement do not purport to be complete and are
qualified in their entirety by reference to the certificate of designation
relating to that series. The related Prospectus Supplement will contain a
description of certain United States federal income tax consequences relating
to the purchase and ownership of the series of Preferred Stock described in
such Prospectus Supplement.
As of June 30, 1995 no shares of Preferred Stock were issued or outstanding.
The rights, preferences, privileges and restrictions of the Preferred Stock
of each series will be fixed by the certificate of designation relating to
such series. A Prospectus Supplement, relating to each series, will specify
the terms of the Preferred Stock as follows:
(a) The maximum number of shares to constitute the series and the
distinctive designation thereof;
(b) The annual dividend rate, if any, on shares of the series, whether
such rate is fixed or variable or both, the date or dates from which
dividends will begin to accrue or accumulate and whether dividends will be
cumulative;
(c) The price at and the terms and conditions on which the shares of the
series may be redeemed, including the time during which shares of the
series may be redeemed and any accumulated dividends thereon that the
holders of shares of the series shall be entitled to receive upon the
redemption thereof;
(d) The liquidation preference, if any, and any accumulated dividends
thereon, that the holders of shares of the series shall be entitled to
receive upon the liquidation, dissolution or winding up of the affairs of
the Company;
(e) Whether or not the shares of the series will be subject to operation
of a retirement or sinking fund, and, if so, the extent and manner in which
any such fund shall be applied to the purchase or redemption of the shares
of the series for retirement or for other corporate purposes, and the terms
and provisions relating to the operation of such fund;
(f) The terms and conditions, if any, on which the shares of the series
shall be convertible into, or exchangeable for, shares of any other class
or classes of capital stock of the Company or a third party or of any other
series of the same class, including the price or prices or the rate or
rates of conversion or exchange and the method, if any, of adjusting the
same and whether such conversion is mandatory or optional;
(g) The stated value of the shares of such series;
(h) The voting rights, if any, of the shares of the series; and
7
<PAGE>
(i) Any or all other preferences and relative, participating, optional or
other special rights or qualifications, limitations or restrictions
thereof.
In the event of any voluntary liquidation, dissolution or winding up of the
affairs of the Company, the holders of any series of any class of Preferred
Stock shall be entitled to receive in full out of the assets of the Company,
including its capital, before any amount shall be paid or distributed among
the holders of the Common Stock or any other shares ranking junior to such
series, the amounts fixed by the Board of Directors with respect to such
series and set forth in the applicable Prospectus Supplement plus an amount
equal to all dividends accrued and unpaid thereon to the date of payment of
the amount due pursuant to such liquidation, dissolution or winding up the
affairs of the Company. After payment to the holders of the Preferred Stock of
the full preferential amounts to which they are entitled, the holders of
Preferred Stock, as such, shall have no right or claim to any of the remaining
assets of the Company.
If liquidating distributions shall have been made in full to all holders of
Preferred Stock, the remaining assets of the Company shall be distributed
among the holders of any other classes or series of capital stock ranking
junior to the Preferred Stock upon liquidation, dissolution or winding up,
according to their respective rights and preferences and in each case
according to their respective numbers of shares. The merger or consolidation
of the Company into or with any other corporation, or the sale, lease or
conveyance of all or substantially all of the assets of the Company, shall not
constitute a dissolution, liquidation or winding up of the Company.
DESCRIPTION OF DEPOSITORY SHARES
GENERAL
The Company may offer receipts ("Depository Receipts") for Depository
Shares, each of which will represent a fractional interest in a share of a
particular series of a class of Preferred Stock, as specified in the
applicable Prospectus Supplement. Preferred Stock of each series of each class
represented by Depository Shares will be deposited under a separate Deposit
Agreement (each, a "Deposit Agreement") among the Company, the depository
named therein (such depository or its successor, the "Preferred Stock
Depository") and the holders from time to time of the Depository Receipts.
Subject to the terms of the Deposit Agreement, each owner of a Depository
Receipt will be entitled, in proportion to the fractional interest of a share
of the particular series of a class of Preferred Stock represented by the
Depository Shares evidenced by such Depository Receipt, to all the rights and
preferences of the Preferred Stock represented by such Depository Shares
(including dividend, voting, conversion, redemption and liquidation rights).
The Depository Shares will be evidenced by Depository Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Stock by the Company to the Preferred
Stock Depository, the Company will cause the Preferred Stock Depository to
issue, on behalf of the Company, the Depository Receipts. Copies of the
applicable form of Deposit Agreement and Depository Receipt may be obtained
from the Company upon request.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depository will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock to the record
holders of the Depository Receipts evidencing the related Depository Shares in
proportion to the number of such Depository Receipts owned by such holder,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the Preferred
Stock Depository.
In the event of a distribution other than in cash, the Preferred Stock
Depository will distribute property received by it to the record holders of
Depository Receipts entitled thereto, subject to certain obligations of
holders to file proofs, certificates and other information and to pay certain
charges and expenses to the Preferred
8
<PAGE>
Stock Depository, unless the Preferred Stock Depository determines that it is
not feasible to make such distribution, in which case the Preferred Stock
Depository may, with the approval of the Company, sell such property and
distribute the net proceeds from such sale to such holders.
WITHDRAWAL OF SHARES
Upon surrender of the Depository Receipts at the corporate trust office of
the Preferred Stock Depository (unless the related Depository Shares have
previously been called for redemption), the holders thereof will be entitled
to delivery at such office, to or upon such holder's order, of the number of
whole shares of Preferred Stock and any money or other property represented by
the Depository Shares evidenced by such Depository Receipts. Holders of
Depository Receipts will be entitled to receive whole shares of the related
Preferred Stock on the basis of the proportion of Preferred Stock represented
by each Depository Share as specified in the applicable Prospectus Supplement,
but holders of such Preferred Stock will not thereafter be entitled to receive
Depository Shares therefor. If the Depository Receipts delivered by the holder
evidence a number of Depository Shares in excess of the number of Depository
Shares representing the number of shares of Preferred Stock to be withdrawn,
the Preferred Stock Depository will deliver to such holder at the same time a
new Depository Receipt evidencing such excess number of Depository Shares.
REDEMPTION OF DEPOSITORY SHARES
Whenever the Company redeems Preferred Stock held by the Preferred Stock
Depository, the Preferred Stock Depository will redeem as of the same
redemption date the number of Depository Shares representing the Preferred
Stock so redeemed, provided the Company shall have paid in full to the
Preferred Stock Depository the redemption price of the Preferred Stock to be
redeemed plus an amount equal to any accrued and unpaid dividends (except,
with respect to noncumulative shares of Preferred Stock, dividends for the
current dividend period only) thereon to the date fixed for redemption. The
redemption price per Depository Share will be equal to the redemption price
and any other amounts per share payable with respect to the Preferred Stock.
If less than all the Depository Shares are to be redeemed, the Depository
Shares to be redeemed will be selected by the Preferred Stock Depository by
lot.
After the date fixed for redemption, the Depository Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depository Receipts evidencing the Depository Shares so called
for redemption will cease, except the right to receive any moneys payable upon
such redemption and any money or other property to which the holders of such
Depository Receipts were entitled upon such redemption upon surrender thereof
to the Preferred Stock Depository.
VOTING OF THE UNDERLYING PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Preferred Stock Depository will mail the
information contained in such notice of meeting to the record holders of the
Depository Receipts evidencing the Depository Shares which represent such
Preferred Stock. Each record holder of Depository Receipts evidencing
Depository Shares on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the
Preferred Stock Depository as to the exercise of the voting rights pertaining
to the amount of Preferred Stock represented by such holder's Depository
Shares. The Preferred Stock Depository will vote the amount of Preferred Stock
represented by such Depository Shares in accordance with such instructions,
and the Company will agree to take all reasonable action which may be deemed
necessary by the Preferred Stock Depository in order to enable the Preferred
Stock Depository to do so. The Preferred Stock Depository will abstain from
voting the amount of Preferred Stock represented by such Depository Shares to
the extent it does not receive specific instructions from the holders of
Depository Receipts evidencing such Depository Shares.
9
<PAGE>
LIQUIDATION PREFERENCE
In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, each holder of a Depository Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
Preferred Stock represented by the Depository Share evidenced by such
Depository Receipt, as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED STOCK
The Depository Shares, as such, are not convertible into Common Stock or any
securities or property of the Company. Nevertheless, if so specified in the
applicable Prospectus Supplement relating to an offering of Depository Shares,
the Depository Receipts may be surrendered by holders thereof to the Preferred
Stock Depository with written instructions to the Preferred Stock Depository
to instruct the Company to cause conversion of the Preferred Stock represented
by the Depository Shares evidenced by such Depository Receipts into whole
shares of Common Stock, other Preferred Stock of the Company or other shares
of capital stock, and the Company has agreed that upon receipt of such
instructions and any amounts payable in respect thereof, it will cause the
conversion thereof utilizing the same procedures as those provided for
delivery of Preferred Stock to effect such conversion. If the Depository
Shares evidenced by a Depository Receipt are to be converted in part only, one
or more new Depository Receipts will be issued for any Depository Shares not
to be converted. No fractional shares of Common Stock will be issued upon
conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of
the fractional interest based upon the closing price of the Common Stock on
the last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depository Receipt evidencing the Depository Shares which
represent the Preferred Stock and any provision of the Deposit Agreement may
at any time be amended by agreement between the Company and the Preferred
Stock Depository. However, any amendment that materially and adversely alters
the rights of the holders of Depository Receipts will not be effective unless
such amendment has been approved by the existing holders of at least a
majority of the Depository Shares evidenced by the Depository Receipts then
outstanding.
The Deposit Agreement may be terminated by the Company upon not less than 30
days' prior written notice to the Preferred Stock Depository if a majority of
each class of Depository Shares affected by such termination consents to such
termination, whereupon the Preferred Stock Depository shall deliver or make
available to each holder of Depository Receipts, upon surrender of the
Depository Receipts held by such holder, such number of whole or fractional
shares of Preferred Stock as are represented by the Depository Shares
evidenced by such Depository Receipts. In addition, the Deposit Agreement will
automatically terminate if (i) all outstanding Depository Shares shall have
been redeemed, (ii) there shall have been a final distribution in respect of
the related Preferred Stock in connection with any liquidation, dissolution or
winding up of the Company and such distribution shall have been distributed to
the holders of Depository Receipts evidencing the Depository Shares
representing such Preferred Stock or (iii) each related share of Preferred
Stock shall have been converted into capital stock of the Company not so
represented by Depository Shares.
CHARGES OF PREFERRED STOCK DEPOSITORY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Stock Depository in
connection with the performance of its duties under the Deposit Agreement.
However, holders of the Depository Receipts will pay the fees and expenses of
the Preferred Stock Depository for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
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RESIGNATION AND REMOVAL OF PREFERRED STOCK DEPOSITORY
The Preferred Stock Depository may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time
remove the Preferred Stock Depository, any such resignation or removal to take
effect upon the appointment of a successor Preferred Stock Depository. A
successor Preferred Stock Depository must be appointed within 60 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.
MISCELLANEOUS
The Preferred Stock Depository will forward to holders of Depository
Receipts any reports and communications from the Company that are received by
the Preferred Stock Depository with respect to the related Preferred Stock.
Neither the Preferred Stock Depository nor the Company will be liable if it
is prevented from or delayed in, by law or any circumstances beyond its
control, performing its obligations under the Deposit Agreement. The
obligations of the Company and the Preferred Stock Depository under the
Deposit Agreement will be limited to performing their duties thereunder in
good faith and without gross negligence or willful misconduct, and the Company
and the Preferred Stock Depository will not be obligated to prosecute or
defend any legal proceeding in respect of any Depository Receipts, Depository
Shares or Preferred Stock represented thereby unless satisfactory indemnity is
furnished. The Company and the Preferred Stock Depository may rely on written
advice of counsel or accountants, or information provided by persons
presenting Preferred Stock represented thereby for deposit, holders of
Depository Receipts or other persons believed to be competent to give such
information, and on documents believed to be genuine and signed by a proper
party.
If the Preferred Stock Depository shall receive conflicting claims, requests
or instructions from any holders of Depository Receipts, on the one hand, and
the Company, on the other hand, the Preferred Stock Depository shall be
entitled to act on such claims, requests or instructions received from the
Company.
DESCRIPTION OF THE DEBT SECURITIES
The Senior Debt Securities will be issued under an Indenture, as amended or
supplemented from time to time (the "Senior Indenture"), between the Company
and Harris Trust and Savings Bank, as trustee (the "Trustee"). The
Subordinated Debt Securities will be issued under an Indenture, as amended or
supplemented from time to time (the "Subordinated Indenture"), between the
Company and the Trustee. The Senior Indenture and the Subordinated Indenture
are sometimes referred to herein collectively as the "Indentures" and each
individually as an "Indenture".
The forms of the Indentures have been filed as exhibits to the Registration
Statement of which this Prospectus is a part and are available for inspection
at the corporate trust office of the Trustee at 111 West Monroe Street,
Chicago, Illinois 60603. The Indentures are subject to, and are governed by,
the Trust Indenture Act of 1939, as amended. The statements made hereunder
relating to the Indentures and the Debt Securities to be issued hereunder are
summaries of certain provisions thereof and do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, all
provisions of the Indentures and such Debt Securities. All section references
appearing in this section "Description of the Debt Securities" are to sections
of the applicable Indenture, and capitalized terms used but not defined herein
shall have the respective meanings set forth in the applicable Indenture.
GENERAL
The Indentures do not limit the amount of Debt Securities that can be issued
thereunder and provide that Debt Securities of any series may be issued
thereunder up to the aggregate principal amount which may be
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authorized from time to time by the Company. The Indentures do not limit the
amount of other indebtedness or securities, other than certain secured
indebtedness as described below which is limited by the Senior Indenture, that
may be issued by the Company or its subsidiaries.
The Debt Securities will be direct, unsecured obligations of the Company and
will constitute Senior Debt Securities and/or Subordinated Debt Securities.
Creditors of the Company's subsidiaries are entitled to a claim on the assets
of such subsidiaries. Consequently, in the event of a liquidation or
reorganization of any subsidiary, creditors of the subsidiary are likely to be
paid in full before any distribution is made to the Company and holders of
Debt Securities, except to the extent that the Company is itself recognized as
a creditor of such subsidiary, in which case the claims of the Company would
still be subordinate to any security interests in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Company.
Reference is made to the Prospectus Supplement for the following and other
possible terms of each series of the Debt Securities in respect of which this
Prospectus is being delivered: (i) the title of the Debt Securities; (ii) any
limit upon the aggregate principal amount of the Debt Securities; (iii) if
other than 100% of the principal amount, the percentage of their principal
amount at which the Debt Securities will be offered; (iv) the date or dates on
which the principal of the Debt Securities will be payable (or method of
determination thereof); (v) the rate or rates (or method of determination
thereof) at which the Debt Securities will bear interest, if any, the date or
dates from which any such interest will accrue and on which such interest will
be payable, and the record dates for the determination of the holders to whom
interest is payable; (vi) if other than as set forth herein, the place or
places where the principal of and interest, if any, on the Debt Securities
will be payable; (vii) the price or prices at which, the period or periods
within which and the terms and conditions upon which Debt Securities may be
redeemed, in whole or in part, at the option of the Company; (viii) if other
than the principal amount thereof, the portion of the principal amount of the
Debt Securities payable upon declaration of acceleration of the maturity
thereof; (ix) the obligation, if any, of the Company to redeem, repurchase or
repay Debt Securities, whether pursuant to any sinking fund or analogous
provisions or pursuant to other provisions set forth therein or at the option
of a Holder thereof; (x) whether the Debt Securities will be represented in
whole or in part by one or more global notes registered in the names of a
depository or its nominee; (xi) any conversion or exchange provisions and
whether such conversion or exchange is optional or mandatory; (xii) the
ranking of such Debt Securities as Senior Debt Securities or Subordinated Debt
Securities; and (xiii) any other terms or conditions not inconsistent with the
provisions of the Indenture under which the Debt Securities will be issued.
(Section 2.3) "Principal" when used herein includes, when appropriate, the
premium, if any, on the Debt Securities.
Unless otherwise provided in the Prospectus Supplement relating to any Debt
Securities, principal and interest, if any, will be payable, and the Debt
Securities will be transferable, at the office or offices or agency maintained
by the Company for such purposes, provided that payment of interest on the
Debt Securities will be paid at such place of payment by check mailed to the
persons entitled thereto at the addresses of such persons appearing on the
Security register. Interest on the Debt Securities will be payable on any
interest payment date to the persons in whose name the Debt Securities are
registered at the close of business on the record date with respect to such
interest payment date.
The Debt Securities may be issued only in fully registered form in minimum
denominations of $1,000 and any integral multiple thereof. Additionally, the
Debt Securities may be represented in whole or in part by one or more global
notes registered in the name of a depository or its nominee and, if so
represented, interests in such global note will be shown on, and transfers
thereof will be effected only through, records maintained by the designated
depository and its participants.
The Debt Securities may be exchanged for an equal aggregate principal amount
of Debt Securities of the same series and date of maturity in such authorized
denominations as may be requested upon surrender of the Debt Securities at an
agency of the Company maintained for such purpose and upon fulfillment of all
other requirements of such agent. No service charge will be made for any
transfer or exchange of the Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. (Section 2.8)
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The Indentures require the annual filing by the Company with the Trustee of
a certificate as to compliance with certain covenants contained in the
Indentures. (Section 3.4)
The Company will comply with Section 14(e) under the Exchange Act, to the
extent applicable, and any other tender offer rules under the Exchange Act
which may then be applicable, in connection with any obligation of the Company
to purchase Debt Securities at the option of the holders thereof. Any such
obligation applicable to a series of Debt Securities will be described in the
Prospectus Supplement relating thereto.
Unless otherwise described in a Prospectus Supplement relating to any Debt
Securities, there are no covenants or provisions contained in the Indentures
which may afford the holders of Debt Securities protection in the event of a
highly leveraged transaction involving the Company.
CONVERSION AND EXCHANGE
The terms, if any, on which Debt Securities of any series are convertible
into or exchangeable for Common Stock or Preferred Stock, property or cash, or
a combination of any of the foregoing, will be set forth in the Prospectus
Supplement relating thereto. Such terms may include provisions for conversion
or exchange, either mandatory, at the option of the holder, or at the option
of the Company, in which the number of shares of Common Stock or Preferred
Stock to be received by the holders of the Debt Securities would be calculated
according to the factors and at such time as set forth in the related
Prospectus Supplement.
COVENANTS APPLICABLE TO SENIOR DEBT SECURITIES
Limitations on Liens
The Senior Indenture provides that, so long as any of the Senior Debt
Securities of a series remain outstanding, the Company will not, nor will it
permit any Restricted Subsidiary (as hereinafter defined) to, secure
indebtedness for money borrowed ("Secured Debt") by placing a Lien (as
hereinafter defined) on any Principal Property (as hereinafter defined) now or
hereafter owned by the Company or any Restricted Subsidiary or on any shares
of stock or securing indebtedness for money borrowed of any Restricted
Subsidiary without equally and ratably securing the Debt Securities of such
series, unless (i) the aggregate principal amount of such Secured Debt then
outstanding plus (ii) all Attributable Debt (as hereinafter defined) of the
Company and its Restricted Subsidiaries in respect of sale and leaseback
transactions described below covering Principal Properties (other than sale
and leaseback transactions under (b) of the following paragraph) does not
exceed an amount equal to 10% of Consolidated Net Tangible Assets (as
hereinafter defined). This restriction will not apply to, and there shall be
excluded in computing such Secured Debt for purposes of this restriction,
certain permitted Liens, including (a) with respect to each series of Senior
Debt Securities, Liens existing as of the date of the issuance of Senior Debt
Securities of such series; (b) Liens on property or assets of, or any shares
of stock or securing indebtedness for money borrowed of, any corporation
existing at the time such corporation becomes a Restricted Subsidiary; (c)
Liens on property or assets or shares of stock or securing indebtedness for
money borrowed existing at the time of acquisition (including acquisition
through merger or consolidation) and certain Liens to secure indebtedness
incurred prior to, at the time of or within 120 days after the later of the
acquisition of, or the completion of the construction of and commencement of
operation of, any such property, for the purpose of financing all or any part
of the purchase price or construction cost thereof; (d) Liens to secure
certain development, operation, construction, alteration, repair or
improvement costs; (e) Liens in favor of, or which secure indebtedness owing
to, the Company or a Restricted Subsidiary; (f) Liens in connection with
government contracts, including the assignment of moneys due or to come due
thereon; (g) certain Liens in connection with legal proceedings to the extent
such proceedings are being contested in good faith; (h) certain Liens arising
in the ordinary course of business and not in connection with the borrowing of
money such as mechanics', materialmens', carriers' or other similar Liens; (i)
Liens on property securing obligations issued by a domestic governmental
issuer to finance the cost of acquisition or construction of such property;
and (j) extensions, substitutions, replacements or renewals of the foregoing.
(Section 3.5)
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Limitations on Sale and Leaseback Transactions
The Senior Indenture provides that, so long as any of the Senior Debt
Securities of a series remain outstanding, the Company will not, nor will it
permit any Restricted Subsidiary to, enter into any sale and leaseback
transaction (except a lease for a period not exceeding three years) covering
any Principal Property which was or is owned by the Company or a Restricted
Subsidiary and which has been or is to be sold or transferred more than 120
days after such property has been owned by the Company or such Restricted
Subsidiary and completion of construction and commencement of full operation
thereof, unless (a) the Attributable Debt in respect thereto and all other
sale and leaseback transactions entered into after the date of the first
issuance of Senior Debt Securities of such series (other than those the
proceeds of which are applied to reduce indebtedness or acquire additional
property under (b) following), plus the aggregate principal amount of then
outstanding Secured Debt not otherwise permitted or excepted without equally
and ratably securing the Senior Debt Securities does not exceed 10% of
Consolidated Net Tangible Assets; or (b) an amount equal to the value of the
Principal Property sold and leased back is applied within 120 days after the
sale or transfer to (x) the voluntary retirement of Funded Debt (as
hereinafter defined), including Senior Debt Securities, or (y) the acquisition
of properties, facilities or equipment used for general operating purposes for
the Company or any Restricted Subsidiary. (Section 3.6)
Certain Definitions
The term "Subsidiary" is defined to mean (i) a corporation, a majority of
whose capital stock with voting power, under ordinary circumstances, to elect
directors is, at the date of determination, directly or indirectly owned by
the Company, by one or more Subsidiaries of the Company or by the Company and
one or more Subsidiaries of the Company, (ii) a partnership in which the
Company or a Subsidiary of the Company holds a majority interest in the equity
capital or profits of such partnership, or (iii) any other person (other than
a corporation) in which the Company, a Subsidiary of the Company or the
Company and one or more Subsidiaries of the Company, directly or indirectly,
at the date of determination, has (x) at least a majority ownership interest
or (y) the power to elect or direct the election of a majority of the
directors or other governing body of such person.
The term "Restricted Subsidiary" is defined to mean any Subsidiary (other
than FMC Gold Company) (i) substantially all the property of which is located
within the continental United States of America or Canada and (ii) which owns
or leases a Principal Property.
The term "Principal Property" is defined to mean any manufacturing or
processing plant or facility (other than any pollution control facility) or
any mineral producing property which is located within the continental United
States of America and is owned by the Company or any Subsidiary, whether owned
at or acquired after the date of the applicable Indenture, the gross book
value on the books of the Company or such Subsidiary (without deduction of any
depreciation reserve) of which on the date as of which the determination is
being made exceeds 1% of Consolidated Net Tangible Assets, other than any such
property, plant or facility, or any portion thereof, which in the opinion of
the Board of Directors is not of material importance to the total business
conducted by the Company and its Restricted Subsidiaries as an entirety or
which is financed with certain tax exempt securities.
The term "Attributable Debt", in respect of the sale and leaseback
transactions described above, is defined to mean the amount determined by
multiplying the greater, at the time such transaction is entered into, of (i)
the fair value of the property, plant or facility subject to such arrangement
(as determined by the Company); or (ii) the net proceeds of the sale of such
property, plant or facility to the lender or investor, by a fraction of which
the numerator shall be the unexpired initial term of the lease of such real
property as of the date of determination of such computation and of which the
denominator shall be the full initial term of such lease. Sale and leasebacks
with respect to facilities financed with certain tax exempt securities are
excepted from the definition.
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The term "Consolidated Net Tangible Assets" is defined to mean the aggregate
amount of assets (less applicable reserves and other properly deductible
items) after deducting therefrom (a) all current liabilities (excluding any
thereof constituting Funded Debt by reason of being extendible or renewable);
and (b) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, all as set forth on the books
and records of the Company and its consolidated subsidiaries and computed in
accordance with generally accepted accounting principles.
The term "Funded Debt" is defined to mean all indebtedness whether or not
evidenced by a bond, debenture, note or similar instrument or agreement, for
the repayment of money borrowed, having a maturity of more than 12 months from
the date of its creation or having a maturity of less than 12 months from the
date of its creation but by its terms being renewable or extendible beyond 12
months from such date at the option of the borrower. For the purpose of
determining "Funded Debt" of any corporation, there shall be excluded any
particular indebtedness if, on or prior to the maturity thereof, there shall
have been deposited with the proper depository in trust the necessary funds
for the payment, redemption or satisfaction of such indebtedness. (Section
1.1)
The term "Lien" is defined to mean any pledge, mortgage or other lien
(including lease purchase, installment purchase and other title retention
financing arrangements) on or in respect of any Principal Property owned by
the Company or any Restricted Subsidiary, or on any shares of stock or
indebtedness for money borrowed of any Restricted Subsidiary. (Section 3.5)
EVENTS OF DEFAULT
An Event of Default with respect to the Debt Securities of any series is
defined in the Indentures as: (i) default in the payment of any installment of
interest upon any of the Debt Securities of such series as and when the same
shall become due and payable, and continuance of such default for a period of
30 days; (ii) default in the payment of all or any part of the principal of
any of the Debt Securities of such series as and when the same shall become
due and payable either at maturity, upon any redemption, by declaration or
otherwise; (iii) default in the performance, or breach, of any other covenant
or warranty of the Company contained in the Debt Securities of such series or
set forth in the applicable Indenture (other than a covenant or warranty
included in the applicable Indenture solely for the benefit of a series of
Debt Securities other than such series) and continuance of such default or
breach for a period of 90 days after due notice by the Trustee or by the
holders of at least 25% in principal amount of the outstanding securities of
that series; or (iv) certain events of bankruptcy, insolvency or
reorganization of the Company. (Section 5.1) Additional Events of Default may
be added for the benefit of holders of certain series of Debt Securities
which, if added, will be described in the Prospectus Supplement relating to
such Debt Securities. The Indentures provide that the Trustee shall notify the
holders of Debt Securities of each series of any continuing default known to
the Trustee which has occurred with respect to that series within 90 days
after the occurrence thereof. The Indentures provide that notwithstanding the
foregoing, except in the case of default in the payment of the principal of,
or interest, if any, on any of the Debt Securities of such series, the Trustee
may withhold such notice if the Trustee in good faith determines that the
withholding of such notice is in the interests of the holders of Debt
Securities of such series. (Section 6.5)
The Indentures provide that if an Event of Default with respect to any
series of Debt Securities shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in aggregate principal amount of
Debt Securities of that series then outstanding may declare the principal
amount of all Debt Securities of that series to be due and payable
immediately, but upon certain conditions such declaration may be annulled.
(Section 5.1) Any past defaults and the consequences thereof (except a default
in the payment of principal of or interest, if any, on Debt Securities of that
series) may be waived by the holders of a majority in principal amount of the
Debt Securities of that series then outstanding. (Section 5.9) The Senior
Indenture also permits the Company to omit compliance with certain covenants
in such Indentures with respect to Senior Debt Securities of any series upon
waiver by the holders of a majority in principal amount of the Senior Debt
Securities of such series then outstanding. (Section 3.7)
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Subject to the provisions of the Indentures relating to the duties of the
Trustee, in case an Event of Default with respect to any series of Debt
Securities shall occur and be continuing, the Trustee shall not be under any
obligation to exercise any of the trusts or powers vested in it by the
Indentures at the request or direction of any of the holders of that series,
unless such holders shall have offered to such Trustee reasonable security or
indemnity. (Sections 6.1 and 6.2) The holders of a majority in aggregate
principal amount of the Debt Securities of each series affected and then
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee under the
applicable Indenture or exercising any trust or power conferred on the Trustee
with respect to the Debt Securities of that series; provided that the Trustee
may refuse to follow any direction which is in conflict with any law or such
Indenture and subject to certain other limitations. (Section 5.8)
No holder of any Debt Security of any series will have any right by virtue
or by availing of any provision of the Indentures to institute any proceeding
at law or in equity or in bankruptcy or otherwise upon or under or with
respect to the Indentures or for any remedy thereunder, unless such holder
shall have previously given the Trustee written notice of an Event of Default
with respect to Debt Securities of that series and unless the holders of at
least 25% in aggregate principal amount of the outstanding Debt Securities of
that series shall also have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee and the
Trustee shall have failed to institute such proceeding within 60 days after
its receipt of such request, and the Trustee shall not have received from the
holders of a majority in aggregate principal amount of the outstanding Debt
Securities of that series a direction inconsistent with such request. (Section
5.5) However, the right of a holder of any Debt Security to receive payment of
the principal of and interest, if any, on such Debt Security on or after the
due dates expressed in such Debt Security, or to institute suit for the
enforcement of any such payment on or after such dates, shall not be impaired
or affected without the consent of such holder. (Section 5.6)
MERGER
Each Indenture provides that the Company may consolidate with, or sell,
convey or lease all or substantially all of its assets to, or merge with or
into, any other corporation, if (i) either the Company is the continuing
corporation or the successor corporation is a domestic corporation and
expressly assumes the due and punctual payment of the principal of and
interest on all the Debt Securities outstanding under such Indenture according
to their tenor and the due and punctual performance and observance of all of
the covenants and conditions of such Indenture to be performed or observed by
the Company; and (ii) the Company or such successor corporation, as the case
may be, is not, immediately after such merger or consolidation, or such sale,
conveyance or lease, in material default in the performance or observance of
any such covenant or condition. (Section 9.1)
SATISFACTION AND DISCHARGE OF INDENTURES
The Indenture with respect to any series of Debt Securities (except for
certain specified surviving obligations including, among other things, the
Company's obligation to pay the principal of and interest on the Debt
Securities of such series) will be discharged and cancelled upon the
satisfaction of certain conditions, including the payment of all the Debt
Securities of such series or the deposit with the Trustee under such Indenture
of cash or appropriate Government Obligations or a combination thereof
sufficient for such payment or redemption in accordance with the applicable
Indenture and the terms of the Debt Securities of such series. (Section 10.1)
MODIFICATION OF THE INDENTURES
The Indentures contain provisions permitting the Company and the Trustee
thereunder, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debt Securities of each series at the time
outstanding under the applicable Indenture, to execute supplemental indentures
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, the applicable Indenture or any supplemental indenture with
respect to the Debt Securities of such series or modifying in any manner the
rights of the holders
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of the Debt Securities of such series; provided that no such supplemental
indenture may (i) extend the final maturity of any Debt Security, or reduce
the principal amount thereof, or reduce the rate or extend the time of payment
of any interest thereon, or reduce any amount payable on redemption thereof,
or impair or affect the right of any holder of Debt Securities to institute
suit for payment thereof or, if the Debt Securities provide therefor, any
right of repayment at the option of the holders of the Debt Securities,
without the consent of the holder of each Debt Security so affected or (ii)
reduce the aforesaid percentage of Debt Securities of such series, the consent
of the holders of which is required for any such supplemental indenture,
without the consent of the holders of all Debt Securities of such series so
affected. (Section 8.2) Additionally, in certain prescribed instances, the
Company and the Trustee may execute supplemental indentures without the
consent of the holders of Debt Securities. (Section 8.1)
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide, if such provision is made applicable to the Debt
Securities of any series, that the Company may elect either (a) to terminate
(and be deemed to have satisfied) all its obligations with respect to such
Debt Securities (except for the obligations to register the transfer or
exchange of such Debt Securities, to replace mutilated, destroyed, lost or
stolen Debt Securities, to maintain an office or agency in respect of the Debt
Securities, to compensate and indemnify the Trustee and to punctually pay or
cause to be paid the principal of, and interest, if any, on all Debt
Securities of such series when due) ("defeasance"); or (b) in the case of the
Senior Indenture, to be released from its obligations with respect to Senior
Debt Securities under Sections 3.5 and 3.6 of the Senior Indenture (being the
restrictions described above under "Limitations on Liens" and "Limitations on
Sale and Leaseback Transactions") ("covenant defeasance"), upon the deposit
with the Trustee, in trust for such purpose, of money and/or Government
Obligations which through the payment of principal and interest in accordance
with their terms will provide money, in an amount sufficient (in the opinion
of a nationally recognized firm of independent public accountants) to pay the
principal of and premium and interest, if any, on the outstanding Debt
Securities of such series, and any mandatory sinking fund or analogous
payments thereon, on the scheduled due dates therefor. Such a trust may be
established only if, among other things, the Company has delivered to the
Trustee an opinion of counsel (as specified in the applicable Indenture) with
regard to certain matters, including an opinion to the effect that the Holders
of such Debt Securities will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and 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 and defeasance
or covenant defeasance, as the case may be, had not occurred. The Prospectus
Supplement may further describe these or other provisions, if any, permitting
defeasance or covenant defeasance with respect to the Debt Securities of any
series. (Section 10.1)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
The Senior Debt Securities will constitute part of the Senior Indebtedness
(as defined below) of the Company and will rank pari passu with all
outstanding senior debt. Except as set forth in the related Prospectus
Supplement, the Subordinated Debt Securities will be subordinated, in right of
payment, to the prior payment in full of the Senior Indebtedness (as defined
below), including the Senior Debt Securities, whether outstanding at the date
of the Subordinated Indenture or thereafter incurred, assumed or guaranteed.
The term "Senior Indebtedness" means (1) the principal of and premium, if any,
and unpaid interest on indebtedness for money borrowed, (2) purchase money and
similar obligations, (3) obligations under capital leases, (4) guarantees,
assumptions or purchase commitments relating to, or other transactions as a
result of which the Company is responsible for the payment of, such
indebtedness of others, (5) renewals, extensions and refunding of any such
indebtedness, (6) interest or obligations in respect of any such indebtedness
accruing after the commencement of any insolvency or bankruptcy proceedings
and (7) obligations associated with derivative products such as interest rate
and currency exchange contracts, foreign exchange contracts, commodity
contracts, and similar arrangements, unless, in each case, the instrument by
which the Company incurred, assumed or guaranteed the indebtedness or
obligations described in clauses (1) through (7) hereof expressly provides
that such indebtedness or obligation is not senior in right of payment to the
Subordinated Debt Securities.
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Upon any distribution of assets of the Company in connection with any
dissolution, winding up, liquidation or reorganization of the Company, whether
in a bankruptcy, insolvency, reorganization or receivership proceeding or upon
an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Company or otherwise, except a distribution in
connection with a merger or consolidation or a conveyance or transfer of all
or substantially all of the properties of the Company in accordance with the
Subordinated Indenture, the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon, or provision shall
be made for such payment in money or money's worth, before the holders of any
of the Subordinated Debt Securities are entitled to receive any payment in
respect of the Subordinated Debt Securities. In the event that a payment
default shall have occurred and be continuing with respect to the Senior
Indebtedness, the holders of all Senior Indebtedness shall first be entitled
to receive payment of the full amount due thereon, or provision shall be made
for such payment in money or money's worth, before the holders of any of the
Subordinated Debt Securities are entitled to receive any payment in respect of
the Subordinated Debt Securities. In the event that the principal of the
Subordinated Debt Securities of any series shall have been declared due and
payable pursuant to the Subordinated Indenture and such declaration shall not
have been rescinded and annulled, the holders of all Senior Indebtedness
outstanding at the time of such declaration shall first be entitled to receive
payment of the full amount due thereon, or provision shall be made for such
payment in money or money's worth, before the holders of any of the
Subordinated Debt Securities are entitled to receive any payment in respect of
the Subordinated Debt Securities.
This subordination will not prevent the occurrence of any event of default
with respect to the Subordinated Debt Securities. There is no limitation on
the issuance of additional Senior Indebtedness in the Subordinated Indenture.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (each, a "Global Security") that will be
deposited with, or on behalf of, a Debt Depository identified in the
applicable Prospectus Supplement. Global Securities may be issued in either
registered or bearer form and in either temporary or permanent form. Unless
otherwise provided in such Prospectus Supplement, Debt Securities that are
represented by a Global Security will be issued in denominations of $1,000 or
any integral multiple thereof and will be issued in registered form only,
without coupons. Payments of principal of, and interest, if any, on Debt
Securities represented by a Global Security will be made by the Company to the
Trustee under the applicable Indenture, and then forwarded to the Debt
Depository.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company, New York, New York ("DTC"), and
that such Global Securities will be registered in the name of Cede & Co.,
DTC's nominee. The Company further anticipates that the following provisions
will apply to the depository arrangements with respect to any such Global
Securities. Any additional or differing terms of the depository arrangements
will be described in the Prospectus Supplement relating to a particular series
of Debt Securities issued in the form of Global Securities.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole Holder of
the Debt Securities represented by such Global Security for all purposes under
the applicable Indenture. Except as described below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities in
certificated form and will not be considered the owners or Holders thereof
under the applicable Indenture. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form; accordingly, such laws may limit the transferability of
beneficial interests in a Global Security.
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If DTC is at any time unwilling or unable to continue as depository or if at
any time DTC ceases to be a clearing agency registered under the Exchange Act
if so required by applicable law or regulation, and, in either case, a
successor Debt Depository is not appointed by the Company within 90 days, the
Company will issue individual Debt Securities in certificated form in exchange
for the Global 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 individual Debt
Securities in certificated form in exchange for the relevant Global
Securities. In any such instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery of individual Debt
Securities in certificated form of like tenor and rank, equal in principal
amount to such beneficial interest, and to have such Debt Securities in
certificated form registered in its name. Unless otherwise described in the
applicable Prospectus Supplement, Debt Securities so issued in certificated
form will be issued in denominations of $1,000 or any integral multiple
thereof, and will be issued in registered form only, without coupons.
DTC will act as securities depository for the Debt Securities. The Debt
Securities will be issued as fully registered securities registered in the
name of Cede & Co. (DTC's partnership nominee). One fully registered Debt
Security certificate will be issued with respect to each $200 million of
principal amount of the Debt Securities of a series, and an additional
certificate will be issued with respect to any remaining principal amount of
such series.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others, such as securities brokers and dealers, and banks and trust companies
that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Purchases of Debt Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debt Securities on
DTC's records. The ownership interest of each actual purchaser of each Debt
Security ("Beneficial Owner") is in turn recorded on the Direct and Indirect
Participants' records. A Beneficial Owner does not receive written
confirmation from DTC of its purchase, but is expected to received a written
confirmation providing details of the transaction, as well as periodic
statements of its holdings, from the Direct or Indirect Participants through
which such Beneficial Owner entered into the action. Transfers of ownership
interests in Debt Securities are accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners do not
receive certificates representing their ownership interests in Debt
Securities, except in the event that use of the book-entry system for the Debt
Securities is discontinued.
To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's partnership nominee, Cede & Co. The deposit of the Debt
Securities with DTC and their registration in the name of Cede & Co. will
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Debt Securities; DTC records reflect only the
identity of the Direct Participants to whose accounts Debt Securities are
credited, which may or may not be the Beneficial Owners. The Participants
remain responsible for keeping account of their holdings on behalf of their
customers.
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Delivery of notice and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants, and by Direct Participants
and Indirect Participants to Beneficial Owners are governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Neither DTC nor Cede & Co. consents or votes with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus Proxy")
to the issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
to whose accounts the Debt Securities are credited on the record date
(identified on a list attached to the Omnibus Proxy).
Principal and interest payments, if any, on the Debt Securities are made to
DTC. DTC's practice is to credit Direct Participants' accounts on the payment
date in accordance with their respective holdings as shown on DTC's records
unless DTC has reason to believe that it will not receive payment on the
payment date. Payments by Participants to Beneficial Owners are governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name" and are the responsibility of such Participant and not of DTC, the
Trustee or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest, if any,
to DTC is the responsibility of the Company or the Trustee, disbursement of
such payments to Direct Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to the
Company or the Trustee. Under such circumstances, in the event that a
successor securities depository is not appointed, Debt Security certificates
are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Debt Security certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
Unless stated otherwise in the Prospectus Supplement, the underwriters or
agents with respect to a series of Debt Securities issued as Global Securities
will be Direct Participants in DTC.
None of the Company, any underwriter or agent, the Trustee or any applicable
paying agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in a
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial interest.
CONCERNING THE TRUSTEE
The Trustee has extended credit facilities to the Company and conducts other
business with the Company and certain of its affiliates, including cash
management and stock transfer services and serving as the trustee for the FMC
Employees' Thrift and Stock Purchase Plan.
DESCRIPTION OF THE WARRANTS TO PURCHASE COMMON STOCK OR PREFERRED STOCK
The following statements with respect to the Common Stock Warrants and
Preferred Stock Warrants (collectively, the "Stock Warrants") are summaries
of, and subject to, the detailed provisions of a warrant agreement ("Stock
Warrant Agreement") to be entered into by the Company and a warrant agent to
be selected
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at the time of issue (the "Stock Warrant Agent"), which Stock Warrant
Agreement may include or incorporate by reference standard warrant provisions
substantially in the form of the Standard Stock Warrant Provisions (the "Stock
Warrant Provisions") filed as an exhibit to the Registration Statement.
GENERAL
The Stock Warrants, evidenced by warrant certificates (the "Stock Warrant
Certificates"), may be issued under the Stock Warrant Agreement independently
or together with any Offered Securities offered by any Prospectus Supplement
and may be attached to or separate from such Offered Securities. If Stock
Warrants are offered, the related Prospectus Supplement will describe the
terms of the Stock Warrants, including without limitation the following: (1)
the offering price, if any; (2) the designation and terms of the Common or
Preferred Stock purchasable upon exercise of the Stock Warrants; (3) the
number of shares of Common or Preferred Stock purchasable upon exercise of one
Stock Warrant and the initial price at which such shares may be purchased upon
exercise; (4) the date on which the right to exercise the Stock Warrants shall
commence and the date on which such right shall expire; (5) a discussion of
certain federal income tax considerations; (6) the call provisions, if any;
(7) the currency, currencies or currency units in which the offering price, if
any, and exercise price are payable; (8) the antidilution provisions of the
Stock Warrants; and (9) any other terms of the Stock Warrants. The shares of
Common or Preferred Stock issuable upon exercise of the Stock Warrants will,
when issued in accordance with the Stock Warrant Agreement, be fully paid and
nonassessable.
EXERCISE OF STOCK WARRANTS
Stock Warrants may be exercised by surrendering to the Stock Warrant Agent
the Stock Warrant certificate signed by the warrantholder, or its duly
authorized agent, indicating the warrantholder's election to exercise all or a
portion of the Stock Warrants evidenced by the certificate. Surrendered Stock
Warrant certificates shall be accompanied by payment of the aggregate exercise
price of the Stock Warrants to be exercised, as set forth in the related
Prospectus Supplement, which payment may be made in the form of cash or a
check equal to the exercise price. Certificates evidencing duly exercised
Stock Warrants will be delivered by the Stock Warrant Agent to the transfer
agent for the Common Stock or the Preferred Stock, as the case may be. Upon
receipt thereof, the transfer agent shall deliver or cause to be delivered, to
or upon the written order of the exercising warrantholder, a certificate
representing the number of shares of Common Stock or Preferred Stock
purchased. If fewer than all of the Stock Warrants evidenced by any
certificate are exercised, the Stock Warrant Agent shall deliver to the
exercising warrantholder a new Stock Warrant certificate representing the
unexercised Stock Warrants.
ANTIDILUTION PROVISIONS
The exercise price payable and the number of shares of Common or Preferred
Stock purchasable upon the exercise of each Stock Warrant will be subject to
adjustment in certain events, including the issuance of a stock dividend to
holders of Common or Preferred Stock, respectively, or a combination,
subdivision or reclassification of Common or Preferred Stock, respectively. In
lieu of adjusting the number of shares of Common or Preferred Stock
purchasable upon exercise of each Stock Warrant, the Company may elect to
adjust the number of Stock Warrants. No adjustment in the number of shares
purchasable upon exercise of the Stock Warrants will be required until
cumulative adjustments require an adjustment of at least 1% thereof. The
Company may, at its option, reduce the exercise price at any time. No
fractional shares will be issued upon exercise of Stock Warrants, but the
Company will pay the cash value of any fractional shares otherwise issuable.
Notwithstanding the foregoing, in case of any consolidation, merger, or sale
or conveyance of the property of the Company as an entirety or substantially
as an entirety, the holder of each outstanding Stock Warrant shall have the
right to the kind and amount of shares of stock and other securities and
property (including cash) receivable by a holder of the number of shares of
Common or Preferred Stock into which such Stock Warrants were exercisable
immediately prior thereto.
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NO RIGHTS AS STOCKHOLDERS
Holders of Stock Warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
stockholders with respect to any meeting of stockholders for the election of
directors of the Company or any other matter, or to exercise any rights
whatsoever as stockholders of the Company.
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIES
The following statements with respect to the Debt Warrants are summaries of,
and subject to, the detailed provisions of a warrant agreement (the "Debt
Warrant Agreement") to be entered into by the Company and a warrant agent to
be selected at the time of issue (the "Debt Warrant Agent"), which Debt
Warrant Agreement may include or incorporate by reference standard warrant
provisions substantially in the form of the Standard Debt Securities Warrant
Provisions (the "Debt Warrant Provisions") filed as an exhibit to the
Registration Statement.
GENERAL
The Debt Warrants, evidenced by warrant certificates (the "Debt Warrant
Certificates"), may be issued under the Debt Warrant Agreement independently
or together with any Offered Securities offered by any Prospectus Supplement
and may be attached to or separate from such Offered Securities. If Debt
Warrants are offered, the related Prospectus Supplement will describe the
terms of the warrants, including without limitation the following: (1) the
offering price, if any; (2) the designation, aggregate principal amount and
terms of the Debt Securities purchasable upon exercise of the warrants; (3) if
applicable, the designation and terms of the Debt Securities with which the
Debt Warrants are issued and the number of Debt Warrants issued with each such
Debt Security; (4) if applicable, the date on and after which the Debt
Warrants and the related Offered Securities will be separately transferable;
(5) the principal amount of Debt Securities purchasable upon exercise of one
Debt Warrant and the price at which such principal amount of Debt Securities
may be purchased upon exercise; (6) the date on which the right to exercise
the Debt Warrants shall commence and the date on which such right shall
expire; (7) a discussion of certain federal income tax considerations; (8)
whether the warrants represented by the Debt Warrant Certificates will be
issued in registered or bearer form; (9) the currency, currencies or currency
units in which the offering price, if any, and exercise price are payable;
(10) the antidilution provisions of the Debt Warrants; and (11) any other
terms of the Debt Warrants.
Debt Warrant Certificates may be exchanged for new Debt Warrant Certificates
of different denominations and may (if in registered form) be presented for
registration of transfer at the corporate trust office of the Debt Warrant
Agent, which will be listed in the related Prospectus Supplement, or at such
other office as may be set forth therein. Warrantholders do not have any of
the rights of holders of Debt Securities (except to the extent that the
consent of warrantholders may be required for certain modifications of the
terms of an Indenture or form of the Debt Security, as the case may be, and
the series of Debt Securities issuable upon exercise of the Debt Warrants) and
are not entitled to payments of principal of and interest, if any, on the Debt
Securities.
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EXERCISE OF DEBT WARRANTS
Debt Warrants may be exercised by surrendering the Debt Warrant Certificate
at the corporate trust office of the Debt Warrant Agent, with the form of
election to purchase on the reverse side of the Debt Warrant Certificate
properly completed and executed, and by payment in full of the exercise price,
as set forth in the Prospectus Supplement. Upon the exercise of Debt Warrants,
the Debt Warrant Agent will, as soon as practicable, deliver the Debt
Securities in authorized denominations in accordance with the instructions of
the exercising warrantholder and at the sole cost and risk of such holder. If
less than all of the Debt Warrants evidenced by the Debt Warrant Certificate
are exercised, a new Debt Warrant Certificate will be issued for the remaining
amount of Debt Warrants.
PLAN OF DISTRIBUTION
The Company may sell Offered Securities (1) through underwriters or dealers,
(2) directly to one or more purchasers, or (3) through agents. A Prospectus
Supplement will set forth the terms of the offering of the Offered Securities
offered thereby, including the name or names of any underwriters, the purchase
price of the Offered Securities, and the proceeds to the Company from the
sale, any underwriting discounts and other items constituting underwriters'
compensation, any public offering price, any discounts or concessions allowed
or reallowed or paid to dealers, and any securities exchange or market on
which the Offered Securities may be listed. Only underwriters so named in such
Prospectus Supplement are deemed to be underwriters in connection with the
Offered Securities offered thereby.
If underwriters are used in the sale, the Offered 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 Offered Securities
will be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all the Offered Securities of the series offered by the
Prospectus Supplement if any of the Offered Securities are purchased. Any
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
Offered Securities may also be sold directly by the Company or through
agents designated by the Company from time to time. Any agent involved in the
offering and sale of Offered Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the related Prospectus Supplement, any such agent will be acting
on a best-efforts basis for the period of its appointment.
All Offered Securities offered other than Common Stock will be a new issue
of securities with no established trading market. Any underwriters to whom
such Offered Securities are sold by the Company for public offering and sale
may make a market in such Offered 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 Offered Securities.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act that may arise
from any untrue statement or alleged untrue statement of a material fact or
any omission or alleged omission to state a material fact in this Prospectus,
any supplement or amendment hereto, or in the registration statement of which
this Prospectus forms a part, or to contribution with respect to payments
which the agents or underwriters may be required to make in respect thereof.
Agents and underwriters may engage in transactions with, or perform services
for, the Company in the ordinary course of business.
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LEGAL MATTERS
Certain legal matters with respect to the validity of the Offered Securities
will be passed upon for the Company by Winston & Strawn, Chicago, Illinois.
The Chairman of the Executive Committee of Winston & Strawn, Governor James R.
Thompson, serves as a member of the Company's Board of Directors and as of
March 1, 1995 beneficially owned 983 shares of Common Stock. Certain legal
matters with respect to the Offered Securities will be passed upon for any
underwriters or agents by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt from time to time acts as counsel in certain matters for the
Company.
EXPERTS
The consolidated financial statements of the Company and its consolidated
subsidiaries as of December 31, 1993 and 1994 and for the years ended December
31, 1992, 1993 and 1994 incorporated by reference herein and elsewhere in the
Registration Statement have been audited by KPMG Peat Marwick LLP ("KPMG"),
independent certified public accountants, as set forth in their report thereon
incorporated by reference herein which, as to 1994, is based in part on the
report of Ernst & Young LLP ("Ernst & Young"), independent auditors, that also
is incorporated by reference herein. The financial statements referred to
above are incorporated by reference in reliance upon such reports given upon
the authority of such firms as experts in accounting and auditing. To the
extent that KPMG audits and reports on consolidated financial statements of
the Company and consolidated subsidiaries issued at future dates, and consents
to the use of their reports thereon, such consolidated financial statements
also will be incorporated by reference in the Registration Statement in
reliance upon their reports given upon the authority of such firm as experts
in accounting and auditing. To the extent that Ernst & Young audits and
reports on financial statements of United Defense, L.P., a subsidiary of the
Company issued at future dates, and consents to the use of their reports
thereon, such reports also will be incorporated by reference in the
Registration Statement in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
With respect to the unaudited interim financial information of the Company
and its consolidated subsidiaries for the periods ended March 31, 1995 and
1994, June 30, 1995 and 1994 and September 30, 1995 and 1994, incorporated by
reference herein, KPMG has reported that they applied limited procedures in
accordance with professional standards for a review of such information. The
reports of KPMG for such periods state that such reports are based on the
reports of other accountants with respect to interim financial information of
United Defense, L.P. With respect to the unaudited interim financial
information of United Defense, L.P., for the periods ended March 31, 1995 and
1994, June 30, 1995 and 1994 and September 30, 1995 and 1994, Ernst & Young
has reported that they applied limited procedures in accordance with
professional standards for a review of such information. However, the separate
reports of KPMG and Ernst & Young included in the Company's Quarterly reports
on Form 10-Q for the quarters ended March 31, 1995, June 30, 1995 and
September 30, 1995, and incorporated by reference herein, state that they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. Neither KPMG nor Ernst & Young is subject to the liability
provisions of Section 11 of the Securities Act for their reports on the
unaudited interim financial information because neither report is a "report"
or a "part" of the Registration Statement prepared or certified by the
accountants within the meaning of Sections 7 and 11 of the Securities Act.
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