<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN GREETINGS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
OHIO 34-0065325
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
ONE AMERICAN ROAD, OHIO 44144 (216) 252-7300
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(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JON GROETZINGER, JR.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
AMERICAN GREETINGS CORPORATION
ONE AMERICAN ROAD
CLEVELAND, OHIO 44144
(216) 252-7300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
STANLEY E. EVERETT EARL D. WEINER
BROUSE & MCDOWELL SULLIVAN & CROMWELL
500 FIRST NATIONAL TOWER 125 BROAD STREET
AKRON, OHIO 44114 NEW YORK, NEW YORK 10004
(330) 535-5711 (212) 558-4000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of the Registration Statement and after
compliance with applicable state and federal laws.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED
PROPOSED MAXIMUM MAXIMUM
TITLE OF SECURITY AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Debt Securities................... $600,000,000 100% $600,000,000 $177,000
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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<PAGE> 2
Information contained herein 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 the registration statement becomes
effective. This 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.
SUBJECT TO COMPLETION, DATED MAY 20, 1998
$600,000,000
AMERICAN GREETINGS CORPORATION
DEBT SECURITIES
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American Greetings Corporation (the "Company") may from time to time offer
Debt Securities consisting of debentures, notes and/or other unsecured evidences
of indebtedness (the "Debt Securities") in one or more series at an aggregate
initial offering price not to exceed $600,000,000 or its equivalent in any other
currency or composite currency. The Debt Securities may be offered as separate
series in amounts, at prices and on terms to be determined at the time of sale.
The accompanying Prospectus Supplement sets forth with regard to the series of
Debt Securities in respect of which this Prospectus is being delivered the
title, aggregate principal amount, denominations (which may be in United States
dollars, in any other currency or in a composite currency), maturity, rate, if
any (which may be fixed or variable), and time of payment of any interest, any
terms for redemption at the option of the Company or the holder, any terms for
sinking fund payments, any listing on a securities exchange and the initial
public offering price and any other terms in connection with the offering and
sale of such series of Debt Securities.
The Company may sell Debt Securities to or through underwriters, and also
may sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include Goldman, Sachs & Co., or may be a group of underwriters
represented by firms including Goldman, Sachs & Co. Goldman, Sachs & Co. may
also act as agents. See "Plan of Distribution". The accompanying Prospectus
Supplement sets forth the names of any underwriters or agents involved in the
sale of the Debt Securities in respect of which this Prospectus is being
delivered, the principal amounts, if any, to be purchased by underwriters and
the compensation, if any, of such underwriters or agents.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
The date of this Prospectus is , 1998.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Debt Securities. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Debt Securities, reference is hereby made to such Registration
Statement, including the exhibits filed as part thereof.
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 Commission. The
Registration Statement (with exhibits), as well as such reports, proxy
statements and other information, can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. Such reports, proxy statements and other
information filed by the Company also are available for inspection and copying
at the Commission's Regional Offices located at: Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and at Seven World
Trade Center, 13th Floor, New York, New York 10048-1102. Copies of such material
also may be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
copies of such material and other information about the Company are available
for inspection at the New York Stock Exchange, 20 Broad Street, New York, New
York 10005. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates the following documents in this Prospectus
by reference: (a) the Company's Annual Report on Form 10-K for the fiscal year
ended February 28, 1998; and (b) the Company's Form 8-A Registration Statement
filed with the Commission on February 6, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference herein and to be 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 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 as modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide, without charge, to each person to
whom this Prospectus is delivered, upon written or oral request of such person,
a copy of any and all of the documents referred to above which have been or may
be incorporated by reference herein, other than exhibits thereto (unless such
exhibits are specifically incorporated by reference in such documents). Requests
for such copies should be directed to Jon Groetzinger, Jr., Senior Vice
President, General Counsel and Secretary, American Greetings Corporation, One
American Road, Cleveland, Ohio 44144; telephone (216) 252-7300.
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<PAGE> 4
THE COMPANY
American Greetings Corporation (the "Company"), through its divisions and
subsidiaries, is primarily engaged in the design, manufacture and sale of
everyday and seasonal greeting cards and other social expression products (gift
wrap, party goods, candles, balloons, stationery and related items). The
Company's products are sold primarily through a global network of approximately
100,000 retail outlets worldwide. In addition, the Company licenses its designs
to various foreign licensees, so that in total, the Company's products and
designs are available in more than 84 nations around the world. Sales to the
Company's five largest customers accounted for approximately 32.6% of net sales
in its most recently completed fiscal year. Sales to retail customers are made
through approximately 22 sales offices in the United States, Canada, United
Kingdom, Australia, New Zealand, France, Mexico and South Africa. During fiscal
year 1998, the Company's major channel of distribution continued to be mass
retail (comprising mass merchandisers, chain drug stores and supermarkets), in
which it is the social expression industry leader. Other channels of
distribution include card and gift shops, combo stores (stores combining food,
general merchandise and drug items), military post exchanges, variety stores and
department stores.
The greeting card and gift wrap industry is intensely competitive.
Competitive factors include quality, design, customer service and terms, which
may include payments and other concessions to retail customers under long-term
agreements. The Company estimates there are 500 companies in the industry. The
Company's principal competitors are Hallmark Cards, Incorporated and Gibson
Greetings, Inc. Based upon its general familiarity with the greeting card and
gift wrap industry and limited information as to its competitors, the Company
believes that it is the second largest company in the industry and the largest
publicly owned company in the industry.
Production of the Company's products is generally on a level basis
throughout the year. Everyday inventories remain relatively constant throughout
the year, while seasonal inventories peak in advance of each major holiday
season, including Christmas, Valentine's Day, Easter, Mother's Day, Father's Day
and Graduation. Also characteristic of the business, accounts receivable for
seasonal merchandise are carried for relatively long periods since products are
normally shipped three to five months prior to a holiday. Payments for seasonal
shipments are generally received during the month in which the major holiday
occurs, or shortly thereafter. Extended payment terms may also be offered in
response to competitive situations with individual customers. The Company and
many of its competitors sell seasonal greeting cards with the right of return.
The Company was incorporated under the laws of the State of Ohio in 1944.
The principal executive offices of the Company are located at One American Road,
Cleveland, Ohio 44114; its telephone number is (216) 252-7300.
USE OF PROCEEDS
Unless otherwise specified in a Prospectus Supplement, the net proceeds
from the sale of the Debt Securities will be added to the Company's general
corporate funds and may be used to repay short-term debt, fund share
repurchases, finance acquisitions and invest in subsidiaries. Prior to such
application, all or a portion of the net proceeds may be invested in short-term
investments.
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<PAGE> 5
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown.
<TABLE>
<CAPTION>
YEAR ENDED FEBRUARY 28 OR 29,
--------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.......................... 7.45 8.18 6.04 7.16 9.74
</TABLE>
The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings plus fixed charges. For purposes of determining this
ratio, earnings have been calculated by adding income before income taxes and
the cumulative effect of accounting changes to the undistributed income or loss
of affiliates that are not wholly-owned and which are accounted for on an equity
basis. Fixed charges consist of interest expense and the estimated interest
component of rent expense.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may not apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities are to be issued under an Indenture (the "Indenture")
between the Company and NBD Bank, as Trustee (the "Trustee"), a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series, or of Debt Securities forming a part of a
series, which are offered by a Prospectus Supplement will be described in such
Prospectus Supplement.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indenture, including the definitions
therein of certain terms, and, with respect to any particular Debt Securities,
to the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the Indenture
are referred to herein or in a Prospectus Supplement, such Sections or defined
terms are incorporated by reference herein or therein, as the case may be.
GENERAL
The Indenture will provide that Debt Securities in separate series may be
issued thereunder from time to time without limitation as to aggregate principal
amount. The Company may specify a maximum aggregate principal amount for the
Debt Securities of any series. (Section 301) The Debt Securities are to have
such terms and provisions which are not inconsistent with the Indenture,
including those as to maturity, principal and interest, as the Company may
determine. The Debt Securities will be unsecured obligations of the Company and,
unless otherwise provided in the Prospectus Supplement, will rank on a parity
with all other unsecured and unsubordinated indebtedness of the Company.
The applicable Prospectus Supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe the
following terms of such Debt Securities: 1) the title of such Debt Securities;
2) any limit on the aggregate principal amount of such Debt Securities or the
series of which they are a part; 3) the date or dates on which the principal of
any of such Debt Securities will be payable; 4) the rate or rates at which any
of such Debt Securities will bear interest, if any, the date or dates from which
any such interest will accrue, the Interest Payment Dates on which any such
interest will be payable and the Regular Record Date for any such interest
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payable on any Interest Payment Date; 5) the place or places where the principal
of and any premium and interest on any of such Debt Securities will be payable;
6) the period or periods within which, the price or prices at which and the
terms and conditions on which any of such Debt Securities may be redeemed, in
whole or in part, at the option of the Company; 7) the obligation, if any, of
the Company to redeem or purchase any of such Debt Securities pursuant to any
sinking fund or analogous provision or at the option of the Holder thereof, and
the period or periods within which, the price or prices at which and the terms
and conditions on which any of such Debt Securities will be redeemed or
purchased, in whole or in part, pursuant to any such obligation; 8) the
denominations in which any of such Debt Securities will be issuable, if other
than denominations of $1,000 and any integral multiple thereof; 9) if the amount
of principal of or any premium or interest on any of such Debt Securities may be
determined with reference to an index or pursuant to a formula, the manner in
which such amounts will be determined; 10) if other than the currency of the
United States of America, the currency, currencies or currency units in which
the principal of or any premium or interest on any of such Debt Securities will
be payable (and the manner in which the equivalent of the principal amount
thereof in the currency of the United States of America is to be determined for
any purpose, including for the purpose of determining the principal amount
deemed to be Outstanding at any time); 11) if the principal of or any premium or
interest on any of such Debt Securities is to be payable, at the election of the
Company or the Holder thereof, in one or more currencies or currency units other
than those in which Debt Securities are stated to be payable, the currency,
currencies or currency units in which payment of any such amount as to which
such election is made payable, the periods within which and the terms and
conditions upon which such election is to be made and amount so payable (or the
manner in which such amount is to be determined); 12) if other than the entire
principal amount thereof, the portion of the principal amount of any of such
Debt Securities which will be payable upon declaration of acceleration of the
Maturity thereof; 13) if the principal amount payable at the Stated Maturity of
any of such Debt Securities will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount of which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any Maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined); 14) if applicable, that such Debt Securities, in whole or any
specified part, are defeasible pursuant to the provisions of the indenture
described under "Defeasance and Covenant Defeasance--Defeasance and Discharge"
or "Defeasance and Covenant Defeasance--Covenant Defeasance", or under both such
captions; 15) whether any of such Debt Securities will be issuable in whole or
in part in the form of one or more Global Securities and, if so, the respective
Depositories for such Global Securities, the form of any legend or legends to be
borne by any such Global Security in addition to or in lieu of the legend
referred to under "Form, Exchange and Transfer--Global Securities" and, if
different from those described under such caption, any circumstances under which
any such Global Security may be exchanged in whole or in part for Debt
Securities registered; and any transfer of such Global Security in whole or in
part may be registered, in the name of Persons other than the Depositary for
such Global Security; or its nominee; 16) any addition to or change in the
Events of Default applicable to any of such Debt Securities and any change in
the right of the Trustee or the Holders to declare the principal amount of any
such Debt Securities due and payable; 17) any addition to or change in the
covenants in the Indenture described under "Certain Restrictive Covenants"
applicable to any of such Debt Securities; and 18) any other term of such Debt
Securities not inconsistent with the provisions of the Indenture. (Section 301)
Securities, including Original Issue Discount Securities, may be sold at a
substantial discount below their principal amount. Certain special United States
federal income tax considerations (if any) applicable to Securities sold at an
original issue discount may be described in the applicable Prospectus
Supplement. In addition, certain special United States federal income tax or
other considerations (if any) applicable to any Securities which are denominated
in a currency or
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currency unit other than United States dollars may be described in the
applicable Prospectus Supplement.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully
registered form, without coupons, and, unless otherwise specified in the
applicable Prospectus Supplement, only in denominations of $1,000 and integral
multiples thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Debt Securities of each series will
be exchangeable for other Debt Securities of the same series of any authorized
denomination and of a like tenor and aggregate principal amount. (Section 305)
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security Registrar
or at the office of any transfer agent designated by the Company for such
purpose. No service charge will be made for any registration or transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in addition
to the Security Registrar) initially designated by the Company for any Debt
Securities will be named in the applicable Prospectus Supplement. (Section 305)
The Company may at any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the office through
which any transfer agent acts, except that the Company will be required to
maintain a transfer agent in each Place of Payment for the Debt Securities of
each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified terms)
are to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of or exchange any Security of that series (or of that
series and specified terms, as the case may be) during a period beginning at the
opening of business 15 days before the day of mailing of a notice of redemption
of any such Security that may be selected for redemption and ending at the close
of business on the day of such mailing or (ii) register the transfer of or
exchange any Security so selected for redemption, in whole or in part, except
the unredeemed portion of any such Security being redeemed in part. (Section
305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities represented thereby. Each
Global Security will be registered in the name of a Depositary or a nominee
thereof identified in the applicable Prospectus Supplement, will be deposited
with such Depositary or nominee or a custodian therefor and will bear a legend
regarding the restrictions on exchanges and registration of transfer thereof
referred to below and any such other matters as may be provided for pursuant to
the Indenture.
Notwithstanding any provision of the Indenture or any Security described
herein, no Global Security may be exchanged in whole or in part for Debt
Securities registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the Depositary for such
Global Security or any nominee of such Depositary unless (i) the Depositary has
notified the Company that it is unwilling or unable to continue as Depositary
for such Global Security or has ceased to be qualified to act as such as
required by the Indenture, (ii) there shall have occurred and be continuing an
Event of Default with respect to the Debt Securities represented by such Global
Security or (iii) there shall exist such circumstances, if any, in addition to
or in lieu of those described above as may be described in the applicable
Prospectus Supplement. All securities
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issued in exchange for a Global Security or any portion thereof will be
registered in such names as the Depositary may direct. (Sections 204 and 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indenture. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered to
be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the Indenture.
All payments of principal of and any premium and interest on a Global Security
will be made to the Depositary or its nominee, as the case may be, as the Holder
thereof. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. These
laws may impair the ability to transfer beneficial interests in a Global
Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) or any such participant (with respect
to interests of persons held by such participants on their behalf). Payments,
transfers, exchanges and other matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by the
Depositary from time to time. None of the Company, the Trustee or any agent of
the Company or the Trustee will have any responsibility or liability for any
aspect of the Depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in a Global Security, or for
maintaining supervising or reviewing any records relating to such beneficial
interests.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Security, in some cases, may trade in the Depositary's same-day
funds settlement system, in which secondary market trading activity in those
beneficial interests would be required by the Depositary to settle in
immediately available funds. There is no assurance as to the effect, if any,
that settlement in immediately available funds would have on trading activity in
such beneficial interests. Also, settlement for purchases of beneficial
interests in a Global Security upon the original issuance thereof may be
required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as
the Company may designate for such purpose from time to time, except that at the
option of the Company payment of any interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Security
Register. Unless otherwise indicated in the applicable Prospectus Supplement,
the corporate trust
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office of the Trustee in The City of New York will be designated as the
Company's sole Paying Agent for payments with respect to Debt Securities of each
series. Any other Paying Agents initially designated by the Company for the Debt
Securities of a particular series will be named in the applicable Prospectus
Supplement. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each Place of Payment for the Debt Securities of a
particular series. (Section 1002)
All monies paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Security which remain unclaimed
at the end of two years after such principal, premium or interest has become due
and payable will be repaid to the Company, and the Holder of such Security
thereafter may look only to the Company for payment thereof. (Section 1003)
CERTAIN RESTRICTIONS
Limitations on Secured Debt
The Company will not, and will not permit any Restricted Subsidiary to,
incur or guarantee any debt secured by a Mortgage on any of the assets of the
Company or any Restricted Subsidiary, without making effective provision for
securing the Debt Securities (and, if the Company so elects, any indebtedness
ranking equally with the Debt Securities) equally and ratably with or prior to
such Secured Debt. These covenants will not apply to debt secured by (a)
Mortgages on property existing at the time acquired or on property of any
corporation existing at the time it becomes a Subsidiary, (b) purchase money
Mortgages, (c) Mortgages on property in favor of the United States or any state
thereof, or any other country, or any political subdivision of any of the
foregoing, to secure payments pursuant to any contract or statute or to secure
any indebtedness incurred for the purpose of financing all or any part of the
purchase price or the cost of construction of the property subject to such
Mortgages, (d) Mortgages securing indebtedness owing to the Company or a
Wholly-owned Restricted Subsidiary, (e) Mortgages in connection with an issuance
of revenue bonds the interest on which is exempt from federal income tax
pursuant to Section 103(b) of the Internal Revenue Code of 1986, as amended, or
(f) extensions, renewals or replacements of any of the foregoing.
Notwithstanding these covenants, the Company and its Restricted Subsidiaries may
incur or guarantee any Secured Debt which would otherwise be subject to the
foregoing restrictions, provided that after giving effect thereto the sum of (i)
the aggregate amount of Secured Debt then outstanding (not including Secured
Debt permitted under the foregoing exceptions), (ii) the aggregate value of Sale
and Leaseback Transactions (as defined) at such time (exclusive of any Sale and
Leaseback Transactions described in (b), (c) and (d) under "Limitations on Sale
and Leasebacks" below) and (iii) the aggregate principal amount of all unsecured
Funded Debt of Restricted Subsidiaries (exclusive of any such unsecured Funded
Debt owed to the Company or a Wholly-owned Restricted Subsidiary or any such
unsecured Funded Debt existing at the time such Restricted Subsidiary first
became a Restricted Subsidiary) then outstanding does not exceed 5% of
Consolidated Net Tangible Assets. (Section 1008)
Limitations on Sale and Leasebacks
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any arrangement with any lender or investor providing for the leasing
to the Company or a Restricted Subsidiary of any real property (except for
certain leases for a temporary period of not more than three years) which has
been or is to be sold or transferred by the Company or such Restricted
Subsidiary more than 120 days after the date of acquisition thereof to such
lender or investor or to any person to whom funds have been or are to be
advanced by such lender or investor on the security of such real property (a
"Sale and Leaseback Transaction"), except if (a) the Company or such Restricted
Subsidiary could create Secured Debt pursuant to the provisions described under
"Limitations on Secured Debt" above, without equally and ratably securing the
Debt Securities of
8
<PAGE> 10
any series, in an amount equal to the value of such Sale and Leaseback
Transaction, (b) an amount equal to the proceeds of sale or the fair value of
the property so leased (whichever is higher) is applied to the retirement of
Funded Debt of the Company (with provision for a credit in certain cases for
Debt Securities otherwise acquired or retired), (c) such Sale and Leaseback
Transaction is in connection with an issuance of revenue bonds, the interest on
which is exempt from federal income tax pursuant to Section 103(b) of the
Internal Revenue Code of 1986, as amended, or (d) the Company applies the net
proceeds from the sale of the property so leased to the purchase of properties,
facilities or equipment to be used for operating purposes. (Section 1009)
Limitations on Unsecured Funded Debt of Restricted Subsidiaries
The Company will not permit any Restricted Subsidiary to incur or guarantee
any unsecured Funded Debt, except unsecured Funded Debt (a) owed to the Company
or any Wholly-owned Restricted Subsidiary, (b) existing at the time such
Restricted Subsidiary first became a Restricted Subsidiary, (c) which was
unsecured Funded Debt of any corporation existing at the time of merger or
consolidation with a Restricted Subsidiary, or (d) incurred for the purpose of
renewing or refunding unsecured Funded Debt permitted under clauses (b) and (c).
Notwithstanding the foregoing, a Restricted Subsidiary may incur or guarantee
unsecured Funded Debt if the Company or such Restricted Subsidiary could create
Secured Debt pursuant to the provisions described under "Limitations on Secured
Debt" above in an amount equal to such unsecured Funded Debt, without equally
and ratably securing the Debt Securities of any series. (Section 1010)
CERTAIN DEFINITIONS
"Consolidated Net Tangible Assets" is defined as (a) the total amount of
assets (less applicable reserves and other properly deductible items) which
under generally accepted accounting principles would be included on a
consolidated balance sheet of the Company and its Restricted Subsidiaries after
deducting therefrom (i) all current liabilities (excluding any portion which is
renewable or extendable at the option of the obligor to a time more than 12
months after the date of computation) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, which in each case under generally accepted accounting principles
would be included on a consolidated balance sheet of the Company and its
Restricted Subsidiaries, less (b) the amount which would be so included on such
consolidated balance sheet for Investments (less applicable reserves) in
Unrestricted Subsidiaries.
"Funded Debt" is defined as (i) all indebtedness which matures, or which is
renewable or extendible at the option of the obligor to a time, more than 12
months after the time of computation and all guarantees thereof, and (ii) all
Preferred Stock of any Subsidiary. Indebtedness will not include obligations
under leases, or guarantees thereof, whether or not shown on a balance sheet as
liability items. The Company or any Restricted Subsidiary will be deemed to have
assumed Funded Debt secured by any Mortgage upon its property or assets whether
or not it has actually done so.
"Unrestricted Subsidiary" is defined to include foreign Subsidiaries or
Subsidiaries in territories or possessions of the United States or leasing, real
estate or financing Subsidiaries. All other Subsidiaries will be Restricted
Subsidiaries. In addition, Unrestricted Subsidiaries may become Restricted
Subsidiaries by designation of the Board of Directors; however, any such
designation may be terminated thereafter by the Board of Directors if, but only
if, immediately thereafter the Company could create additional Secured Debt
pursuant to the provisions described above under "Certain
Restrictions--Limitations on Secured Debt" without equally and ratably securing
the Debt Securities. (Section 101)
9
<PAGE> 11
MERGER AND CONSOLIDATION
The Indenture will provide that the Company may consolidate with or merge
into any other corporation, or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, or may permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, provided that
in any such case (i) the successor corporation shall be a domestic corporation
and such corporation shall assume by a supplemental indenture the Company's
obligations under the Indenture, (ii) immediately after giving effect to such
transaction, no default shall have occurred and be continuing and (iii) if, as a
result of such transaction, properties or assets of the Company would become
subject to a Mortgage that would be prohibited pursuant to the provisions
described under "Certain Restrictions--Limitations on Secured Debt" above, the
Company or its successor will secure the Debt Securities equally and ratably
with (or prior to) all Indebtedness secured thereby. Upon compliance with these
provisions by a successor to the Company, the Company, (except in the case of a
lease) is relieved of its obligations under the Indenture and the Debt
Securities of any series. (Sections 801 and 802)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due; (b)
failure to pay any interest on any Debt Securities of that series when due,
continued for 30 days; (c) failure to deposit any sinking fund payment, when
due, in respect of any Debt Security of that series; (d) failure to perform any
other covenant of the Company in the Indenture (other than a covenant included
in the Indenture solely for the benefit of a series other than that series),
continued for 60 days after written notice has been given the Trustee, or the
Holders of at least 10% in principal amount of the Outstanding Securities of
that series, as provided in the Indenture; (e) acceleration of the maturity of
any indebtedness for money borrowed by the Company in excess of $20 million, if
such acceleration has not been rescinded or annulled, within 10 days after
written notice has been given by the Trustee, or the Holders of not less than
25% in principal amount of the Outstanding Securities of that series, as
provided in the Indenture, and (f) certain events in bankruptcy, insolvency or
reorganization. (Section 501)
If an Event of Default (other than an Event of Default described in clause
(f) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Securities of that
series by notice as provided in the Indenture may declare the principal amount
of the Debt Securities of that series (or, in the case of any Debt Security that
is an Original Issue Discount Security or the principal amount of which is not
then determinable, such portion of the principal amount of such Debt Security,
or such other amount in lieu of such principal amount, as may be specified in
the terms of such Debt Security) to be due and payable immediately. If an Event
of Default described in clause (f) above with respect to the Debt Securities of
any series at the time Outstanding shall occur, the principal amount of all the
Debt Securities of that series (or, in the case of any such Original Issue
Discount Security or other Debt Security, such specified amount) will
automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. After any such acceleration, but before a judgment
or decree based on acceleration, the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of that series may, under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the nonpayment of accelerated principal (or other specified
amount), have been cured or waived as provided in the Indenture. (Section 502)
For information as to waiver of defaults, see "Modification and Waiver".
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such
10
<PAGE> 12
Holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Debt Securities
of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Debt Securities
of that series. (Section 512)
No Holder of a Security of any series will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or a trustee, or for any other remedy thereunder, unless (i) such Holder has
previously given to the Trustee written notice of a continuing Event of Default
with respect to the Debt Securities of that series, (ii) the Holders of at least
25% in aggregate principal amount of the Outstanding Debt Securities of that
series have made written request, and such Holder or Holders have offered
reasonable indemnity to the Trustee to institute such proceeding as trustee and
(iii) the Trustee has failed to institute such proceeding, and has not 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,
within 60 days after such notice, request and offer. (Section 507) However, such
limitations do not apply to a suit instituted by a Holder of a Debt Security for
the enforcement of payment of the principal of or any premium or interest on
such Security on or after the applicable due date specified in such Debt
Security. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of 66 2/3% in aggregate
principal amount of the Outstanding Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, (b) reduce the
principal amount of, or any premium or interest on, any Security, (c) reduce the
amount of principal of an Original Issue Discount Security or any other Security
payable upon acceleration of the Maturity thereof, (d) change the place or
currency of payment of principal of, or any premium or interest on, any
Security, (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any Security, (f) reduce the percentage in
principal amount of Outstanding Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indenture, (g) reduce
the percentage in principal amount of Outstanding Securities of any series
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults or (h) modify such provisions with respect to
modification and waiver. (Section 902)
Holders of 66 2/3% in principal amount of the Outstanding Securities of any
series may waive compliance by the Company with certain restrictive provisions
of the Indenture. (Section 1011) The Holders of a majority in principal amount
of the Outstanding Securities of any series may waive any past default under the
Indenture except a default in the payment of principal, premium or interest and
certain covenants and provisions of the Indenture which cannot be amended
without the consent of the Holder of each Outstanding Debt Security of such
series affected. (Section 513)
The Indenture will provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver or other action under the Indenture
as of any date, (i) the principal amount of an Original Issue Discount Security
that will be deemed to be Outstanding will be the amount of the principal
11
<PAGE> 13
thereof that would be due and payable as of such date upon acceleration of the
Maturity thereof to such date, (ii) if, as of such date, the principal amount
payable at the Stated Maturity of a Debt Security is not determinable (for
example, because it is based on an index), the principal amount of such Debt
Security deemed to be Outstanding as of such date will be an amount determined
in the manner prescribed for such Debt Security and (iii) the principal amount
of a Debt Security denominated in one or more foreign currencies or currency
units that will be deemed to be Outstanding will be the U.S. dollar equivalent,
determined as of such date in the manner prescribed for such Debt Security, of
the principal amount of such Debt Security (or, in the case of a Debt Security
described in clause (i) or (ii) above, of the amount described in such clause).
Certain Debt Securities, including those for whose payment or redemption money
has been deposited or set aside in trust for the Holders and those that have
been fully defeased pursuant to Section 1302, will not be deemed to be
Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled to
set any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled to give or take any
direction, notice, consent, waiver or other action under the Indenture, in the
manner and subject to the limitations provided in the Indenture. In certain
limited circumstances, the Trustee will be entitled to set a record date for
action by Holders. If a record date is set for any action to be taken by Holders
of a particular series, such action may be taken only by persons who are Holders
of Outstanding Debt Securities of that series of the record date. To be
effective, such action must be taken by Holders of the requisite principal
amount of such Debt Securities within a specified period following the record
date. For any particular record date, this period will be 180 days or such
shorter period as may be specified by the company (or the Trustee, if it set the
record date), and may be shortened or lengthened (but not beyond 180 days) from
time to time. (Section 104)
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of Section
1302, relating to defeasance and discharge of indebtedness, or Section 1303,
relating to defeasance of certain restrictive covenants in the Indenture,
applied to the Debt Securities of any series, or to any specified part of a
series. (Section 1301)
Defeasance and Discharge
The Indenture will provide that, upon the Company's exercise of its option
(if any) to have Section 1302 applied to any Debt Securities, the Company will
be discharged from all its obligations with respect to such Debt Securities
(except for certain obligations to exchange or register the transfer of Debt
Securities, to replace stolen, lost or mutilated Debt Securities, to maintain
paying agencies and to hold moneys for payment in trust) upon the deposit in
trust for the benefit of the Holders of such Debt Securities of money or U.S.
Government Obligations, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay the principal of and any premium and interest on
such Debt Securities on the respective Stated Maturities in accordance with the
terms of the Indenture and such Debt Securities. Such defeasance or discharge
may occur only if, among other things, the Company has delivered to the Trustee
an Opinion of Counsel to the effect that the Company has received from, or there
has been published by the United States Internal Revenue Service a ruling, or
there has been a change in tax law, in either case to the effect that Holders of
such Debt Securities will not recognize gain or loss for federal income tax
purposes as a result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit defeasance and discharge
were not to occur. (Sections 1302 and 1304)
12
<PAGE> 14
Defeasance of Certain Covenants
The Indenture will provide that, unless such provision is made inapplicable
to the Debt Securities of any series pursuant to Section 301 of the Indenture
which will be indicated in the Prospectus Supplement applicable thereto, the
Company may omit to comply with certain restrictive covenants, including those
described under "Certain Restrictions" above and certain restrictions described
under "Consolidation, Merger and Sale of Assets" above and any that may be
described in the applicable Prospectus Supplement, and the occurrence of certain
Events of Default, which are described above in clause (d) (with respect to such
restrictive covenants) and clause (e) under "Events of Default" and any that may
be described in the applicable Prospectus Supplement, will be deemed not to be
or result in an Event of Default, in each case with respect to such Debt
Securities. The Company, in order to exercise such option, will be required to
deposit, in trust for the benefit of the Holders of such Debt Securities, money
or U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and any premium and
interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the Indenture and such Debt Securities. The Company
will also be required, among other things, to deliver to the Trustee an Opinion
of Counsel to the effect that Holders of such Debt Securities will not recognize
gain or loss for federal income tax purposes as a result of such deposit and
defeasance amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance were not to occur. In the event the
Company exercises this option with respect to any Debt Securities and such Debt
Securities are declared due and payable because of the occurrence of any Event
of Default, the amount of money and U.S. Government Obligations so deposited in
trust would be sufficient to pay amounts due on such Debt Securities at the time
of their respective Stated Maturities but may not be sufficient to pay amounts
due on such Debt Securities upon any acceleration resulting from such Event of
Default. In such case, the Company would remain liable for such payments.
(Sections 1303 and 1304)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they may appear in the Security Register. (Sections
101 and 106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the purpose
of making payment and for all other purposes. (Section 308)
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 112)
REGARDING THE TRUSTEE
The Trustee and its affiliates provide credit to the Company and its
subsidiaries from time to time. The largest amount of indebtedness allowed, but
not fully utilized, to the Company and its subsidiaries from the Trustee and its
affiliates at any time during 1997 was $238,810,000. Additionally, affiliates of
the Trustee provide other banking services to the Company and its subsidiaries,
including cash management, letters of credit, foreign exchange, loans, and trade
letters of credit. The Company anticipates that it and its subsidiaries will
continue to conduct banking transactions with, and utilize other banking
services of, the Trustee and affiliates of the Trustee in the normal course of
their business.
13
<PAGE> 15
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters and may
also sell Debt Securities directly to other purchasers or through agents. Such
underwriters may include Goldman, Sachs & Co. or a group of underwriters
represented by firms including one or more of Goldman, Sachs & Co. Goldman,
Sachs & Co. may also act as agents.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sales of Debt Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Debt Securities for
whom they may act as agents in the form of discounts, concessions or
commissions. Underwriters may sell Debt Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them and any profit on the resale of Debt
Securities by them may be deemed to be underwriting discounts and commissions,
under the Securities Act. Any such underwriter or agent will be identified, and
any such compensation received from the Company will be described, in the
Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Debt Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Debt Securities from the Company pursuant to
contracts providing for payment and delivery on a future date. Institutions with
which such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under any such contract will be
subject to the condition that the purchase of the Offered Debt Securities shall
not at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and such other agents will not
have any responsibility in respect of the validity or performance of such
contracts.
Goldman, Sachs & Co. has acted as financial advisor to the Company and has
performed services in connection with the underwriting and sale of securities on
behalf of the Company for which it has received fees. The Company anticipates
that Goldman, Sachs & Co. will provide similar services in the future.
VALIDITY OF DEBT SECURITIES
Unless otherwise specified in a Prospectus Supplement, the validity of the
Debt Securities will be passed upon for the Company by Brouse & McDowell, Akron,
Ohio, and, if sold to or through underwriters, by Sullivan & Cromwell, New York,
New York.
EXPERTS
The consolidated financial statements and schedule of the Company appearing
in the Company's Annual Report on Form 10-K for its fiscal year ended February
28, 1998, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedule are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
14
<PAGE> 16
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses payable by the
Registrant in connection with the issuance and distribution of the Debt
Securities, other than underwriting discounts and commissions. All the amounts
shown are estimates, except for the Commission registration fee which is the
actual amount paid in connection with the registration of the $600,000,000
principal amount of Debt Securities being registered under this Registration
Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $177,000
Blue Sky fees and expenses.................................. *
Accounting fees and expenses................................ *
Printing fees and expenses.................................. *
Legal fees and expenses..................................... *
Trustee fees and expenses................................... *
Miscellaneous............................................... *
--------
Total..................................................... $ *
========
</TABLE>
- ---------------
* To be completed by Amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1701.13(E) of the Ohio Revised Code authorizes the indemnification
of officers and directors in defense of any civil, criminal, administrative or
investigative proceeding. Article IV of the Regulations of the Company provides
for indemnification in terms consistent with the statutory authority, and the
Company maintains insurance covering certain liabilities of the directors and
the elected and appointed officers of the Company and its subsidiaries,
including liabilities under the Securities Act.
ITEM 16. EXHIBITS.
See the Exhibit Index at page E-1 of this Registration Statement.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement.
II-1
<PAGE> 17
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Security
Exchange Act of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of the registrant in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Cleveland and State of Ohio, as of the 20th day of
May, 1998.
AMERICAN GREETINGS CORPORATION
By: /s/ DALE A. CABLE
----------------------------------
Dale A. Cable
Vice President,
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 20, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ IRVING I. STONE Founder-Chairman; Chairman of the Executive
- -------------------------------------------- Committee; Director
Irving I. Stone
/s/ MORRY WEISS Chairman of the Board; Chief Executive
- -------------------------------------------- Officer; Director
Morry Weiss
/s/ EDWARD FRUCHTENBAUM* President; Chief Operating Officer; Director
- --------------------------------------------
Edward Fruchtenbaum
/s/ SCOTT S. COWEN* Director
- --------------------------------------------
Scott S. Cowen
/s/ HERBERT H. JACOBS* Director
- --------------------------------------------
Herbert H. Jacobs
/s/ ALBERT B. RATNER Director
- --------------------------------------------
Albert B. Ratner
/s/ HARRY H. STONE Director
- --------------------------------------------
Harry H. Stone
Director
- --------------------------------------------
Jeanette S. Wagner
/s/ MILTON A. WOLF Director
- --------------------------------------------
Milton A. Wolf
/s/ WILLIAM S. MEYER Senior Vice President; Chief Financial
- -------------------------------------------- Officer (principal financial officer)
William S. Meyer
/s/ PATRICIA L. RIPPLE Vice President; Corporate Controller
- -------------------------------------------- (principal accounting officer)
Patricia L. Ripple
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on behalf of each of the Officers and Directors of
American Greetings Corporation indicated by an "*" above, pursuant to Powers
of Attorney executed by each such Officer or Director and filed with the
Securities and Exchange Commission as an exhibit to this Registration
Statement.
/s/ JON GROETZINGER, JR.
- ------------------------------------
Jon Groetzinger, Jr., Esq.
Attorney-in-fact
May 20, 1998
II-3
<PAGE> 19
AMERICAN GREETINGS CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
DOCUMENT
NUMBER DOCUMENT NAME
- -------- -------------
<C> <S>
1.1 Form of Underwriting Agreement*
4.1 Form of Trust Indenture by and between the Company and NBD
Bank*
4.2 Form of Debt Securities (included in Exhibit 4.1)*
5.1 Opinion of Brouse & McDowell as to the validity of the Debt
Services*
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Independent Auditors
23.2 Consent of Brouse & McDowell (included in Exhibit 5.1)
24.1 Power of Attorney*
25.1 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of NBD Bank
</TABLE>
- ---------------
*To be filed by Amendment
<PAGE> 1
Exhibit 12.1
AMERICAN GREETINGS CORPORATION
COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES
(Dollars in Thousands)
<TABLE>
<CAPTION>
FISCAL YEAR
-----------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
FIXED CHARGES:
<S> <C> <C> <C> <C> <C>
Interest expense ..................................................... $ 16,897 $ 16,871 $ 24,290 $ 30,749 $ 22,992
Estimated interest component of rental expense........................ 15,580 14,815 11,198 10,361 10,467
-------- -------- -------- -------- --------
Fixed Charges ........................................................ $ 32,477 $ 31,686 $ 35,488 $ 41,110 $ 33,459
======== ======== ======== ======== ========
<CAPTION>
FISCAL YEAR
-----------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
EARNINGS:
<S> <C> <C> <C> <C> <C>
Consolidated earnings before income taxes
and cumulative efect of accounting changes......................... $209,414 $227,163 $175,009 $254,330 $292,437
Loss (profit) on equity investment ................................... (92) 321 3,720 (1,138) -
Fixed charges, per above ............................................. 32,477 31,686 35,488 41,110 33,459
-------- --------- -------- -------- --------
Earnings ............................................................. $241,799 $259,170 $214,217 $294,302 $325,896
======== ======== ======== ======== ========
RATIO OF EARNINGS TO FIXED
CHARGES .............................................................. 7.45 8.18 6.04 7.16 9.74
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 No. 333-00000 and related Prospectus of
American Greetings Corporation for the registration of $600,000,000 of debt
securities and to the incorporation by reference therein of our report dated
March 26, 1998, with respect to the consolidated financial statements and
schedule of American Greetings Corporation included in its Annual Report (Form
10-K) for the year ended February 28, 1998, filed with the Securities and
Exchange Commission.
Ernst & Young LLP
Cleveland, Ohio
May 18, 1998
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
-----------------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED,
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)__
--------------------------------------------
NBD BANK
(Exact name of Trustee as specified in its charter)
611 WOODWARD AVENUE
DETROIT, MICHIGAN 48226 38-0864715
(Address of principal (Zip Code) (I.R.S. Employer
executive offices) Identification No.)
AMERICAN GREETINGS CORPORATION
(Exact name of obligor as specified in its charter)
OHIO 34-0065325
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE AMERICAN ROAD
CLEVELAND, OHIO 44144
(Address of principal executive offices) (Zip Code)
DEBT SECURITIES
(Title of Indenture Securities)
1
<PAGE> 2
ITEM 1 GENERAL INFORMATION. Furnish the following information as to
the Trustee:
(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT:
State of Michigan Financial Institutions Bureau,
Lansing, MI Federal Reserve Bank of Chicago, Chicago,
Illinois Federal Deposit Insurance Corporation,
Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE
TRUST POWERS. The Trustee is authorized to
exercise corporate trust powers.
ITEM 2 AFFILIATIONS WITH THE OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE,
DESCRIBE EACH SUCH AFFILIATION. The obligor is not an
affiliate of the Trustee.
ITEM 3 VOTING SECURITIES OF THE TRUSTEE.
The following information is furnished as to each class of
voting securities of the Trustee:
<TABLE>
<CAPTION>
As of March 27, 1998
---------------------------------------------------------------------------------------------
<S> <C> <C>
Column A Column B
---------------------------------------------------------------------------------------------
Title of Class Amount Outstanding
---------------------------------------------------------------------------------------------
Common Stock, par value $12.50 per share 8,948,648 shares
</TABLE>
ITEM 4 TRUSTEESHIPS UNDER OTHER INDENTURES
None
ITEM 5 THROUGH ITEM 15 Not applicable
ITEM 16 LIST OF EXHIBITS:
EXHIBIT (1) A COPY OF THE ARTICLES OF INCORPORATION OF
THE TRUSTEE NOW IN EFFECT
Incorporated by reference to Exhibit (1) to Item
16 of Form T-1 filed as Exhibit 25 to Registration
Statement, Securities and Exchange Commission,
Registration No. 33-51775.*
EXHIBIT (2) CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO
COMMENCE BUSINESS
Incorporated by reference to Exhibit (2) to Item
16 of Form T-1 filed with Amendment No. 1, Securities
and Exchange Commission, Registration No. 22-4501.*
EXHIBIT (3) AUTHORIZATION OF THE TRUSTEE TO EXERCISE
CORPORATE TRUST POWERS Incorporated by reference to Exhibit
(3) to Item 16 of Form T-1 filed with Amendment No. 1,
Securities and Exchange Commission, Registration No. 22-4501.*
2
<PAGE> 3
EXHIBIT (4) BY-LAWS OF THE TRUSTEE, AS PRESENTLY IN EFFECT
Incorporated by reference to Exhibit (4) to Item 16
of Form T-1 filed as Exhibit 25 to Registration Statement,
Securities and Exchange Commission, Registration No.
33-51775.*
EXHIBIT (5) Not Applicable.
EXHIBIT (6) CONSENT BY THE TRUSTEE REQUIRED BY SECTION
321 (B) OF THE ACT.
Incorporated by reference to Exhibit (6) to Item 16 of
Form T-1, filed with Amendment No. 1, Securities and Exchange
Commission, Registration No. 22-4501.*
EXHIBIT (7) A COPY OF THE LATEST REPORT OF
CONDITION OF THE TRUSTEE PUBLISHED PURSUANT TO LAW OR
THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
EXHIBIT (8) Not applicable.
EXHIBIT (9) Not applicable.
* Exhibits thus designated are incorporated herein by reference Exhibits bearing
identical numbers in Item 16 of the Form T-1 filed by the Trustee with the
Securities and Exchange Commission with the specific references noted.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
Trustee, NBD Bank, a Michigan banking corporation organized and existing under
the laws of the State of Michigan, has duly caused this Statement of Eligibility
and Qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Detroit, State of Michigan on the 20th day of
May, 1998.
NBD BANK, Trustee
By: /s/ J. Michael Banas
----------------------------------
J. Michael Banas
Vice President
3
