AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 1998
REGISTRATION NO. 333-
=========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
THE INTERPUBLIC GROUP OF COMPANIES, INC.
(Exact name of registrant as specified in its charter)
---------------
Delaware 13-1024020
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1271 Avenue of the Americas
New York, New York 10020
212-399-8000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
NICHOLAS J. CAMERA, VICE PRESIDENT,
GENERAL COUNSEL & SECRETARY
THE INTERPUBLIC GROUP OF COMPANIES, INC.
1271 Avenue of the Americas
New York, New York 10020
212-399-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
The Commission is requested to mail signed copies of all
orders, notices and communications to:
Theodore H. Paraskevas, Esq. Barry M. Fox, Esq.
The Interpublic Group of Companies, Inc. Cleary, Gottlieb, Steen &
1271 Avenue of the Americas Hamilton
New York, New York 10020 One Liberty Plaza
212-399-8000 New York, New York 10006
212-225-2000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: As soon as practicable after this Registration Statement
becomes effective.
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(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 delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. |_|
<PAGE>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------
Proposed
maximum Proposed
Title of offering maximum Amount of
securities Amount to be price per aggregate registration
to be registered registered security offering price fee
- --------------------------------------------------------------------------
Rights 3,346,500(1) n/a n/a n/a(2)
- --------------------------------------------------------------------------
(1) Plus such additional indeterminate number of Rights as may
become issuable upon issuance of Common Stock, par value
$.10 per share, upon conversion of the Notes by means of
adjustment of the conversion price.
(2) There is no filing fee with respect to the Rights issuable
with the Common Stock issuable upon conversion of the
Registrant's 1.80% Convertible Subordinated Notes due 2004
(the "Notes") registered previously because no additional
consideration will be received in connection with the
exercise of the conversion privilege. Pursuant to Rule 429,
the registration of $250,000,000 aggregate principal amount
at maturity of Notes and 3,346,500 shares of the
Registrant's Common Stock (plus such additional
indeterminate number of shares as may become issuable upon
conversion of the Notes by means of adjustment of the
conversion price), par value $.10 per share, and the filing
fee of $63,425 paid in connection therewith are being
carried forward.
Pursuant to Rule 429 under the Securities Act of 1933, the
Prospectus included in this Registration Statement is a combined
prospectus and relates to registration statement No. 333-42243 as
previously filed on Form S-3.
=========================================================================
<PAGE>
PROSPECTUS
THE INTERPUBLIC GROUP OF
COMPANIES, INC.
$250,000,000 Principal Amount of
1.80% Convertible Subordinated Notes Due 2004
(Interest payable March 16 and September 16)
and
Shares of Common Stock (and Rights) Issuable Upon Conversion Thereof
---------
This Prospectus relates to (i) $250,000,000 aggregate
principal amount at maturity of 1.80% Convertible Subordinated
Notes due 2004 (the "Notes") of the Interpublic Group of
Companies, Inc., a Delaware corporation (the "Company") and (ii)
the shares of common stock, par value $.10 per share (the "Common
Stock"), of the Company issuable upon conversion of the Notes
(the "Shares") and Rights (the "Rights") to purchase Series A
Cumulative Participating Preferred Stock without par value
issuable in certain circumstances with the shares of Common Stock
issuable upon conversion of the Notes. See "Description of
Capital Stock and Rights." References herein to the Common Stock
will generally include the Rights associated therewith. The Notes
and the Common Stock that offered resale hereby are to be offered
for the account of the holders thereof (the "Selling
Securityholders"). The Notes were initially acquired from the
Company by Morgan Stanley & Co. Incorporated, Goldman, Sachs &
Co. and SBC Warburg Dillon Read Inc. (the "Initial Purchasers")
in September 1997 in connection with a private offering. See
"Description of the Notes."
The Notes are convertible into Common Stock of the Company
at any time after 90 days following the original issuance thereof
and prior to maturity, unless previously redeemed, at a
Conversion Rate of 13.386 shares per $1,000 principal amount at
maturity (initially representing a conversion price of
approximately $59.769), subject to adjustment in certain events.
The Company's Common Stock is listed on the New York Stock
Exchange under the symbol "IPG." On February 2, 1998, the last
sale price of the Common Stock as reported on the New York Stock
Exchange Composite Tape was $49 5/8 per share.
The Notes are not redeemable by the Company prior to
September 20, 2000. Thereafter, the Notes will be redeemable on
at least 30 days' notice at the option of the Company, in whole
or in part at any time, at a redemption price for each Note equal
to the Issue Price (as defined herein) plus accrued Original
Issue Discount (as defined herein), together with accrued
interest, in each case to the redemption date. The Notes may also
be redeemed at the option of the holder if there is a Fundamental
Change (as defined herein) at a redemption price for each Note
equal to the Issue Price plus accrued Original
1
<PAGE>
Issue Discount, together with accrued interest, in each case to
the redemption date, subject to adjustment in certain
circumstances.
The Notes are general, unsecured obligations of the
Company, subordinated in right of payment to all Senior Debt (as
defined herein) of Company, and are subordinated by operation of
law to all liabilities (including trade payables) of the
Company's subsidiaries. The Indenture pursuant to which the Notes
are issued does not restrict the incurrence of Senior Debt or
other indebtedness by the Company or its subsidiaries. At
September 30, 1997, the Company had an aggregate of approximately
$260.1 million of Senior Debt. See "Description of the Notes."
The Company will not receive any of the proceeds from sales
of Notes or the Shares by the Selling Securityholders. The Notes
and the Shares may be offered in negotiated transactions or
otherwise at market prices prevailing at the time of sale or at
negotiated prices. See "Plan of Distribution." The Selling
Securityholders may be deemed to be "underwriters" as defined in
the Securities Act of 1933, as amended (the "Securities Act"). If
any broker-dealers are used by the Selling Securityholders, any
commissions paid to broker-dealers and, if broker-dealers
purchase any Notes or Shares as principals, any profits received
by such broker-dealers on the resale of the Notes or Shares may
be deemed to be underwriting discounts or commissions under the
Securities Act. In addition, any profits realized by the Selling
Securityholders may be deemed to be underwriting commissions.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED
HEREBY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL
FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION.
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.
FEBRUARY 4, 1998
2
<PAGE>
TABLE OF CONTENTS
Page
----
Available Information ......................................... 3
Incorporation of Certain Documents by Reference ............... 4
Prospectus Summary ............................................ 5
The Company ................................................... 8
Use of Proceeds ............................................... 8
Common Stock Price Range and Dividends ........................ 9
Ratio of Earnings to Fixed Charges ............................ 9
Description of the Notes ...................................... 10
Description of Capital Stock and Rights ....................... 23
Certain Federal Income Tax Considerations ..................... 24
Selling Securityholders ....................................... 29
Plan of Distribution .......................................... 29
Legal Matters ................................................. 31
Experts ....................................................... 31
-----------
Interpublic is a trademark of the Company. All other
trademarks or trade names referred to herein are the property of
their respective owners.
-----------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Exchange Act and, in accordance therewith, files reports,
proxy statements and other information with the Commission. Such
reports, proxy statements and other information 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 following regional offices of
the Commission: Seven World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials can be obtained by mail from the Public Reference
Section of the Commission, at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy statements and
other information regarding registrants that file electronically
with the Commission.
3
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Securities
and Exchange Commission (the "Commission") and are incorporated
herein by reference:
(a) the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, as amended by the Company's
Amendment Number One on Form 10-K/A for the year ended
December 31, 1996;
(b) the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997;
(c) the Company's Current Reports on Form 8-K dated
January 10, 1997, March 10, 1997, April 7, 1997, June
17, 1997, September 9, 1997, September 10, 1997,
September 25, 1997 and January 7, 1998; and
(d) the Company's Proxy Statement for the 1997 annual
meeting of stockholders.
All documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") after the date of this Prospectus
and prior to termination of the offering to which this Prospectus
relates shall be deemed to be incorporated by reference and to be
a part of this Prospectus from the respective dates of filing of
those documents. Any statement contained 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 statement so 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 a copy of this Prospectus has been delivered,
on the written or oral request of such person, a copy of any or
all of the documents referred to above which have been
incorporated in this Prospectus by reference, other than exhibits
to such documents. Written or telephone requests for such copies
should be directed to Thomas J. Volpe, Senior Vice
President-Financial Operations, The Interpublic Group of
Companies, Inc., 1271 Avenue of the Americas, New York, New York
10020; telephone number (212) 399-8000.
4
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the
more detailed information and financial statements, including the
notes thereto, included or incorporated by reference in this
Prospectus.
THE COMPANY
The Interpublic Group of Companies, Inc. ("Interpublic" or
the "Company") was incorporated in Delaware in September 1930
under the name of McCann-Erickson Incorporated as the successor
to the advertising agency businesses founded in 1902 by A.W.
Erickson and in 1911 by Harrison K. McCann. It has operated under
the Interpublic name since January 1961.
The advertising agency business is the primary business of
the Company. This business is conducted throughout the world
through three advertising agency systems, McCann-Erickson
Worldwide, Ammirati Puris Lintas and The Lowe Group. Interpublic
also carries on a media buying business through its ownership of
Western International Media and its affiliates, as well as a
separate direct and promotional marketing business through its
ownership of DraftWorldwide, Inc. The Company also offers
advertising agency services through association arrangements with
local agencies in various parts of the world. Other activities
conducted by the Company within the area of "marketing
communications" include public relations, graphic design, market
research, sales promotion, interactive services, sports and event
marketing, consulting and other related services.
The principal functions of an advertising agency are to
plan and create advertising programs for its clients and to place
advertising in various media such as television, cinema, radio,
magazines, newspapers, direct mail, outdoor and interactive
electronic media. The planning function involves analysis of the
market for the particular product or service, evaluation of
alternative methods of distribution and choice of the appropriate
media to reach the desired market most efficiently. The
advertising agency develops a communications strategy and then
creates an advertising program, within the limits imposed by the
client's advertising budget, and places orders for space or time
with the media that have been selected.
THE OFFERING
Securities Offered .....$250,000,000 principal amount at maturity of
1.80% Convertible Subordinated Notes due 2004
(the "Notes") and Common Stock issuable upon
conversion thereof. See "Description of the
Notes."
Issue ..................Price The Notes were originally sold to
the Initial Purchasers at an issue price
of 80.007% of the principal amount at
maturity (the "Issue Price").
Interest ...............1.80% per annum on the principal amount
at maturity, payable semiannually in
arrears in cash on March 16 and September
16 of each year, commencing March 16,
1998.
5
<PAGE>
Yield to Maturity of
Notes ..................5-1/4% per annum (computed on a
semi-annual bond equivalent basis giving
effect both to accrual of Original Issue
Discount and to accrual of interest)
calculated from September 16, 1997.
Conversion .............Each Note is convertible, at the option of the
holder, at any time (after 90 days) following the
latest date of original issuance thereof through
maturity, unless previously redeemed or otherwise
purchased by the Company, into Common Stock at the
Conversion Rate of 13.386 shares per $1,000
principal amount at maturity of the Notes. The
Conversion Rate will not be adjusted for accrued
Original Issue Discount or interest, but will be
subject to adjustment upon the occurrence of
certain events affecting the Common Stock. Upon
conversion, the holder will not receive any cash
payment representing accrued Original Issue
Discount or interest; such accrued Original Issue
Discount and interest will be deemed paid by the
Common Stock received on conversion. See
"Description of the Notes--Conversion of Notes."
Subordination ..........The Notes are subordinated to all existing and
future Senior Debt (as defined herein). The Notes
are also effectively subordinated to all
indebtedness and liabilities of subsidiaries of the
Company. At September 30, 1997, the Company had
approximately $260.1 million of outstanding Senior
Debt. The Indenture does not prohibit or limit the
incurrence of additional Senior Debt.
Original Issue
Discount ...............Each Note was offered at an
original issue discount for federal
income tax purposes equal to the excess
of the principal amount at maturity of
the Note over the amount of its issue
price. Prospective purchasers of Notes
should be aware that accrued original
issue discount will be includable
periodically in a holder's gross income
for federal income tax purposes prior to
conversion, redemption, other disposition
or maturity of such holder's Notes,
whether or not such Notes are ultimately
converted, redeemed, sold (to the Company
or otherwise) or paid at maturity. See
"Certain Federal Income Tax
Considerations."
Sinking Fund ...........None.
Redemption by Company ..The Notes are not redeemable
by the Company prior to September 20,
2000. Subject to the foregoing, the Notes
are redeemable on at least 30 days'
notice at the option of the Company, in
whole or in part, at any time, at the
redemption prices set forth in
"Description of the Notes," in each case
together with accrued and unpaid
interest.
Fundamental Change .....Upon the occurrence of any Fundamental Change in
6
<PAGE>
the Company occurring prior to the maturity of
the Notes, each holder shall have the right,
at such holder's option, to require the
Company to purchase all or any part
(provided that the principal amount at
maturity is $1,000 or an integral
multiple thereof) of such holder's Notes
at the redemption prices set forth in
"Description of Notes," subject to
adjustment in certain events, together
with accrued and unpaid interest thereon
to the date of purchase. See "Description
of the Notes--Redemption at Option of the
Holder."
Use of Proceeds ........The Company will not receive any proceeds
from the sale by the Selling Securityholders
of the Notes or the Common Stock.
Registration Rights ....The Company has agreed to use reasonable
efforts to keep effective a shelf registration
statement of which this Prospectus forms a part
covering the resale of the Notes and the
underlying Common Stock until the earlier of
(i) the sale of all securities covered by the
registration statement, and (ii) the expiration
of the holding period applicable under Rule
144(k) under the Securities Act, or any
successor provision.
7
<PAGE>
THE COMPANY
The Interpublic Group of Companies, Inc. was
incorporated in Delaware in September 1930 under the name of
McCann-Erickson Incorporated as the successor to the advertising
agency businesses founded in 1902 by A.W. Erickson and in 1911 by
Harrison K. McCann. It has operated under the Interpublic name
since January 1961.
The advertising agency business is the primary business of
the Company. This business is conducted throughout the world
through three advertising agency systems, McCann-Erickson
Worldwide, Ammirati Puris Lintas and The Lowe Group. Interpublic
also carries on a media buying business through its ownership of
Western International Media and its affiliates, as well as a
separate direct and promotional marketing business through its
ownership of DraftWorldwide, Inc. The Company also offers
advertising agency services through association arrangements with
local agencies in various parts of the world. Other activities
conducted by the Company within the area of "marketing
communications" include public relations, graphic design, market
research, sales promotion, interactive services, sports and event
marketing, consulting and other related services.
The principal functions of an advertising agency are to
plan and create advertising programs for its clients and to place
advertising in various media such as television, cinema, radio,
magazines, newspapers, direct mail, outdoor and interactive
electronic media. The planning function involves analysis of the
market for the particular product or service, evaluation of
alternative methods of distribution and choice of the appropriate
media to reach the desired market most efficiently. The
advertising agency develops a communications strategy and then
creates an advertising program, within the limits imposed by the
client's advertising budget, and places orders for space or time
with the media that have been selected.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale by
the Selling Securityholders of the Notes or the Shares. See
"Selling Securityholders."
8
<PAGE>
COMMON STOCK PRICE RANGE AND DIVIDENDS
The Company's Common Stock is listed on the New York Stock
Exchange under the symbol "IPG." The table below shows the range
of reported last sale prices on the New York Stock Exchange
Composite Tape for the Company's Common Stock for the periods
indicated and the dividends paid per share on the Common Stock
for such periods. Sales prices and per share amounts have been
adjusted to reflect a three-for-two stock split paid in the form
of a stock dividend on July 15, 1997. On December 18, 1997, the
Company declared a dividend of $.13 per share payable on
March 16, 1998.
Cash
Dividends
Common Declared Per
Stock Price Share
----------- ------------
High Low
---- ---
Year ended December 31, 1995
First Quarter ................. $24 11/12 $21 7/12 $.093
Second Quarter ................ 26 23 1/2 .103
Third Quarter ................. 26 2/3 24 .103
Fourth Quarter ................ 28 11/12 24 11/12 .103
Year ended December 31, 1996
First Quarter ................. 31 1/2 26 2/3 .103
Second Quarter ................ 33 1/6 30 5/12 .113
Third Quarter ................. 32 1/3 27 5/6 .113
Fourth Quarter ................ 33 1/3 29 7/12 .113
Year ended December 31, 1997
First Quarter ................. 36 7/12 32 1/4 .113
Second Quarter ................ 41 5/12 35 1/12 .130
Third Quarter ................. 50 5/16 40 7/8 .130
Fourth Quarter ................ 52 9/16 45 3/8 .130
Year ended December 31,1998
First Quarter (through
February 2) ................... 51 1/4 47 11/16 .130
The Company is not aware of any restrictions on its present
or future ability to pay dividends. However, in connection with
certain borrowing facilities entered into by the Company and its
subsidiaries, the Company is subject to certain restrictions on
the ratio of cash flow to consolidated borrowings and the ratio
of consolidated borrowings to net worth. Any future dividend
payments will be made at the discretion of the Board of
Directors.
RATIO OF EARNINGS TO FIXED CHARGES
Nine Months
Year Ended December 31, Ended September 30,
1992 1993 1994 1995 1996 1996 1997
Ratio of
earnings to
fixed charges 3.8 4.5 3.6 3.9 4.9 4.3 4.3
9
<PAGE>
DESCRIPTION OF THE NOTES
The Notes were issued under an indenture, dated as of
September 16, 1997 (the "Indenture"), between the Company and The
Bank of New York, as trustee (the "Trustee"). A copy of the
Indenture and the Registration Rights Agreement, dated as of
September 16, 1997 between the Company and Morgan Stanley & Co.
Incorporated, Goldman, Sachs & Co., and SBC Warburg Dillon Read
(the "Registration Rights Agreement"), are available from the
Trustee upon request by a registered holder of the Notes. The
following summaries of certain provisions of the Notes and the
Indenture do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, all the
provisions of the Notes and the Indenture, including the
definitions therein of certain terms which are not otherwise
defined in this Prospectus. Wherever particular provisions or
defined terms of the Indenture (or of the form of Note which is a
part thereof) are referred to, such provisions or defined terms
are incorporated herein by reference.
General
The Notes represent unsecured general obligations of the
Company subordinate in right of payment to certain other
obligations of the Company as described under "Subordination of
Notes" and convertible into Common Stock as described under
"Conversion of Notes." The Notes are limited to $250,000,000
aggregate principal amount at maturity, were issued only in
denominations of $1,000 or any multiple thereof and will mature
on September 16, 2004, unless earlier redeemed at the option of
the Company or at the option of the holder upon a Fundamental
Change (as defined below) or converted prior thereto.
The Indenture does not contain any financial covenants or
restrictions on the payment of dividends, the incurrence of
Senior Debt (as defined below under "Subordination of Notes") or
the issuance or repurchase of securities of the Company. The
Indenture contains no covenants or other provisions to afford
protection to holders of the Notes in the event of a highly
leveraged transaction or a change in control of the Company
except to the extent described under "Redemption at Option of the
Holder."
The Notes bear interest at the annual rate set forth on the
cover page hereof from September 16, 1997, payable semi-annually
on March 16 and September 16, commencing on March 16, 1998, to
holders of record at the close of business on the preceding March
2 and September 2, respectively, except (i) that the interest
payment upon redemption (unless the date of redemption is an
interest payment date) will be payable to the person to whom
principal is payable and (ii) as set forth in the next succeeding
sentence. In the case of any Note (or portion thereof) which is
converted into Common Stock of the Company during the period from
(but excluding) a record date to (but excluding) the next
succeeding interest payment date either (i) if such Note (or
portion thereof) has been called for redemption on a redemption
date which occurs during such period, or is to be redeemed in
connection with a Fundamental Change on a Fundamental Change
Repurchase Date (as defined below) which occurs during such
period, the Company shall not be required to pay interest on such
interest payment date in respect of any such Note (or portion
thereof) or (ii) if otherwise, any Note (or portion thereof)
submitted for conversion
10
<PAGE>
during such period shall be accompanied by funds equal to the
interest payable on such succeeding interest payment date on the
aggregate principal amount so converted (see "Conversion of
Notes" below). Interest may, at the Company's option, be paid
either (i) by check mailed to the address of the person entitled
thereto as it appears in the Note register or (ii) by transfer to
an account maintained by such person located in the United
States; provided, however, that payments to The Depository Trust
Company, New York, New York ("DTC") will be made by wire transfer
of immediately available funds to the account of DTC or its
nominee. Interest will be computed on the basis of a 360-day year
composed of twelve 30-day months.
The Notes are offered at a substantial discount from their
principal amount at maturity. See "Certain Federal Income Tax
Considerations." The calculation of the accrual of "Original
Issue Discount" (the difference between the Issue Price and the
principal amount at maturity of a Note) in the period during
which a Note remains outstanding will be on a semi-annual bond
equivalent basis using a year composed of twelve 30-day months;
such accrual will commence on the first date of issuance of any
of the Notes. Maturity, conversion or redemption of a Note will
cause Original Issue Discount and interest, if any, to cease to
accrue on such Note under the terms and subject to the conditions
of the Indenture. The Company may not reissue a Note that has
matured or been converted, redeemed or otherwise canceled (except
for registration of transfer, exchange or replacement thereof).
Form, Denomination and Registration
The Notes are issued in fully registered form, without
coupons, in denomination of $1,000 principal amount and multiples
thereof.
Global Note, Book-Entry Form. Notes are issuable in fully
registered form without coupons, in denominations of $1,000
principal amount and multiples thereof. Notes sold by the Selling
Securityholders pursuant to the Registration Statement of which
this Prospectus forms a part will be represented by a global Note
(the "Global Note"), except as set forth below under
"Certificated Notes." The Global Note will be deposited with, or
on behalf of, The Depository Trust Company, New York, New York
("DTC") and registered in the name of Cede & Co. ("Cede") as
DTC's nominee. Beneficial interests in the Global Note will be
exchangeable for definitive Certificated Notes only in accordance
with the terms of the Indenture.
Purchasers of the Notes offered hereby may hold their
interests in the Global Note directly through DTC or indirectly
through organizations that are participants in DTC (the
"Participants"). Transfers between Participants will be effected
in the ordinary way in accordance with DTC rules and will be
settled in clearing house funds.
Persons who are not Participants may beneficially own
interests in the Global Note held by DTC only through
Participants, or certain banks, brokers, dealers, trust companies
and other parties that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly
("Indirect Participants"). So long as Cede, as the nominee of
DTC, is the registered owner of the Global Note, Cede for all
purposes will be considered
11
<PAGE>
the sole holder of the Global Note. Except as provided below,
owners of beneficial interests in the Global Note will not be
entitled to have certificates registered in their names, will not
receive or be entitled to receive physical delivery of
certificates in definitive form, and will not be considered the
holders thereof.
Payment of interest on and the redemption price of the
Global Note will be made to Cede, the nominee for DTC, as the
registered owner of the Global Note by wire transfer of
immediately available funds on each interest payment date or the
redemption or repurchase date, as the case may be. Neither the
Company, the Trustee nor any paying agent will have any
responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership
interests in the Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
interests.
The Company has been informed by DTC that, with respect to
any payment of interest on, or the redemption price of, the
Global Note, DTC's practice is to credit Participants' accounts
on the payment date therefor with payments in amounts
proportionate to their respective beneficial interests in the
principal amount represented by the Global Note as shown on the
records of DTC, unless DTC has reason to believe that it will not
receive payment on such payment date. Payments by Participants to
owners of beneficial interests in the principal amount
represented by the Global Note held through such Participants
will be the responsibility of such Participants, as is now the
case with securities held for the accounts of customers
registered in "street name."
Because DTC can only act on behalf of Participants, who in
turn act on behalf of Indirect Participants and certain banks,
the ability of a person having a beneficial interest in the
principal amount represented by the Global Note to pledge such
interest to persons or entities that do not participate in the
DTC system, or otherwise take actions in respect of such
interest, may be affected by the lack of a physical certificate
evidencing such interest.
Neither the Company nor the Trustee (or any registrar,
paying agent or conversion agent under the Indenture) will have
any responsibility for the performance by DTC or its Participants
or Indirect Participants of their respective obligations under
the rules and procedures governing their operations. DTC has
advised the Company that it will take any action permitted to be
taken by a holder of Notes (including, without limitation, the
presentation of Notes for exchange as described below) only at
the direction of one or more Participants to whose account with
DTC interests in the Global Note are credited, and only in
respect of the principal amount of the Notes represented by the
Global Note as to which such Participant or Participants has or
have given such direction.
DTC has advised the Company as follows: DTC is a limited
purpose trust company organized under the laws of the State of
New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code
and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance
and settlement
12
<PAGE>
of securities transactions between Participants through
electronic book-entry changes to the accounts of its
Participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may
include certain other organizations such as the Initial
Purchasers. Certain of such Participants (or their
representatives), together with other entities, own DTC. Indirect
access to the DTC system is available to others such as banks,
brokers, dealers and trust companies that clear through, or
maintain a custodial relationship with, a Participant, either
directly or indirectly.
Although DTC has agreed to the foregoing procedures in
order to facilitate transfers of interests in the Global Note
among Participants, it is under no obligation to perform or
continue to perform such procedures, and such procedures may be
discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is
not appointed by the Company within 90 days, the Company will
cause Notes to be issued in definitive form in exchange for the
Global Note.
Certificated Notes. Holders of Notes may take physical delivery
of the Notes in definitive registered form. In addition, Holders
may request that certificated Notes be issued in exchange for
Notes represented by the Global Notes. Furthermore, certificated
Notes may be issued in exchange for Notes represented by the
Global Note, if no successor depositary is appointed by the
Company as set forth above under "Global Note, Book-Entry Form."
Conversion of Notes
A holder may convert a Note into Common Stock of the
Company at any time after 90 days following the latest date of
original issuance of the Notes through the close of business on
the final maturity date of the Notes; provided that if a Note is
called for redemption, the holder may convert such Note only
until the close of business on the day prior to the Redemption
Date. A Note in respect of which a holder is exercising its
option to require redemption upon a Fundamental Change may be
converted only if such holder withdraws its election to exercise
its option in accordance with the terms of the Indenture. A
holder may convert such holder's Notes in part so long as such
part is $1,000 principal amount at maturity or an integral
multiple thereof. If Notes not called for redemption are
converted after a record date for the payment of interest and
prior to the next succeeding interest payment date, such Notes
must be accompanied by funds equal to the interest payable on
such succeeding interest payment date on the principal amount at
maturity so converted provided that no such payment will be
required if the Company exercises its rights to redeem the Notes.
The initial Conversion Rate is 13.386 shares of Common
Stock per $1,000 principal amount at maturity of Notes, subject
to adjustment upon the occurrence of certain events. A holder who
would otherwise be entitled to a fractional share of Common Stock
shall receive cash equal to the then current market value of such
fractional share. On conversion of a Note, a holder will not
receive any cash payment representing accrued Original Issue
Discount or accrued interest thereon. The Company's delivery to
the holder of the fixed
13
<PAGE>
number of shares of Common Stock into which the Note is
convertible (together with the cash payment in lieu of any
fractional share of Common Stock) will be deemed to satisfy the
Company's obligation to pay the principal amount of the Note
including the accrued Original Issue Discount attributable to the
period from the first date of issuance of any of the Notes to the
date of surrender for conversion and accrued interest thereon.
Thus, the accrued Original Issue Discount and accrued interest
are deemed to be paid in full rather than canceled, extinguished
or forfeited. The Conversion Rate will not be adjusted at any
time during the term of the Notes for such accrued Original Issue
Discount or accrued interest.
To convert a Note into shares of Common Stock, the holder
of a Note must (i) complete and manually sign the conversion
notice on the back of the Note (or complete and manually sign a
facsimile thereof) and deliver such notice to the Conversion
Agent, (ii) surrender the Note to the Conversion Agent, (iii) if
required, furnish appropriate endorsements and transfer
documents, (iv) if required, pay all transfer or similar taxes,
and (v) if required, pay funds equal to interest payable on the
next interest payment date. Pursuant to the Indenture, the date
on which all of the foregoing requirements have been satisfied is
the date of surrender for conversion.
The initial Conversion Rate is subject to adjustment under
formulae as set forth in the Indenture in certain events,
including:
(i) the issuance of Common Stock of the Company as a
dividend or distribution on the Common Stock;
(ii) certain subdivisions and combinations of the
Common Stock;
(iii) the issuance to all holders of Common Stock of
certain rights or warrants to purchase Common Stock;
(iv) the distribution to all holders of Common Stock
of capital stock (other than Common Stock), of evidences of
indebtedness of the Company or of assets (including
securities, but excluding those rights, warrants, dividends
and distributions referred to in clause (iii) above or paid
in cash);
(v) distributions consisting of cash, excluding any
quarterly cash dividend on the Common Stock to the extent
that the aggregate cash dividend per share of Common Stock
in any quarter does not exceed the greater of (x) the
amount per share of Common Stock of the next preceding
quarterly cash dividend on the Common Stock to the extent
that such preceding quarterly dividend did not require an
adjustment of the Conversion Rate pursuant to this clause
(v) (as adjusted to reflect subdivisions or combinations of
the Common Stock), and (y) 3.75 percent of the average of
the last reported sales price of the Common Stock during
the ten trading days immediately prior to the date of
declaration of such dividend, and excluding any dividend or
distribution in connection with the liquidation,
dissolution or winding up of the Company. If an adjustment
is required to be made as set forth in this clause (v) as a
result of a distribution that is a quarterly dividend,
14
<PAGE>
such adjustment would be based upon the amount by which
such distribution exceeds the amount of the quarterly cash
dividend permitted to be excluded pursuant to this clause
(v). If an adjustment is required to be made as set forth
in this clause (v) as a result of a distribution that is
not a quarterly dividend, such adjustment would be based
upon the full amount of the distribution;
(vi) payment in respect of a tender offer or exchange
offer by the Company or any subsidiary of the Company for
the Common Stock to the extent that the cash and value of
any other consideration included in such payment per share
of Common Stock exceeds the Current Market Price (as
defined in the Indenture) per share of Common Stock on the
trading day next succeeding the last date on which tenders
or exchanges may be made pursuant to such tender or
exchange offer; and
(vii) payment in respect of a tender offer or exchange
offer by a person other than the Company or any subsidiary
of the Company in which, as of the closing date of the
offer, the Board of Directors is not recommending rejection
of the offer. The adjustment referred to in this clause
(vii) will only be made if the tender offer or exchange
offer is for an amount which increases the offeror's
ownership of Common Stock to more than 25% of the total
shares of Common Stock outstanding, and if the cash and
value of any other consideration included in such payment
per share of Common Stock exceeds the Current Market Price
per share of Common Stock on the business day next
succeeding the last date on which tenders or exchanges may
be made pursuant to such tender or exchange offer. The
adjustment referred to in this clause (vii) will generally
not be made, however, if, as of the closing of the offer,
the offering documents with respect to such offer disclose
a plan or an intention to cause the Company to engage in a
consolidation or merger of the Company or a sale of all or
substantially all of the Company's assets.
In the event that the Rights (as defined below) are
separated from the Common Stock in accordance with the provisions
of the Company's Preferred Shares Rights Plan such that the
holders of Notes would thereafter not be entitled to receive any
such Rights in respect to the Common Stock issuable upon
conversion of such Notes, the Conversion Rate will be adjusted as
provided in clause (iv) of the preceding paragraph (subject to
readjustment in the event of the expiration, termination or
redemption of the Rights). In lieu of any such adjustment, the
Company may amend the Preferred Shares Rights Plan to provide
that upon conversion of the Notes the holders will receive, in
addition to the Common Stock issuable upon such conversion, the
Rights which would have attached to such shares of Common Stock
if the Rights had not become separated from the Common Stock
pursuant to the provisions of the Preferred Shares Rights Plan.
See "Description of Capital Stock and Rights--Rights."
In the case of (i) any reclassification of the Common
Stock, or (ii) a consolidation, merger or combination involving
the Company or a sale or conveyance to another person of the
property and assets of the Company as an entirety or
substantially as an entirety, in each case as a result of which
holders of Common Stock shall be entitled to receive stock, other
securities, other property or assets (including cash) with
respect to or in exchange for
15
<PAGE>
such Common Stock, the holders of the Notes then outstanding will
generally be entitled thereafter to convert such Notes into the
kind and amount of shares of stock, other securities or other
property or assets which they would have owned or been entitled
to receive upon such reclassification, change, consolidation,
merger, combination, sale or conveyance had such Notes been
converted into Common Stock immediately prior to such
reclassification, change, consolidation, merger, combination,
sale or conveyance assuming that a holder of Notes would not have
exercised any rights of election as to the stock, other
securities or other property or assets receivable in connection
therewith. See "Redemption at Option of the Holder."
In the event of a taxable distribution to holders of
Common Stock or in certain other circumstances requiring
Conversion Rate adjustments, the holders of Notes may, in certain
circumstances, be deemed to have received a distribution subject
to United States income tax as a dividend; in certain other
circumstances, the absence of such an adjustment may result in a
taxable dividend to the holders of Common Stock. See "Certain
Federal Income Tax Considerations."
The Company from time to time may, to the extent permitted
by law, increase the Conversion Rate by any amount for any period
of at least 20 days, in which case the Company shall give at
least 15 days' notice of such increase if the Company's Board of
Directors has made a determination that such increase would be in
the best interests of the Company, which determination shall be
conclusive. The Company may, at its option, make such increases
in the Conversion Rate, in addition to those set forth above, as
the Board of Directors deems advisable to avoid or diminish any
income tax to holders of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes. See "Certain
Federal Income Tax Considerations."
No adjustment in the Conversion Rate will be required
unless such adjustment would require a change of at least one
percent in the Conversion Rate then in effect; provided that any
adjustment that would otherwise be required to be made shall be
carried forward and taken into account in any subsequent
adjustment. Except as stated above, the Conversion Rate will not
be adjusted for the issuance of Common Stock or any securities
convertible into or exchangeable for Common Stock or carrying the
right to purchase any of the foregoing.
Optional Redemption by the Company
No sinking fund is provided for the Notes. Prior to
September 20, 2000 (three business days after the interest
payment date immediately prior thereto), the Notes will not be
redeemable at the option of the Company. At any time on or after
such date, the Company may redeem the Notes for cash as a whole
at any time, or from time to time in part at the applicable
Redemption Price together with accrued interest to, but
excluding, the date fixed for redemptions; provided that any
semi-annual payment of interest becoming due on the date fixed
for redemption shall be payable to the holders of such Notes
registered on the relevant record date. Not less than 30 days'
nor more than 60 days' notice of redemption shall be given by
mail to holders of Notes. The
16
<PAGE>
Notes will be redeemable in integral multiples of $1,000
principal amount at maturity.
The table below shows Redemption Prices of a Note per
$1,000 principal amount at maturity, at September 20, 2000, at
each September 16 thereafter prior to maturity and at maturity on
September 16, 2004, which prices reflect the accrued Original
Issue Discount calculated to each such date. The Redemption Price
of a Note redeemed between such dates would include an additional
amount reflecting the additional Original Issue Discount accrued
since the next preceding date in the table to the actual
Redemption Date.
(1) (2) (3)
Note Issue Accrued Original Redemption
Redemption Date Price Issue Discount Price
- --------------- ----- --------------
(1) + (2)
---------
September 20, 2000 ..... $800.070 $77.215 $877.285
September 16, 2001 ..... 800.070 105.312 905.382
September 16, 2002 ..... 800.070 135.232 935.302
September 16, 2003 ..... 800.070 166.743 966.813
September 16, 2004 ..... 800.070 199.930 1,000.000
If less than all of the outstanding Notes are to be
redeemed, the Trustee shall select the Notes to be redeemed in
principal amounts of $1,000 or multiples thereof by lot, pro rata
or by another method the Trustee considers fair and appropriate.
If a portion of a holder's Notes is selected for partial
redemption and such holder converts a portion of such Notes, such
converted portion shall be deemed to be of the portion selected
for redemption.
Redemption at Option of the Holder
If a Fundamental Change (as defined below) occurs at any
time prior to September 16, 2004, each holder shall have the
right, at the holder's option, to require the Company to redeem
any or all of such holder's Notes on the date (the "Fundamental
Change Repurchase Date") that is 45 days after the date of the
Company's notice of such Fundamental Change. The Notes will be
redeemable in multiples of $1,000 principal amount at maturity at
their accreted value on the Fundamental Change Repurchase Date.
The Company shall redeem such Notes at a price (the
"Fundamental Change Repurchase Price") equal to the accreted
value of the Note to, but excluding, the Fundamental Change
Repurchase Date. The Fundamental Change Repurchase Price is equal
to (i) $800.070 if the Fundamental Change Repurchase Date is
September 16, 1997, (ii) $824.388 if the Fundamental Change
Repurchase Date is September 16, 1998, (iii) $850.000 if the
Fundamental Change Repurchase Date is September 16, 1999, (iv)
$876.974 if the Fundamental Change Repurchase Date is September
16, 2000 and (v) thereafter at the redemption price set forth
under "Optional Redemption by the Company" which would be
applicable to a redemption at the option of the Company on the
Fundamental Change Repurchase Date; provided, however, that if
the Fundamental Change Repurchase Date is between such dates,
17
<PAGE>
the Fundamental Change Repurchase Price would include an
additional amount reflecting the additional Original Issue
Discount accrued since the preceding September 16.
Notwithstanding the foregoing, if the Applicable Price (as
defined) is less than the Reference Market Price (as defined),
the Company shall redeem such Notes at a price equal to the
foregoing redemption price multiplied by the fraction obtained by
dividing the Applicable Price by the Reference Market Price. In
each case, the Company shall also pay accrued interest on the
redeemed Notes to, but excluding, the Fundamental Change
Repurchase Date; provided that, if such Fundamental Change
Repurchase Date is an interest payment date, then the interest
payable on such date shall be paid to the holder of record of the
Notes on the relevant record date.
The Company is required to mail to all holders of record of
the Notes a notice of the occurrence of a Fundamental Change and
of the redemption right arising as a result thereof on or before
the tenth day after the occurrence of such Fundamental Change.
The Company is also required to deliver to the Trustee a copy of
such notice. To exercise the redemption right, a holder of Notes
must deliver, on or before the 30th day after the date of the
Company's notice of a Fundamental Change (the "Fundamental Change
Expiration Time"), written notice of the holder's exercise of
such right, together with the Notes to be so redeemed, duly
endorsed for transfer, to the Company (or an agent designated by
the Company for such purpose). Payment for Notes surrendered for
redemption (and not withdrawn) prior to the Fundamental Change
Expiration Time will be made promptly following the Fundamental
Change Repurchase Date.
The term "Fundamental Change" means the occurrence of any
transaction or event in connection with which all or
substantially all Common Stock shall be exchanged for, converted
into, acquired for or constitute the right to receive
consideration (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise) which is not all
or substantially all common stock of a company listed (or, upon
consummation or immediately following such transaction or event,
which will be listed) on a United States national securities
exchange or approved for quotation on the Nasdaq National Market
or any similar United States system of automated dissemination of
quotations of securities prices.
The term "Applicable Price" means (i) in the event of a
Fundamental Change in which the holders of Common Stock receive
only cash, the amount of cash received by the holder of one share
of Common Stock and (ii) in the event of any other Fundamental
Change, the average of the last reported sale price for the
Common Stock during the ten trading days prior to the record date
for the determination of the holders of Common Stock entitled to
receive cash, securities, property or other assets in connection
with such Fundamental Change, or, if there is not such record
date, the date upon which the holders of the Common Stock shall
have the right to receive such cash, securities, property or
other assets in connection with the Fundamental Change.
The term "Reference Market Price" shall initially mean
$31.875 (which is equal to 66 2/3% of the last sale price of the
Common Stock prior to the original issuance of the Notes) and, in
the event of any adjustment to the Conversion Rate described
above pursuant to the provisions of the Indenture, the Reference
Market Price shall also be adjusted so that the Reference Market
18
<PAGE>
Price after giving effect to any such adjustment shall equal the
Reference Market Price multiplied by a fraction, the numerator of
which is the Conversion Rate prior to such adjustment and the
denominator of which is the Conversion Rate after such
adjustment.
The Company will comply with the provisions of Rule 13e-4
and any other tender offer rules under the Exchange Act which may
then be applicable in connection with the redemption rights of
Note holders in the event of a Fundamental Change. The redemption
rights of the holders of Notes could discourage a potential
acquiror of the Company. The Fundamental Change redemption
feature, however, is not the result of management's knowledge of
any specific effort to obtain control of the Company by means of
a merger, tender offer, solicitation, or otherwise, or part of a
plan by management to adopt a series of anti-takeover provisions.
The Company, would, in the future, enter into certain
transactions, including certain recapitalizations of the Company,
that would not constitute a Fundamental Change, but that would
increase the amount of indebtedness, including Senior Debt,
outstanding at such time. Further, payment of the Fundamental
Change Repurchase Price on the Notes may be subordinated to the
prior payment of Senior Debt as described under "Subordination of
Notes" below. There are no restrictions in the Indenture on the
creation of additional Senior Debt or other indebtedness. Under
certain circumstances, the incurrence of additional indebtedness
could have an adverse effect on the Company's ability to service
its indebtedness, including the Notes. If a Fundamental Change
were to occur, there can be no assurance that the Company would
have sufficient funds to pay the Fundamental Change Repurchase
Price for all Notes tendered by the holders thereof. A default by
the Company on its obligations to pay the Fundamental Change
Repurchase Price could result in acceleration of the payment of
other indebtedness of the Company at the time outstanding
pursuant to cross-default provisions.
Subordination of Notes
The payment of the principal of and premium, if any, and
interest on the Notes will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior
payment in full of all Senior Debt. Upon any payment or
distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshalling of assets or any bankruptcy,
insolvency or similar proceedings of the Company, the holders of
all Senior Debt will first be entitled to receive payment in full
of all amounts due or to become due thereon before the holders of
the Notes will be entitled to receive any payment in respect of
the principal of or premium, if any, or interest on the Notes. In
the event of the acceleration of the maturity of any Notes, the
holders of all Senior Debt will first be entitled to receive
payment in full of all amounts due or to become due thereon
before the holders of the Notes will be entitled to receive any
payment in respect of the principal of or premium, if any, or
interest on the Notes. No payments on account of principal,
premium, if any, or interest in respect of the Notes may be made
if there shall have occurred and be continuing a default in any
payment with respect to Senior Debt, or an event of default with
respect to any Senior Debt permitting the holders thereof to
accelerate the maturity thereof.
19
<PAGE>
By reason of such subordination, in the event of
insolvency, creditors of the Company who are not holders of
Senior Debt or of the Notes may recover less, ratably, than
holders of Senior Debt and may recover more, ratably, than
holders of the Notes. The Notes are also subordinated by
operation of law to all liabilities (including trade payables) of
the Company's subsidiaries.
"Senior Debt" is defined to mean the principal of and
premium, if any, and interest on the following, whether
outstanding at the date of execution of the Indenture or
thereafter incurred or created: (a) indebtedness of the Company
for money borrowed, or evidenced by a note or similar instrument
or written agreement given in connection with the acquisition of
any businesses, properties or assets, including securities, (b)
indebtedness of the Company to banks or financial institution
evidenced by notes or other written obligations, (c) indebtedness
of the Company evidenced by notes, debentures, bonds or other
securities issued under the provisions of an indenture or similar
instrument, (d) indebtedness of others of the kinds described in
the preceding clauses (a), (b) and (c) that the Company has
assumed, guaranteed or otherwise assured the payment thereof,
directly or indirectly, and (e) deferrals, renewals, extensions
and refundings of, or bonds, debentures, notes or other evidences
of indebtedness issued in exchange for, the indebtedness
described in the preceding classes (a) through (d) whether or not
there is any notice to or consent of the holders of Notes; except
(i) indebtedness and advances among the Company and its direct
and indirect Subsidiaries, (ii) any particular indebtedness,
deferral, renewal, extension or refunding, if it is expressly
stated in the governing terms, or in the assumption or guarantee,
thereof that the indebtedness involved is not Senior Debt and
(iii) the Company's 3 3/4% Convertible Subordinated Debentures
due 2002.
At September 30, 1997, Senior Debt aggregated approximately
$260.1 million, excluding accrued interest. The Company expects
from time to time to incur additional indebtedness constituting
Senior Debt. The Indenture does not prohibit or limit the
incurrence of additional Senior Debt.
Events of Default; Notice and Waiver
The Indenture provides that if any Event of Default shall
have occurred and be continuing the Trustee or the holders of not
less than 25 percent in principal amount at maturity of the Notes
then outstanding may declare due and payable immediately the sum
of the Issue Price plus accrued Original Issue Discount from the
date of issue of the Notes to the date of declaration and accrued
interest, but if the Company shall cure all defaults (except the
nonpayment of Issue Price and accrued Original Issue Discount
which shall have become due by acceleration) and certain other
conditions are met, such declaration may be annulled and past
defaults may be waived by the holders of a majority in principal
amount at maturity of the Notes then outstanding. In the case of
certain events of bankruptcy or insolvency, the Issue Price of
the Notes plus the Original Issue Discount accrued thereon to the
occurrence of such event shall automatically become and be
immediately due and payable. See "--Subordination of Notes"
above. Under certain circumstances, the holders of a majority in
aggregate principal amount at maturity of the outstanding Notes
may rescind any such acceleration with respect to the Notes and
its consequences.
20
<PAGE>
Interest shall accrue and be payable on demand upon a default in
the payment of the Issue Price, accrued Original Issue Discount,
or any Redemption Price, Purchase Price or Fundamental Change
redemption price to the extent that payment of such interest
shall be legally enforceable.
Under the Indenture, Events of Default are defined as: (i)
default in payment of the principal amount at maturity, Issue
Price, accrued Original Issue Discount, Redemption Price or
Fundamental Change Redemption Price with respect to any Note when
such becomes due and payable (whether or not payment is
prohibited by the provisions of the Indenture); (ii) default for
30 days in payment of any installment of interest on the Notes;
(iii) failure by the Company to comply with any of its other
agreements in the Notes or the Indenture upon the receipt by the
Company of notice of such default by the Trustee or by holders of
not less than 25 percent in aggregate principal amount at
maturity of the Notes then outstanding and the Company's failure
to cure such default within 45 days after receipt by the Company
of such notice; or (iv) certain events of bankruptcy or
insolvency. The Indenture provides that the Trustee may withhold
notice to the holders of Notes of any default (except in payment
of the principal amount at maturity, or interest on, the Notes)
if the Trustee considers it in the interest of the holders of the
Notes to do so.
Modification
The Indenture contains provisions permitting the Company
and the Trustee, with the consent of the holders of not less than
a majority in principal amount at maturity of the Notes at the
time outstanding, to modify the Indenture or any supplemental
indenture or the rights of the holders of the Notes, except that
no such modification shall (i) extend the fixed maturity of any
Note, reduce the rate or extend the time or payment of interest
thereon, change the rate of accrual or extend the time of payment
in connection with Original Issue Discount, reduce the principal
amount at maturity thereof, reduce any amount payable upon
redemption thereof, change the obligation of the Company to make
redemption of any Note upon the happening of any Fundamental
Change, impair or affect the right of a holder to institute suit
for the payment thereof, change the currency in which the Notes
are payable, impair the right to convert the Notes into Common
Stock subject to the terms set forth in the Indenture or modify
the provisions of the Indenture with respect to the subordination
of the Notes in a manner adverse to the holders of the Notes in
any material respect, without the consent of the holder of each
Note so affected, or (ii) reduce the aforesaid percentage of
Notes, without the consent of the holders of all the Notes then
outstanding.
Registration Rights of the Noteholders
The Company has filed with the Commission a shelf
registration statement, of which this Prospectus forms a part,
covering resales by holders of the Notes and the Common Stock
issuable upon conversion of the Notes within 90 days after the
latest date of original issuance of the Notes. The Company will
use its reasonable efforts to keep the registration statement
effective until the earlier of (i) the sale pursuant to the shelf
registration statement of all the securities registered
thereunder and (ii) the expiration of the
21
<PAGE>
holding period applicable to such securities under Rule 144(k)
under the Securities Act, or any successor provision. The Company
will be permitted to suspend the use of this Prospectus for a
period not to exceed 30 days in any three-month period, or not to
exceed an aggregate of 90 days in any 12-month period under
certain circumstances relating to pending corporate developments,
public filings with the Commission and similar events. The
Company has agreed to pay predetermined liquidated damages to
those holders of Notes and those holders of Common Stock issued
upon conversion of the Notes who have requested to sell pursuant
to the registration statement if the registration statement is
not timely filed or if the Prospectus is unavailable for periods
in excess of those permitted above. The Company has further
agreed, if such failure to file or unavailability continues for
an additional 30 day period, to pay predetermined liquidated
damages to all holders of Notes and all holders of Common Stock
issued upon conversion of the Notes, whether or not such holder
has requested to sell pursuant to the shelf registration
statement. Such predetermined liquidated damages shall be
determined, in respect of any Note, at a rate equal to .5% of the
accreted amount thereof and, in respect of any shares of Common
Stock, at a rate equal to .5% of the then applicable conversion
price, which equals the accreted amount of the Notes divided by
the Conversion Rate. A holder who sells Notes and Common Stock
issued upon conversion of the Notes pursuant to the shelf
registration statement generally will be required to be named as
a selling securityholder in the Prospectus, deliver a Prospectus
to purchasers and be bound by those provisions of the
Registration Rights Agreement that are applicable to such holder
(including certain indemnification provisions). The Company will
pay all expenses of the registration statement, provide to each
registered holder copies of the Prospectus, notify each
registered holder when the shelf registration statement has
become effective and take certain other actions as are required
to permit, subject to the foregoing, unrestricted resales of the
Notes and the Common Stock issued upon conversion of the Notes.
Certain holders of the Company's Common Stock have certain
rights with respect to the registration under the Securities Act,
for resale to the public, of less than two percent of the shares
of the Company's Common Stock (the "Registrable Shares"). The
Company's agreements with such holders provide that in the event
the Company proposes to register its securities under the
Securities Act, such stockholders may be entitled to have the
Registrable Shares registered, subject to certain conditions and
limitations. The Company will be obligated to pay all expenses
associated with the exercise of such registration rights other
than underwriting discounts or commissions incurred in connection
with such registration and the legal fees of the holders of the
Registrable Shares. The Company has filed a registration
statement with respect to the Registrable Shares.
Limitations of Claims in Bankruptcy
If a bankruptcy proceeding is commenced in respect of the
Company, the claim of the holder of a Note is, under Title 11 of
the United States Code, limited to the Issue Price of the Note
plus that portion of the Original Issue Discount and interest
that has accrued from the date of issue to the commencement of
the proceeding. In addition, the holders of the Notes will be
22
<PAGE>
subordinated in right of payment to Senior Debt and effectively
subordinated to the indebtedness and other obligations of the
Company's subsidiaries. See "Subordination of Notes" above.
Taxation of Notes
See "Certain Federal Income Tax Considerations" for a
discussion of certain Federal tax aspects which will apply to
holders of Notes.
Information Concerning the Trustee
The Bank of New York, as the Trustee under the
Indenture, has been appointed by the Company as paying agent,
conversion agent, registrar and custodian with regard to the
Notes. The Indenture provides that, in case an Event of Default
has occurred (which has not been cured or waived), the Trustee
thereunder will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in
its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act of
1939, as amended ("TIA"), incorporated by reference therein
contain limitations on the rights of the Trustee thereunder,
should it become a creditor of the Company, to obtain payment of
certain claims in certain cases or to realize on certain property
received by it in respect of any such claims, as security or
otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any
conflicting interest (within the meaning of the TIA) it must
eliminate such conflicting interest or resign.
DESCRIPTION OF CAPITAL STOCK AND RIGHTS
The total number of shares of all classes of capital stock
which the Company has the authority to issue is 245,000,000
shares, consisting of 225,000,0000 shares of Common Stock, par
value $.10 per share, and 20,000,000 shares of Preferred Stock,
without par value. No shares of Preferred Stock have been issued.
The number of shares of Common Stock which were issued as of December
31, 1997 was 143,567,843 (of which 12,749,317 were Treasury
Stock), as restated to reflect a three-for-two stock split paid
in the form of a stock dividend on July 15, 1997. To the best of
the Company's knowledge based on publicly available information
as of January 31, 1998, no person was the beneficial owner of more
than 5% of Common Stock other than The Capital Group Companies,
Inc. and its subsidiaries, which owned 7.8% of the Common Stock
as of March 24, 1997. The following description of Common Stock
is qualified in its entirety by reference to the Restated
Certificate of Incorporation, as amended, and By-Laws of the
Company as amended, copies of which will be available for
inspection at the office of the Trustee in New York during the
term of the Notes.
The holders of Common Stock are entitled to receive such
dividends as the Board of Directors of the Company from time to
time may declare out of funds legally available therefor. See
"Common Stock Price Range and Dividend Payments." Each holder of
Common Stock is entitled to one vote for each share held on all
matters voted upon by the stockholders of the Company, including
23
<PAGE>
the election of directors. The Common Stock does not have
cumulative voting rights. Election of directors is decided by the
holders of a plurality of the shares entitled to vote and present
in person or by proxy at a meeting for the election of directors.
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, holders of Common Stock
are entitled to share equally and ratably in the balance of
assets, if any, remaining after payment of all debts and
liabilities.
The Common Stock has no conversion or preemptive rights or
redemption or sinking fund provisions. The issued and outstanding
shares of Common Stock are fully paid and non-assessable.
The transfer agent and registrar for the Common Stock is
First Chicago Trust Company of New York.
Rights
In 1989, the Company adopted a Preferred Share Rights Plan
designed to deter coercive takeover tactics. Pursuant to this
plan, holders of shares of Common Stock are entitled (such
entitlement, the "Rights") to purchase 1/100th of a share of
Preferred Stock at an exercise price of $100 per such 1/100th of
a share if a person or group acquires, or commences a tender
offer for, 15% or more of the Company's outstanding Common Stock.
Rights holders (other than the 15% stockholder) will also be
entitled to buy, for the $100 exercise price, shares of Common
Stock with a market value of $200 in the event a person or group
actually acquires 15% or more of the Common Stock. Rights may be
redeemed at $.01 per Right under certain circumstances. The
Rights will not be represented by separate certificates, and thus
will not be separable from the Common Stock, until after the
Rights become exercisable. The Conversion Rate will be adjusted
if and when the Rights become exercisable and separable from the
Common Stock, and shares of Common Stock issued after the Rights
become exercisable and separable (including those issued upon
conversion of the Notes) will not be entitled to such Rights. See
"Description of the Notes--Conversion of the Notes." The Rights
expire by their terms on July 18, 1999 unless earlier redeemed by
the Company.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal
income tax consequences of the purchase, ownership and
disposition of the Notes and the Common Stock into which Notes
may be converted, but does not purport to be a complete analysis
of all the potential tax considerations relating thereto. This
summary is based on laws, regulations, rulings and decisions now
in effect, all of which are subject to change. This summary deals
only with holders that will hold Notes and Common Stock as
capital assets and does not address tax considerations applicable
to investors that may be subject to special tax rules such as
banks, insurance companies, tax-exempt organizations, dealers in
securities or currencies, persons that will hold Notes or Common
Stock as part of an integrated investment (including a
"straddle") comprised of Notes or shares of Common Stock and one
or more other positions, persons that
24
<PAGE>
have a "functional currency" other than the U.S. dollar or
holders of Notes that did not acquire the Notes in the initial
distribution thereof at their original issue price. Investors
considering the purchase of Notes should consult their own tax
advisors with respect to the application of the federal income
tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or
foreign taxing jurisdiction.
As used herein, the term "United States Holder" means the
beneficial owner of a Note or Common Stock that is, for United
States federal income tax purposes, (i) a citizen or resident of
the United States, (ii) a domestic corporation or (iii) otherwise
subject to United States federal income taxation on a net income
basis.
Interest and Original Issue Discount
Payments of interest on the Notes will constitute
"qualified stated interest" (as defined below) and will generally
be taxable to a United States Holder as ordinary interest income
at the time such interest is received or accrued, in accordance
with such holder's method of accounting for federal income tax
purposes.
United States Holders of Notes generally will also be
subject to the special tax accounting rules for original issue
discount obligations provided by the Internal Revenue Code of
1986, as amended (the "Code"). Accordingly, as described in more
detail below, United States Holders of the Notes will be required
to include original issue discount in gross income as ordinary
income as it accrues, in advance of the receipt of cash
attributable to that income.
In general, a debt obligation that is issued for an amount
less than its stated redemption price at maturity will be
considered to have been issued with original issue discount for
U.S. federal income tax purposes. Under the applicable
regulations, the stated redemption price at maturity will equal
100 percent of the principal amount.
Each United States Holder of a Note, whether such holder
uses the cash or the accrual method of tax accounting, will be
required to include in gross income the sum of the "daily
portions" of original issue discount on that Note for all days
during the taxable year that the United States Holder owns the
Note. The daily portions of original issue discount on a Note are
determined by allocating to each day in any accrual period (each
successive period that ends on an interest payment date) a
ratable portion of the original issue discount allocable to that
accrual period. The amount of original issue discount allocable
to each accrual period is determined by (i) multiplying the
"adjusted issue price" (as defined below) at the beginning of the
accrual period by the annual yield to maturity of the Note and
(ii) subtracting from that product the amount of qualified stated
interest payable at the end of the period. The "adjusted issue
price" of a Note at the beginning of any accrual period will be
the sum of its issue price (generally, the first price at which a
substantial amount of Notes are sold, disregarding sales to bond
houses, brokers, or similar persons or organizations acting in
the capacity of underwriters, placement agents or wholesalers)
and the amount of original issue discount allocable to all prior
accrual periods, reduced by the amount of all payments
25
<PAGE>
previously made on the Notes that were not qualified stated
interest payments. The term "qualified stated interest" generally
means stated interest that is unconditionally payable in cash or
property (other than debt instruments of the Company) at least
annually during the entire term of the Notes at a single fixed
rate of interest. As a result of this "constant yield" method of
including original issue discount in income, the amounts
includible in income by a United States Holder in respect of a
Note are lesser in the early years and greater in the later years
than the amounts that would be includible on a straight-line
basis.
Sale, Exchange or Retirement of the Notes
Upon the sale, exchange or retirement (including a
redemption by the Company) of a Note, a United States Holder
generally will recognize capital gain or loss equal to the
difference between the amount realized on the sale, exchange or
retirement (except to the extent such amount is attributable to
accrued interest income, which will be treated as such) and such
holder's adjusted tax basis in the Note. A holder's adjusted tax
basis in a Note will generally be equal to the amount paid for
the Note by such holder increased by any original issue discount
included in income by the holder, and reduced by any payments
received, other than payments of qualified stated interest. Such
capital gain or loss will be long-term capital gain or loss if
the United States Holder's holding period in the Note is more
than one year at the time of disposition. The distinction between
capital gain or loss and ordinary income or loss is important for
purposes of the limitations on a United States Holder's ability
to offset capital losses against ordinary income and because
United States Holders that are individuals may be entitled to a
preferential rate on long-term capital gains. The Taxpayer Relief
Act of 1997 further reduces tax rates on capital gains recognized
by individuals in respect of assets held for more than 18 months.
United States Holders are advised to consult with their own tax
advisers regarding the application of the Taxpayer Relief Act of
1997 to their particular circumstances.
Conversion of the Notes
A United States Holder generally will not recognize any
income, gain, or loss upon conversion of a Note into Common Stock
except with respect to cash received in lieu of a fractional
share of Common Stock. Such holder's basis in the Common Stock
received on conversion of a Note will be the same as such
holder's tax basis in the Note at the time of conversion (reduced
by any basis allocable to a fractional share interest as
described below), and the holding period for the Common Stock
received on conversion will include the holding period of the
Note converted, except that the holding period of the Common
Stock allocable to accrued original issue discount may commence
with the conversion.
Cash received in lieu of a fractional share of Common Stock
upon conversion will be treated as a payment in exchange for the
fractional share interest in the Common Stock. Accordingly, the
receipt of cash in lieu of a fractional share of Common Stock
will generally result in capital gain or loss (measured by the
difference between the cash received for the fractional share and
the United States Holder's basis in the fractional share).
26
<PAGE>
Constructive Dividends
If at any time (a) the Company makes a distribution to its
shareholders or purchases Common Stock in a tender offer and such
distribution or purchase would be taxable to such stockholders as
a dividend for United States federal income tax purposes (e.g.,
distributions of evidences of indebtedness or assets of the
Company, but generally not stock dividends or rights to subscribe
for Common Stock) and, pursuant to the antidilution provisions of
the Indenture, the Conversion Rate of the Notes is increased, or
(b) the Conversion Rate of the Notes is increased at the
discretion of the Company, such increase may be deemed to be the
payment of a taxable dividend to holders or beneficial owners of
Notes (pursuant to Section 305 of the Code). Holders of Notes
therefore could have taxable income as a result of an event in
which they receive no cash or property. Similarly, a failure to
adjust the Conversion Rate to reflect a stock dividend or other
event increasing the proportionate interest of the holders of
outstanding Common Stock could, in some circumstances, give rise
to deemed dividend income to United States Holders of such Common
Stock.
Dividends on Common Stock
Dividends paid on Common Stock generally will be includible
in the income of a United States Holder as ordinary income to the
extent of the Company's current or accumulated earnings and
profits. Subject to certain limitations, a corporate taxpayer
holding Common Stock that receives dividends thereon generally
will be eligible for a dividends-received deduction equal to 70%
of the dividends received.
Sale, Exchange or Redemption of Common Stock
Upon the sale, exchange or redemption of Common Stock, a
United States Holder generally will recognize capital gain or
loss equal to the difference between the amount realized on the
sale, exchange or redemption and the holder's adjusted basis in
the Common Stock. Such capital gain or loss will be long-term
capital gain or loss if the holder's holding period in the Common
Stock was more than one year at the time of the sale, exchange or
redemption. The distinction between capital gain or loss and
ordinary income or loss is important for purposes of the
limitations on a United States Holder's ability to offset capital
losses against ordinary income and because United States Holders
that are individuals may be entitled to a preferential rate on
long-term capital gains. The Taxpayer Relief Act of 1997 further
reduces tax rates on capital gains recognized by individuals in
respect of assets held for more than 18 months. United States
Holders are advised to consult with their own tax advisers
regarding the application of the Taxpayer Relief Act of 1997 to
their particular circumstances.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply
to payments of principal, premium, if any, and interest on a
Note, payments of dividends on Common Stock, and payment of the
proceeds of the sale of a Note or Common Stock to certain
non-corporate United States Holders, and a 31% backup withholding
27
<PAGE>
tax may apply to such payments if the United States Holder (i)
fails to furnish or certify its correct taxpayer identification
number to the payor in the manner required, (ii) is notified by
the Internal Revenue Service (the "IRS") that it has failed to
report payments of interest and dividends properly, or (iii)
under certain circumstances, fails to certify that it has not
been notified by the IRS that it is subject to backup withholding
for failure to report interest and dividend payments. Any amounts
withheld under the backup withholding rules from a payment to a
United States Holder will be allowed as a credit against such
holder's United States federal income tax liability and may
entitle the United States Holder to a refund.
Non-United States Holders
Subject to the discussion of backup withholding below,
payments of interest (including original issue discount) on the
Notes to, or on behalf of, any beneficial owner of a Note that
is, with respect to the United States, a nonresident alien or a
foreign corporation and that is not subject to United States
federal income tax as a result of any direct or indirect
connection to the United States other than its ownership of a
Note or Common Stock (a "Non-United States Holder") will not be
subject to U.S. federal income or withholding taxes, provided
that the Non-United States Holder provides an appropriate
statement (generally on IRS Form W-8), signed under penalties of
perjury, identifying the Non-United States Holder and stating
that the holder is not a U.S. person (or, with respect to
payments made after December 31, 1998, satisfies certain
documentary evidence requirements for establishing that it is not
a U.S. person) and provided that the holder is not a "10%
shareholder" or "related controlled foreign corporation" with
respect to the Company. If these conditions are not met, a 30%
withholding tax will apply to interest income from the Notes,
unless an income tax treaty reduces or eliminates such tax. A 30%
withholding tax will apply to dividends paid (or deemed paid, as
described under "Constructive Dividends") on shares of Common
Stock held by a Non-United States Holder, unless an income tax
treaty reduces or eliminates such tax.
Any capital gain realized on the sale, exchange, redemption
or other disposition of a Note or shares of Common Stock
(including the receipt of cash in lieu of fractional shares upon
conversion of a Note into shares of Common Stock) by a Non-United
States Holder will not be subject to United States federal income
or withholding taxes unless, in the case of an individual, such
holder is present in the United States for 183 days or more in
the taxable year of the sale, exchange, redemption, or other
disposition and certain other conditions are met.
Except as described above with respect to the receipt of
cash in lieu of fractional shares by certain Non-United States
Holders upon conversion of Notes, no United States federal income
or withholding taxes will be imposed upon the conversion of Notes
into shares of Common Stock.
If interest with respect to the Notes, dividends on Common
Stock or capital gain on the sale, exchange or other disposition
of the Notes or Common Stock is "effectively connected" with the
conduct of a trade or business by a nonresident alien or foreign
corporation in the United States, such income will be subject to
United States federal income tax at the same rate that applies
for United States Holders and may also be subject to a United
States "branch
28
<PAGE>
profits tax" at a 30% rate (or such lower rate as may be
specified by an applicable income tax treaty).
Payments made on Notes or shares of Common Stock and
proceeds from the sale of a Note or shares of Common Stock
received by a Non-United States Holder will not be subject to a
backup withholding tax of 31% or to information reporting
requirements unless, in general, the holder fails to comply with
certain reporting procedures (or, with respect to payments made
after December 31, 1998, fails to satisfy certain documentary
evidence requirements for establishing that it is not a U.S.
person) or otherwise fails to establish an exemption from such
tax reporting requirements under applicable provisions of the
Code.
With respect to payments made after December 31, 1998,
for purposes of applying the rules set forth above for
"Non-United States Holders" to an entity that is treated as
fiscally transparent (e.g., a partnership) for U.S. federal
income tax purposes, the beneficial owner means each of the
ultimate beneficial owners of the entity.
SELLING SECURITYHOLDERS
The Notes offered hereby were originally issued by the
Company and sold by the Initial Purchasers in transactions exempt
from the registration requirements of the Securities Act to
"qualified institutional buyers" (as defined in Rule 144A under
the Securities Act) or other institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act). The Selling Securityholders (which term includes
their transferees, pledgees, donees or their successors) may from
time to time offer and sell pursuant to this Prospectus any or
all of the Notes and Common Stock issued upon conversion of the
Notes.
Prior to any use of this Prospectus in connection with an
offering of the Notes and/or the Common Stock issuable upon
conversion of the Notes, this Prospectus will be supplemented to
set forth the name and number of shares beneficially owned by the
Selling Securityholder intending to sell such Notes and/or Common
Stock and the number of Notes and/or shares of Common Stock to be
offered. The Prospectus Supplement will also disclose whether any
Selling Securityholder selling in connection with such Prospectus
Supplement has held any position or office with, been employed by
or otherwise has had a material relationship with, the Company or
any of its affiliates during the three years prior to the date of
the Prospectus Supplement.
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds of the
sale of the Notes and Common Stock offered hereby. The Notes and
Common Stock may be sold from time to time to purchasers directly
by the Selling Securityholders. Alternatively, the Selling
Securityholders may from time to time offer the Notes in the form
of discounts, concessions or commissions from the Selling
Securityholders and/or the purchasers of the Notes and Common
Stock for whom
29
<PAGE>
they may act as agent. The Selling Securityholders and any such
brokers, dealers or agents who participate in the distribution of
the Notes and Common Stock may be deemed to be "underwriters,"
and any profits on the sale of the Notes and Common Stock by them
and any discounts, commissions or concessions received by any
such brokers, dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act.
To the extent the Selling Securityholders may be deemed to be
underwriters, the Selling Securityholders may be subject to
certain statutory liabilities, including, but not limited to,
Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under
the Exchange Act.
The Notes and Common Stock offered hereby may be sold from
time to time in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices
determined at the time of sale or at negotiated prices. The Notes
and Common Stock may be sold by one or more of the following
methods, without limitation: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the Notes and
Common Stock issuable upon conversion thereof as agent but may
position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer
as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions
and transactions in which the broker solicits purchasers; (d) an
exchange distribution in accordance with the rules of such
exchange; (e) face-to-face transactions between sellers and
purchasers without a broker-dealer; (f) through the writing of
options; and (g) other. At any time a particular offer of the
Notes and Common Stock is made, a revised Prospectus or
Prospectus Supplement, if required, will be distributed which
will set forth the aggregate amount and type of Securities being
offered and the terms of the offering, including the name or
names of any underwriters, dealers or agents, any discounts,
commissions, concessions and other items constituting
compensation from the Selling Securityholders and any discounts,
commissions or concessions allowed or reallowed or paid to
dealers. Such Prospectus Supplement and, if necessary, a
post-effective amendment to the Registration Statement of which
this Prospectus is apart, will be filed with the Commission to
reflect the disclosure of additional information with respect to
the distribution of the Notes and Common Stock. In addition, the
Notes and Common Stock covered by this Prospectus may be sold in
private transactions or under Rule 144 rather than pursuant to
this Prospectus.
To the best knowledge of the Company, there are currently
no plans, arrangements or understandings between any Selling
Securityholders and any broker, dealer, agent or underwriter
regarding the sale of the Securities by the Selling
Securityholders. There is no assurance that any Selling
Securityholder will sell any or all of the Securities offered by
it hereunder or that any such Selling Securityholder will not
transfer, devise or gift such Securities by other means not
described herein.
The Selling Securityholders and any other person
participating in such distribution will be subject to applicable
provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M which may
limit the timing of purchases and sales of any of the Notes and
Common Stock by the Selling Securityholders and any other such
person. Furthermore, Regulation M of the Exchange Act may
restrict the ability of any
30
<PAGE>
person engaged in the distribution of the Notes and Common Stock
to engage in market-making activities with respect to the
particular Notes and Common Stock being distributed for a period
of up to five business days prior to the commencement of such
distribution. All of the foregoing may affect the marketability
of the Notes and Common Stock and the ability of any person or
entity to engage in market-making activities with respect to the
Notes and Common Stock.
Pursuant to the Registration Rights Agreement entered into
in connection with the offer and sale of the Notes by the
Company, each of the Company and the Selling Securityholders will
be indemnified by the other against certain liabilities,
including certain liabilities under the Securities Act, or will
be entitled to contribution in connection therewith.
The Company has agreed to pay substantially all of the
expenses incidental to the registration, offering and sale of the
Securities to the public other than commissions, fees and
discounts of underwriters, brokers, dealers and agents.
LEGAL MATTERS
The validity of the Notes and the underlying Common Stock
offered hereby will be passed upon for the Company by Nicholas J.
Camera, General Counsel of the Company.
EXPERTS
The consolidated financial statements of the Company and its
subsidiaries incorporated in this Prospectus by reference to the
Company's Annual Report on Form 10-K for the year ended December
31, 1996, as amended by the Company's Amendment Number One on
Form 10-K/A for the year ended December 31, 1996, have been so
incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as
experts in accounting and auditing.
31
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the registrant in
connection with the distribution of the securities being
registered are as follows:
Registration fees............................... $0
Legal fees and expenses......................... 1,000
Fee of accountants, Price Waterhouse LLP ....... 5,000
Miscellaneous................................... 0
Total........................................... $6,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of Title 8 of the Delaware Code gives a
corporation power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The same
Section also gives a corporation power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good
faith and in a manner he reasonable believed to be in or not
opposed to the best interests of the corporation and except that
no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnify for such expenses
II-1
<PAGE>
which the Court of Chancery or such other court shall deem
proper. Also, the Section states that, to the extent that a
director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense or any such
action, suit or proceeding, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
The Company's bylaws contain specific authority for
indemnification by the Company of current and former directors,
officers, employees or agents of the Company on terms that have
been derived from Section 145 of Title 8 of the Delaware Code.
The Company maintains policies of insurance under which the
Company and its directors and officers are insured subject to
specified exclusions and deductible and maximum amounts against
loss arising from any claim which may be made against the Company
or any director or officer of the Company by reason of any breach
of duty, neglect, error, misstatement, omission or act done or
alleged to have been done while acting in their respective
capabilities.
ITEM 16. EXHIBITS.
Exhibit Number Description
-------------- -----------
4.1* Indenture dated as of September 16, 1997 between
the Company and The Bank of New York, as trustee.
4.2* Form of Note (included in Exhibit 4.1).
4.3* Registration Rights Agreement dated as of
September 16, 1997 between the Company and
Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co., and SBC Warburg Dillon Read Inc.
4.4** Rights Agreement dated as of August 1, 1989
between the Company and First Chicago Trust
Company of New York.
5 Opinion of Nicholas J. Camera, Esq.
12 Statement of Ratio of Earnings to Fixed Charges.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Nicholas J. Camera, Esq. (included in
Exhibit 5).
24 Power of Attorney (included in Part II of this
Registration Statement).
25* Statement re Eligibility of Trustee on Form T-1.
*Filed as an exhibit to the Company's Registration Statement
(No. 333-42243) on Form S-3 and incorporated herein by reference.
**Filed as an exhibit to the Company's Registration Statement
(No. 0-17904) on Form 8-A and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
II-2
<PAGE>
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, 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 this 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 Rule 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 this registration
statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this registration statement or any material change to
such information in this registration statement;
provided, however, that the undertakings set forth in paragraphs
(i) and (ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this 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 herein, 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.
(b) 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 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.
II-3
<PAGE>
(c) 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 Securities 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 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.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
Prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of Prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of Prospectus 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 initial bona fide offering thereof.
II-4
<PAGE>
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 New York, State of New York, on the 4th day of
February, 1998.
THE INTERPUBLIC GROUP OF COMPANIES,
INC.
(Registrant)
By: /s/ Nicholas J. Camera
----------------------
Nicholas J. Camera
Vice President, General Counsel and
Secretary
II-6
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Philip H. Geier,
Jr., Eugene P. Beard and Nicholas J. Camera, and each of them,
his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection
therewith with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and to perform each and every act and
thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he might or
would do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Philip H. Geier, Jr. Chairman of the Board and December 9,
- ------------------------ President (Principal Executive 1997
Philip H. Geier, Jr. Officer)
/s/ Eugene P. Beard Vice Chairman - Finance and December 9,
- ------------------------ Operations (Principal Financial 1997
Eugene P. Beard Officer and Director)
/s/ Joseph M. Studley Vice President and Controller December 9,
- ------------------------ (Principal Accounting Officer) 1997
Joseph M. Studley
/s/ Frank J. Borelli Director December 9,
- ------------------------ 1997
Frank J. Borelli
/s/ Reginald K. Brack Director December 9,
- ------------------------ 1997
Reginald K. Brack
/s/ Jill M. Considine Director December 9,
- ------------------------ 1997
Jill M. Considine
/s/ John J. Dooner, Jr. Director December 9,
- ------------------------ 1997
John J. Dooner, Jr.
/s/ Frank B. Lowe Director December 9,
- ------------------------ 1997
Frank B. Lowe
/s/ Leif H. Olsen Director December 9,
- ------------------------ 1997
Leif H. Olsen
II-5
<PAGE>
/s/ Martin F. Puris Director December 9,
- ------------------------ 1997
Martin F. Puris
/s/ Allen Questrom Director December 9,
- ------------------------ 1997
Allen Questrom
/s/ J. Phillip Samper Director December 9,
- ------------------------ 1997
J. Phillip Samper
II-6
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
4.1* Indenture dated as of September 16, 1997
between the Company and The Bank of New
York, as trustee.
4.2* Form of Note (included in Exhibit 4.1).
4.3* Registration Rights Agreement dated as of September
16, 1997 between the Company and Morgan Stanley &
Co. Incorporated, Goldman, Sachs & Co., and SBC
Warburg Dillon Read Inc.
4.4** Rights Agreement dated as of August 1, 1989 between
the Company and First Chicago Trust Company of New
York.
5 Opinion of Nicholas J. Camera, Esq.
12 Statement of Ratio of Earnings to Fixed Charges.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Nicholas J. Camera, Esq. (included in
Exhibit 5).
24 Power of Attorney (included in Part II of this
Registration Statement).
25* Statement re Eligibility of Trustee on Form T-1.
* Filed as an exhibit to the Company's Registration Statement (No. 333-
42243) on Form S-3 and incorporated herein by reference.
** Filed as an exhibit to the Company's Registration Statement (No. 0-
17904) on Form 8-A and incorporated herein by reference.
Exhibit 5
February 4, 1998
The Interpublic Group of Companies, Inc.
1271 Avenue of the Americas
New York, New York 10020
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
In my capacity as General Counsel to The Interpublic Group
of Companies, Inc., a Delaware corporation (the "Company"), I
have been asked to render this opinion in connection with a
Registration Statement on Form S-3 (the "Registration Statement")
being filed by the Company contemporaneously herewith with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, covering an aggregate of 3,346,500 Rights to
purchase Series A Cumulative Participating Preferred Stock
issuable in certain circumstances with the shares of Common
Stock, par value $.10 per share (the "Common Stock"), issuable
upon conversion of the Company's 1.80% Convertible Subordinated
Notes due 2004 (the "Notes"), plus such indeterminate amount of
Rights as may become issuable upon conversion of the Notes as a
result of adjustments to the conversion price (the "Rights"). The
Rights registered by the Registration Statement are to be offered
for the respective accounts of the holders thereof.
In that connection, I have examined the Certificate of
Incorporation and the By-Laws, both as amended, of the Company,
the Indenture dated as of September 16, 1997 (the "Indenture")
between the Company and The Bank of New York, as trustee, the
Registration Rights Agreement dated as of September 16, 1997
between the Company and Morgan Stanley & Co. Incorporated,
Goldman Sachs & Co. and SBC Warburg Dillon Read Inc., the
Registration Statement, corporate proceedings relating to the
authorization of the Rights, and such other instruments and
documents as I deemed relevant under the circumstances.
In making the aforesaid examinations, I have assumed the
genuineness of all signatures and the conformity to original
documents of all copies furnished to me as original or
photostatic copies. I have also assumed that the corporate
records furnished to me by the Company include all corporate
proceedings taken by the Company to date.
Based upon and subject to the foregoing, I am of the
opinion that the Rights have been duly authorized and, when
issued in connection with the issuance of the Common Stock upon
conversion of the Notes in accordance with the terms of the
Indenture, and when duly executed and delivered by the Company,
will be the valid, binding and enforceable obligations of the
Company.
Insofar as the foregoing opinions relate to the validity,
binding effect or enforceability of any agreement or obligation
of the Company, (a) I have assumed that each other party to such
agreement or obligation has satisfied those legal requirements
that are applicable and it to the extent necessary to make such
agreement or obligation enforceable against it, and (b) such
1
<PAGE>
opinions are subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and to general
principals of equity.
The foregoing opinions are limited to the federal law of
the United States of America and the law of the State of New
York, and, where necessary, the corporate laws of the State of
Delaware.
I hereby consent to the use of my opinion as herein set
forth as an exhibit to the Registration Statement and to the use
of my name under the caption "Legal Matters" in the Prospectus
forming part of the Registration Statement.
Very truly yours,
/s/ Nicholas J. Camera
----------------------
Nicholas J. Camera
Vice President, General
Counsel and Secretary
2
EXHIBIT 12
Statement of Ratio of Earnings to Fixed Charges
Nine Months
Year Ended December 31, Ended September 30,
----------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
---- ---- ---- ---- ---- ---- ----
Ratio of
earnings to
fixed
charges 3.8 4.5 3.6 3.9 4.9 4.3 4.3
For purpose of computing the ratio of earnings to
fixed charges, earnings are defined as income before provision
for income taxes plus fixed charges. Fixed charges consist of
interest expense, amortization of debt discount and debt issuance
costs and a portion of rent expense which is deemed to be
representative of an interest factor.
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
the Prospectus constituting part of this Registration Statement
on Form S-3 of our report dated February 14, 1997, which appears
on page 48 of the 1996 Annual Report to the Stockholders of The
Interpublic Group of Companies, Inc., (the "Company") which is
incorporated by reference in the Company's Annual Report on Form
10-K for the year ended December 31, 1996, as amended by the
Company's Amendment Number One on Form 10-K/A for the year ended
December 31, 1996. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules,
which appears on page F-2 of such Annual Report on Form 10-K, as
amended by the Company's Amendment Number One on Form 10-K/A for
the year ended December 31, 1996. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
New York, New York
February 4, 1998
