<PAGE> 1
As filed with the Securities and Exchange Commission on September 28, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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KELLOGG COMPANY
(Exact Name of Registrant as Specified in its Charter)
Delaware 38-0710690
(State or Other Jurisdiction (IRS Employer Identification Number)
of Incorporation or Organization)
<TABLE>
<S> <C>
One Kellogg Square Richard M. Clark
Battle Creek, Michigan 49016 Senior Vice President, General Counsel and Secretary
(616) 961-2000 Kellogg Company
(Address, including zip code, and telephone number, One Kellogg Square
including area code, of Registrant's principal executive offices) Battle Creek, Michigan 49016
(616) 961-2181
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
Copies to:
Edward S. Best
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 782-0600
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
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, please check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Each Class of Amount of Securities Proposed Maximum Proposed Maximum Amount of
Securities to Be Registered to Be Registered Offering Price Aggregate Registration Fee
Per Share(1) Offering Price(1)
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<S> <C> <C> <C> <C>
Notes due 2005................... $200,000,000 100% $200,000,000 $59,000
====================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of determining the registration fee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTINg PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 28, 1998
$200,000,000
KELLOGG COMPANY
% NOTES DUE 2005
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Interest on the Notes is payable on and of each year, commencing
on , 1999. The Notes will not be redeemable prior to maturity. See
"Description of Notes."
The Notes will be represented by one or more global securities registered
in the name of a nominee of The Depository Trust Company, as Depository.
Ownership of interests in the global securities will be shown on, and the
transfer thereof will be effected only through, records maintained by the
Depository or its nominee for such global securities and on the records of
participants. Except as otherwise described under "Description of Notes-Book
Entry Procedures" below, owners of beneficial interests in the global securities
will not be entitled to receive Notes in definitive form and will not be
considered the holders thereof. Settlement for the Notes will be made in
immediately available funds. The Notes will trade in the Depository's Same-Day
Funds Settlement System and secondary market trading activity for the Notes will
therefore settle in immediately available funds. See "Description of
Notes-Settlement and Payment."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
Initial Public Underwriting Proceeds to
Offering Price(1) Discount(2) Company(1)(3)
----------------- ----------- -------------
<S> <C> <C> <C>
Per Note ................. % % %
Total .................... $ $ $
</TABLE>
(1) Plus accrued interest, if any, from October , 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting estimated expenses of $275,000 payable by the Company.
---------------
The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the Notes
will be distributed through the facilities of The Depository Trust Company, New
York, New York, on or about October , 1998 against payment therefor in
immediately available funds.
JOINT BOOK-RUNNING MANAGERS:
GOLDMAN, SACHS & CO. LEHMAN BROTHERS
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The date of this Prospectus is October , 1998.
<PAGE> 3
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH NOTES, AND
THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE UNDERWRITING.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company may be inspected and
copied at the public reference facilities maintained by the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World
Trade Center, New York, New York 10048 and at Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can also be obtained
upon written request addressed to the Commission, Public Reference Section,
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates, or from the Commission's Internet website at
http://www.sec.gov. Reports, proxy statements and other information concerning
the Company may also be inspected at the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act, with respect to the Notes
offered hereby. This Prospectus, which constitutes part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain items of which are contained in exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission.
Statements made in this Prospectus as to the content of any contract, agreement
or other document referred to are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the Registration Statement, which
may be inspected and copied in the manner and at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission by the Company
are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997 (File No. 1-4171); and
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents. All information appearing in this Prospectus is qualified in
its entirety by the information and financial statements (including the notes
thereto) appearing in the documents incorporated by reference herein. Any
statement contained in a document incorporated or
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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 in any 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 will furnish without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the documents described above (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference in such documents) which
have been or may be incorporated by reference in this Prospectus. Requests
should be addressed to Richard M. Clark, Senior Vice President, General Counsel
and Secretary, Kellogg Company, One Kellogg Square, Battle Creek, Michigan 49016
(Telephone: (616) 961-2181).
THE COMPANY
Kellogg Company and its subsidiaries are engaged in the manufacture and
marketing of ready-to-eat cereal and other convenience food products on a
worldwide basis. The principal products of the Company are ready-to-eat cereals
and other convenience food products which are manufactured in 19 countries and
distributed in nearly 160 countries. Ready-to-eat cereals are marketed under the
KELLOGG'S(R) name and are sold principally to the grocery trade through direct
sales forces for resale to consumers and through broker and distribution
arrangements in less developed market areas. In addition to ready-to-eat
cereals, the Company produces and distributes toaster pastries, frozen waffles,
crispy marshmallow squares, bagels, and cereal bars. The Company also markets
several other convenience food products in various locations throughout the
world.
Kellogg Company was incorporated in Delaware in 1922 as the successor to
Kellogg Toasted Corn Flake Company which had been incorporated in Michigan in
1906. As used herein and in the Prospectus Supplement, the term "Company" or
"Kellogg" refers to Kellogg Company and its consolidated subsidiaries, unless
otherwise indicated or unless the context otherwise requires. The Company's
principal business offices are located at One Kellogg Square, Battle Creek,
Michigan 49016; the telephone number is (616) 961-2000.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company and its subsidiaries, whether or not consolidated, for the six-month
period ended June 30, 1998 and for each of the years in the five-year period
ended December 31, 1997. For the purposes of computing the ratio of earnings to
fixed charges, fixed charges consist of interest expense plus interest
capitalized and that portion (one-third) of rental expenses considered to be
interest. Earnings are computed by adding fixed charges except interest
capitalized to earnings before income taxes. A statement setting forth the
computation of the ratio of earnings to fixed charges is filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended June -------------------------------------------------------------------------------------------------
30, 1998 1997 1996 1995 1994 1993
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
8.2x 7.8x 11.4x 10.8x 18.3x 19.5x
</TABLE>
3
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USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes,
estimated to be approximately $ , will be used to refund outstanding
indebtedness. Such indebtedness bears interest at a rate per annum equal to
6.25% and matures on October 12, 1998.
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DESCRIPTION OF NOTES
The Notes will be issued under an indenture, dated as of August 1, 1993
(the "Indenture"), between the Company and Harris Trust and Savings Bank, as
trustee (the "Trustee"). A copy of the Indenture is incorporated by reference as
an exhibit to the Registration Statement of which this Prospectus is a part.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Indenture, including the definitions
therein of certain terms. Wherever particular sections, articles or defined
terms of the Indenture are referred to herein, such sections, articles or
defined terms shall be as specified in the Indenture. Certain defined terms in
the Indenture are capitalized herein.
GENERAL
The Notes will represent unsecured and unsubordinated obligations of the
Company and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Notes will be limited to $200,000,000 aggregate
principal amount.
The Notes will mature on , 2005. The Notes will bear interest at
the annual interest rate shown on the cover page of this Prospectus from ,
1998 or from the most recent date on which interest has been paid or provided
for, payable semi-annually on and of each year, commencing ,
1999, to the persons in whose names such Notes were registered at the close of
business on the next preceding and , respectively. Principal
and interest will be payable, and the Notes will be transferable or
exchangeable, at the office or offices or agency maintained by the Company for
such purposes, provided that payment of interest on the Notes may be made at
the option of the Company by check mailed to the registered holders.
Any payment otherwise required to be made in respect of Notes on a date
that is not a Business Day for such Notes need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on such date, and no additional interest shall accrue as a result of such
delayed payment.
The Notes are not subject to redemption prior to maturity and are not
entitled to any sinking fund.
The Notes will be issued in denominations of $1,000 or any whole multiple
of $1,000. No service charge will be made for any transfer or exchange of the
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. (Section 2.8)
SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds. The Notes will trade in the Depository's
Same-Day Funds Settlement System until maturity, and secondary market trading in
the Notes will therefore be required by the Depository to settle in immediately
available funds.
BOOK-ENTRY PROCEDURES
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The Notes will be issued initially in the form of one or more fully
registered global securities which will be deposited with, or on behalf of, the
Depository, and registered in the name of the Depository's nominee. Except as
set forth below, the Notes will not be issuable in certificated form.
The Depository has advised the Company and each of the underwriters named
below in the section entitled "Underwriting" (collectively, the "Underwriters"),
as follows: The Depository is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depository holds securities that its Participants deposit with
the Depository. The Depository also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations. The Depository is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depository's system is also available to others such
as securities brokers and dealers, banks and trust companies that clear through
or maintain a custodial relationship with a Direct Participant, either directly
or indirectly. The rules applicable to the Depository and its Participants are
on file with the Commission.
Upon the issuance of the global securities, the Depository or its nominee
will credit the accounts of persons holding a beneficial interest in such global
securities with the respective principal amounts of the Notes represented by
such global securities. Such accounts shall be designated by the Underwriters.
Ownership of beneficial interests in the global securities will be limited to
persons that have accounts with the Depository for such global securities or its
nominee ("Participants") or persons that may hold interests through
Participants. Ownership of beneficial interests in such global securities will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by the Depository or its nominee (with respect to interests
of Participants) for such global securities and on the records of Participants
(with respect to interests of persons other than Participants). The laws of some
states require that certain purchasers of securities take physical delivery of
such securities in definitive form. Such limitation and such laws may impair the
ability to transfer beneficial interests in the global securities.
So long as the Depository, or its nominee, is the registered owner of the
global securities, the Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such global
securities for all purposes under the Indenture. Except as provided below,
owners of beneficial interests in the global securities will not be entitled to
have Notes represented by such global securities registered in their names, will
not receive or be entitled to receive physical delivery of such Notes in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payment of principal of and any premium and interest on Notes registered in
the name of the Depository or its nominee will be made to the Depository or its
nominee, as the case may be, as the registered owner of the global securities
representing such Notes. Neither the Company, the Trustee, any Paying Agent nor
the Security Registrar for the Notes will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of the global securities for such Notes or for
maintaining, supervising or receiving any records relating to such beneficial
ownership interests.
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The Company expects that the Depository or its nominee, as the case may be,
upon receipt of any payment of principal, premium or interest, will credit
immediately Participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the global
securities as shown on the records of the Depository or its nominee. The Company
also expects that payments by Participants to owners of beneficial interests in
such global securities held through such Participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of such Participants.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue Notes in definitive form in exchange for the global
securities representing such Notes. In addition, the Company may at any time and
in its sole discretion determine not to have the Notes represented by a global
securities and, in such event, the Company will issue Notes in definitive form
in exchange for the global securities.
CERTAIN COVENANTS OF THE COMPANY
The Company will covenant that, so long as any of the Notes remain
outstanding, the Company will not, nor will it permit any Restricted Subsidiary
(as defined below) to, issue, assume or guarantee any indebtedness for money
borrowed (herein referred to as "Debt") if such Debt is secured by a mortgage
(as defined in the Indenture) upon any Principal Property (as defined below) or
on any shares of stock or indebtedness of any Restricted Subsidiary (whether
such Principal Property, shares of stock or indebtedness are now owned or
hereafter acquired) without in any such case effectively providing that the
Notes (together with, if the Company shall so determine, any other indebtedness
of or guaranteed by the Company or such Restricted Subsidiary ranking equally
with the Notes and then existing or thereafter created) shall be secured equally
and ratably with such Debt so long as such Debt shall be so secured, except that
the foregoing restriction shall not apply to (i) mortgages on property, shares
of stock or indebtedness (herein referred to as "property") of any corporation
existing at the time such corporation becomes a Restricted Subsidiary; (ii)
mortgages on property existing at the time of acquisition thereof or mortgages
to secure all or part of the purchase price of such property or to secure Debt
incurred prior to, at the time of, or within 360 days after, the acquisition,
completion of construction or commencement of commercial operation of such
property for the purpose of financing the purchase price of such property or
construction or improvements thereon, provided that the mortgage shall not apply
to property theretofore owned by the Company or any Restricted Subsidiary other
than real property substantially unimproved for the use intended by the Company
or such Restricted Subsidiary; (iii) mortgages on property of a Restricted
Subsidiary securing Debt owing to the Company or another Restricted Subsidiary;
(iv) mortgages on property of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of a corporation or firm as an entirety or substantially as an
entirety to the Company or a Restricted Subsidiary, provided that any such
mortgages do not affect property theretofore owned by the Company or such
Restricted Subsidiary; (v) mortgages on property owned or leased by the Company
or a Restricted Subsidiary in favor of the United States of America, any State,
any other country, or any political subdivision thereof or in favor of the
holders of securities issued by any such entity, pursuant to any contract or
statute (including mortgages to secure Debt of the pollution control or
industrial revenue bond type) or to secure any indebtedness incurred for the
purpose of financing all or any part of the purchase price or the cost of
construction of the property subject to such mortgages; (vi) mortgages existing
at the date of the Indenture; (vii) certain landlords' liens; (viii) mortgages
to secure partial, progress, advance or other payments or any Debt incurred for
the purpose of financing all or part of the purchase price or cost of
construction, development or substantial repair, alteration or improvement of
the property subject to
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such mortgage if the commitment for such financing is obtained within one
year after completion of or the placing into operation of such constructed,
developed, repaired, altered or improved property; (ix) mortgages arising in
connection with contracts with or made at the request of the United States of
America, any State, or any department, agency or instrumentality of any of the
foregoing; (x) mechanics' and similar liens arising in the ordinary course of
business in respect of obligations not due or being contested in good faith;
(xi) mortgages arising from deposits with or the giving of any form of security
to any governmental authority required as a condition to the transaction of
business or exercise of any privilege, franchise or license; (xii) mortgages for
taxes, assessments or governmental charges or levies which, if delinquent, are
being contested in good faith; (xiii) mortgages (including judgment liens)
arising from legal proceedings being contested in good faith; or (xiv) any
extension, renewal or replacement (or successive extensions, renewals, or
replacements) in whole or in part of any mortgage referred to in the foregoing
clauses (i) to (xiii), inclusive.
Notwithstanding the above, the Company and one or more Restricted
Subsidiaries may, without securing the Notes, issue, assume or guarantee secured
Debt which would otherwise be subject to the foregoing restrictions, provided
that after giving effect thereto the aggregate amount of such Debt then
outstanding (not including secured Debt permitted under the foregoing
exceptions) at such time does not exceed 10% of the Consolidated Net Tangible
Assets (as defined in the Indenture) of the Company as calculated on the basis
of its latest quarterly financial statements preceding the date of such
determination. (Section 3.6)
The Company will covenant that it will not enter, nor will it permit any
Restricted Subsidiary to enter, into a sale and leaseback transaction of any
Principal Property (except for temporary leases for a term of not more than
three years and except for leases between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries) unless (a) the Company or such
Restricted Subsidiary would be entitled to issue, assume or guarantee Debt
secured by the property involved at least equal in amount to the Attributable
Debt (as defined below) in respect of such transaction without equally and
ratably securing the Notes (provided that such Attributable Debt shall thereupon
be deemed to be Debt subject to the provisions of the preceding paragraph), or
(b) an amount in cash equal to such Attributable Debt is applied to the
retirement (other than any mandatory retirement) of long-term non-subordinated
Debt of the Company or long-term Debt of a Restricted Subsidiary. Attributable
Debt is defined as the present value (discounted at an appropriate rate) of the
obligation of a lessee for rental payments during the remaining term of any
lease. (Section 3.7)
If upon any consolidation or merger of the Company or any Restricted
Subsidiary with or into any other corporation, or upon any sale, conveyance or
lease of substantially all the properties of the Company or any Restricted
Subsidiary, any Principal Property or any shares of stock or indebtedness of any
Restricted Subsidiary which is owned immediately after such event by the Company
or a Restricted Subsidiary would thereupon become subject to any mortgage,
pledge, security interest or other lien or encumbrance, the Company, prior to or
concurrently with such event, will effectively provide that the Notes shall be
secured (equally and ratably with, if the Company shall determine, any other
indebtedness of or guaranteed by the Company or a Restricted Subsidiary ranking
equally with the Notes) by a direct lien on such Principal Property, shares of
stock or indebtedness, prior to all liens other than any theretofore existing
thereon, so long as such Principal Property, shares of stock or indebtedness
shall be subject to such mortgage, security interest, pledge, lien or
encumbrance. (Section 9.2)
The term "Subsidiary" is defined to mean any corporation which is
consolidated in the Company's accounts and any corporation of which at least a
majority of the outstanding stock having voting power under ordinary
circumstances to elect a majority of the board of directors of said corporation
is at the time owned or controlled by the Company or by the Company and one or
more Subsidiaries or by one or more
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Subsidiaries. The term "Restricted Subsidiary" is defined to mean any
Subsidiary (i) substantially all the property of which is located within the
continental United States of America, (ii) which owns a Principal Property and
(iii) in which the Company's investment exceeds 1% of the consolidated assets of
the Company as shown on its latest quarterly financial statements; provided,
however, that the term "Restricted Subsidiary" does not include any Subsidiary
which is principally engaged in certain types of leasing and financing
activities. The term "Principal Property" is defined to mean any manufacturing
plant or facility which is located within the continental United States of
America and is owned by the Company or any Restricted Subsidiary, unless the
Board of Directors of the Company (or any duly authorized committee thereof) by
resolution declares that such plant or facility, together with all other plants
and facilities previously so declared, is not of material importance to the
total business conducted by the Company and its Restricted Subsidiaries as an
entirety. (Section 1.1)
There are no covenants or other provisions which would offer protection to
securityholders in the event of a highly leveraged transaction, rating downgrade
or similar occurrence.
EVENTS OF DEFAULT
An Event of Default with respect to the Notes is defined as being: default
for 30 days in payment of interest on any Note; default in payment of principal
(or premium, if any) on any Note as and when the same becomes due either upon
maturity, by declaration or otherwise; default by the Company in the performance
of any of the other covenants or agreements in the Indenture relating to the
Notes which shall not have been remedied within a period of 90 days after notice
by the Trustee or holders of at least 25% in aggregate principal amount of the
Notes then outstanding; and certain events of bankruptcy, insolvency or
reorganization of the Company. (Section 5.1) The Indenture provides that the
Trustee shall, with certain exceptions, notify the holders of the Notes of
Events of Default known to it and affecting that series within 90 days after the
occurrence thereof. (Section 5.11)
The Indenture provides that if an Event of Default with respect to the
Notes shall have occurred and be continuing, either the Trustee or the holders
of at least 25% in aggregate principal amount of the Notes then outstanding may
declare the principal amount of all of the Notes to be due and payable
immediately, but upon certain conditions such declaration may be annulled and
past defaults (except, unless theretofore cured, a default in payment of
principal of or interest or premium on the Notes) may be waived by the holders
of a majority in principal amount of the Notes then outstanding. (Sections 5.1
and 5.10)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
shall be under no obligation to exercise any of the rights or powers in the
Indenture at the request or direction of any of the holders of the Notes, unless
such holders shall have offered to the Trustee reasonable security or indemnity.
(Sections 6.1 and 6.2) Subject to such provisions for security or
indemnification and certain limitations contained in the Indenture, the holders
of a majority in principal amount of the Notes affected by an Event of Default
and then outstanding shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee under the
Indenture or exercising any trust or power conferred on the Trustee with respect
to the Notes. (Section 5.9) The Indenture requires the annual filing by the
Company with the Trustee of a certificate as to compliance with certain
covenants contained in the Indenture. (Section 4.3)
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given the Trustee
9
<PAGE> 11
written notice of an Event of Default with respect to the Notes and unless
also the holders of at least 25% in aggregate principal amount of the
outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, and the
Trustee shall not have received from the holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, any right of a holder of any Note to receive payment of the principal
of (and premium, if any) and any interest on such Note on or after the due dates
expressed in such Note and to institute suit for the enforcement of any such
payment on or after such dates shall not be impaired or affected without the
consent of such holder. (Sections 5.6 and 5.7)
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture with respect to the Notes (except for certain specified
surviving obligations including, among other things, the Company's obligation to
pay the principal of and interest on the Notes) will be discharged and cancelled
upon the satisfaction of certain conditions, including the payment of all the
Notes or the deposit with the Trustee of cash or appropriate government
obligations or a combination thereof sufficient for such payment or redemption
in accordance with the Indenture and the terms of the Notes. (Section 10.1)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Notes at the time outstanding, to execute supplemental
indentures adding any provisions to, or changing in any manner or eliminating
any of the provisions of, the Indenture or any supplemental indenture with
respect to the Notes or modifying in any manner the rights of the holders of the
Notes; provided that no such supplemental indenture may, among other things, (i)
extend the final maturity of any Note, or reduce the rate or extend the time of
payment of any interest thereon, or reduce the principal amount thereof, premium
thereon, or reduce any amount payable upon any redemption thereof, without the
consent of the holder of each Note so affected, or (ii) reduce the aforesaid
percentage of Notes, the consent of the holders of which is required for any
such supplemental indenture, without the consent of the holders of all Notes
then outstanding. (Section 8.2)
CONCERNING THE TRUSTEE
The Company maintains customary banking relationships with Harris Trust and
Savings Bank, the Trustee under the Indenture.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amount of Notes set forth opposite its name below.
<TABLE>
<CAPTION>
Principal Amount
Underwriter of Notes
----------- --------
<S> <C>
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,000,000
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000
-------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200,000,000
</TABLE>
10
<PAGE> 12
Under the terms and conditions of the Underwriting Agreement, the
Underwriters have committed to take and pay for all of the Notes, if any are
taken.
The Company has been advised by the Underwriters that they propose to offer
the Notes in part directly to the public at the initial public offering price
set forth on the cover page of this Prospectus and in part to certain securities
dealers at such price less a concession of % of the principal amount. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
% of the principal amount of the Notes to certain brokers and dealers. After
the Notes are released for sale to the public, the offering prices and other
selling terms may from time to time be varied by the representatives.
The Notes will not have an established trading market when issued. The
Notes will not be listed on any securities exchange. Each Underwriter may make a
market in the Notes, but such Underwriter is not obligated to do so and may
discontinue any market-making at any time without notice. There can be no
assurance that the Notes offered hereby will be sold or that there will be a
secondary market for the Notes.
In connection with the offering, the Underwriters may purchase and sell the
Notes in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover short positions created by the
Underwriters in connection with the offering. Stabilizing transactions consist
of certain bids or purchases for the purpose of preventing or retarding a
decline in the market price of the Notes; and short positions created by the
Underwriters involve the sale by the Underwriters of a greater number of Notes
than they are required to purchase from the Company in the offering. The
Underwriters also may impose a penalty bid, whereby selling concessions allowed
to broker-dealers in respect of the Notes sold in the offering may be reclaimed
by the Underwriters if such Notes are repurchased by the Underwriters in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Notes, which may be higher than the
price that might otherwise prevail in the open market; and these activities, if
commenced, may be discontinued at any time. These transactions may be effected
in the over-the-counter market or otherwise.
Each of the Underwriters and certain affiliates thereof engage, or may in
the future engage, in transactions with and perform services for the Company in
the ordinary course of business.
The Company has agreed to indemnify each Underwriter against certain civil
liabilities, including liabilities under the Securities Act, or to contribute to
payments such Underwriter may be required to make in respect thereof.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the
Company by Richard M. Clark, Senior Vice President, General Counsel and
Secretary of the Company. Certain legal matters in connection with the Notes
offered hereby will be passed upon for the Underwriters by Mayer, Brown & Platt,
Chicago, Illinois.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
11
<PAGE> 13
================================================================================
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities
described in this Prospectus or an offer to sell or the solicitation of an offer
to buy such securities in any circumstances in which such offer or solicitation
is unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the
information contained herein or therein is correct as of any time subsequent to
its date.
---------------
Table of Contents
Page
Available Information............................
Incorporation of Certain Documents
by Reference................................
The Company......................................
Ratio of Earnings to Fixed Charges...............
Use of Proceeds..................................
Description of Notes.............................
Underwriting.....................................
Legal Matters....................................
Experts..........................................
================================================================================
$200,000,000
KELLOGG COMPANY
% NOTES DUE 2005
---------------
[Kellogg Logo]
---------------
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
================================================================================
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions,
are estimated to be:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................ $ 59,000
Printing and Engraving Fees and Expenses........................... 25,000
Trustee's Fees and Expenses........................................ 10,000
Rating Agency Fees................................................. 110,000
Accounting Fees and Expenses....................................... 35,000
Legal Fees and Expenses............................................ 10,000
Blue Sky Fees and Expenses......................................... 5,000
Miscellaneous Expenses............................................. 21,000
--------
Total....................................................... $275,000
</TABLE>
All of the above expenses, other than the Securities and Exchange
Commission registration fee, are estimated.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law contains provisions
under which corporations organized thereunder are permitted or required in
certain circumstances to indemnify directors, officers and others against
certain liabilities, and are permitted to maintain insurance to cover such
liabilities against which such corporations may not directly indemnify such
persons. The Restated Certificate of Incorporation, as amended, and Bylaws of
the Registrant grant indemnification to such persons to the extent permitted by
Delaware law and authorize the purchase of such insurance. The Registrant
maintains policies of indemnity insurance for its directors and officers.
Reference is made to Section 8 of the form of Underwriting Agreement filed
as Exhibit 1.1 which provides for indemnification in certain circumstances by
each Underwriter or Agent, as the case may be, to the Registrant, its directors
and officers and to each person, if any, who controls the Registrant.
ITEM 16. EXHIBITS.
1.1 Form of Underwriting Agreement
4.1 Form of Indenture between the Company and Harris Trust and Savings Bank
(Incorporated by reference to Exhibit 4.1 to Registrant's Registration
Statement on Form S-3 (File No. 33-49875))
4.2 Form of Securities (Incorporated by reference to Exhibit 4.4 to
Registrant's Registration Statement on Form S-3 (File No. 33-49875))
5.1 Opinion of Richard M. Clark, Esq., as to the validity of the Securities
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Richard M. Clark (included in Exhibit 5.1)
24.1 Powers of Attorney
II-I
<PAGE> 15
25.1 Form T-1 Statement of Eligibility of Harris Trust and Savings Bank
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) 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.
(b) 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 provisions described in Item 15 above, or
otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted against the Registrant by such officer, director 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 of whether
or not such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(c) (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 declared 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
the initial bona fide offering thereof.
II-2
<PAGE> 16
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 or amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Battle Creek, Michigan on the 28th day of
September 1998.
KELLOGG COMPANY
By: ARNOLD G. LANGBO
---------------------------
Arnold G. Langbo
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Date Position
---- ---- --------
<S> <C> <C>
ARNOLD G. LANGBO September 28, 1998 Chairman of the Board and Chief
- ---------------------------- Executive Officer; Director (Principal
Arnold G. Langbo Executive Officer)
JOHN R. HINTON September 28, 1998 Executive Vice President-Administration
- ---------------------------- and Chief Financial Officer (Principal
John R. Hinton Financial Officer)
ALAN TAYLOR September 28, 1998 Vice President - Corporate Controller
- ---------------------------- (Principal Accounting Officer)
Alan Taylor
* September 28, 1998 Director
- ----------------------------
Dr. Benjamin S. Carson
* September 28, 1998 Director
- ----------------------------
Carleton S. Fiorina
* September 28, 1998 Director
- ----------------------------
Claudio X. Gonzalez
* September 28, 1998 Director
- ----------------------------
Gordon Gund
* September 28, 1998 Director
- ----------------------------
Dorothy Johnson
* September 28, 1998 Director
- ----------------------------
William E. LaMaothe
</TABLE>
II-3
<PAGE> 17
<TABLE>
<S> <C>
* September 28, 1998 Director
- -----------------------------
Ann McLaughlin
* September 28, 1998 Director
- -----------------------------
J. Richard Munro
* September 28, 1998 Director
- -----------------------------
Harold A. Poling
* September 28, 1998 Director
- -----------------------------
Dr. William C. Richardson
* September 28, 1998 Director
- -----------------------------
Donald H. Rumsfeld
* September 28, 1998 Director
- -----------------------------
Dr. John L. Zabriskie
* By: RICHARD M. CLARK
------------------------------------
Richard M. Clark
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
1.1 Form of Underwriting Agreement*
5.1 Opinion of Richard M. Clark, Esq., as to the validity of the Securities
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of PricewaterhouseCoopers LLP
24.1 Powers of Attorney*
25.1 Form T-1 Statement of Eligibility of Harris Trust and Savings Bank
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 5.1
September 28, 1998
Kellogg Company
One Kellogg Square
Battle Creek, Michigan 49016-3599
Re: Registration Statement on Form S-3
Dear Sirs:
This refers to the Registration Statement on Form S-3 (the "Registration
Statement") being filed on September 28, 1998 by Kellogg Company (the "Company")
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), with respect to the registration
of $200,000,000 aggregate principal amount of the Company's Notes due 2005 (the
"Notes"). The Notes are to be issued under an indenture, dated as of August 1,
1993 (the "Indenture"), between the Company and Harris Trust and Savings Bank,
as trustee.
I or counsel under my general supervision have participated in the
preparation of the Registration Statement and the Indenture and am familiar with
the proceedings to date with respect to the proposed issuance and sale of the
Notes and have examined such records, documents and matters of law and satisfied
myself as to such matters of fact as I have considered relevant for the purpose
of this opinion.
Based on the foregoing, I am of the opinion that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company has the corporate power to execute and deliver the Indenture
and to authorize and sell the Notes.
3. The Indenture has been duly authorized, executed and delivered by the
Company and constitues a legal and binding agreement of the Company, enforceable
against the Company in accordance with its terms (except as may be limited by
bankruptcy, insolvency, reorganization or other laws relating to the enforcement
of creditors' rights or by general principles of equity).
4. The Notes will be legal and binding obligations of the Company (except
as may be limited by bankruptcy, insolvency, reorganization or other laws
relating to the enforcement of creditors' rights or by general principles of
equity) when (i) the Registration Statement, as finally amended (including all
necessary post-effective amendments), shall have become effective under the Act,
(ii) the proper officers of the Company shall have taken, pursuant to
resolutions of the Company's board of directors, all necessary action to
establish the specific terms of the Notes and (iii) the Notes shall have been
duly executed and authenticated as provided in the Indenture and such
resolutions and shall have been delivered to the purchasers thereof against
payment of the agreed upon consideration.
I am admitted to the bar of the State of New York and I express no opinion
as to the laws of any jurisdiction other than the laws of the State of New York,
the laws of the United States and the corporate laws of the State of Delaware.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and being named under the caption "Legal Opinions".
Very truly yours,
Richard M. Clark
<PAGE> 1
EXHIBIT 12.1
KELLOGG COMPANY
Computation of Ratio of Earnings to Fixed Charges
(Dollars in millions)
<TABLE>
<CAPTION>
For the Six For the Year ended December 31,
Months Ended -------------------------------
June 30, 1998 1997 1996 1995 1994 1993
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings Before Income Taxes and
Cumulative Effect of Accounting
Change........................................... $ 490.2 $ 904.5 $ 859.9 $ 796.0 $1,130.0 $1,034.1
-------- -------- ------- ------- -------- --------
Fixed Charges:
Interest Expense ............................. 58.1 108.3 65.6 62.6 45.4 33.3
Capitalized Interest ......................... 3.1 9.6 3.8 7.2 6.9 7.1
Portions of Rental Expense
Representing Interest...................... 6.4 12.9 12.6 10.7 12.5 15.0
-------- -------- ------- ------- -------- --------
Total Fixed Charges (B) ......................... 67.6 130.8 82.0 80.5 64.8 55.4
Earnings Before Income Taxes, Cumulative Effect of
Accounting Changes and Fixed Charges (Excluding
Capitalized Interest) (A)........................ $ 554.7 $1,025.7 $ 938.1 $ 869.3 $1,187.9 $1,082.4
Ratio of Earnings to Fixed
Charges (A/B)................................. 8.2x 7.8x 11.4x 10.8x 18.3x 19.5x
</TABLE>
<PAGE> 1
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
January 30, 1998, which appears on page 32 of the 1997 Annual Report to
Shareholders of Kellogg Company, which is incorporated by reference in Kellogg
Company's Annual Report on Form 10-K for the year ended December 31, 1997. We
also consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 11 of such Annual Report on Form 10-K.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
PricewaterhouseCoopers LLP
Battle Creek, Michigan
September 28, 1998
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) ______
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Carolyn Potter, Harris Trust and Savings Bank,
311 West Monroe Street, Chicago, Illinois, 60606
312-461-2531 phone 312-461-3525 facsimile
(Name, address and telephone number for agent for service)
Kellogg Company
(Name of obligor)
Delaware 38-0710690
(State of Incorporation) (I.R.S. Employer Identification No.)
One Kellogg Square
Battle Creek, Michigan 49016
(Address of principal executive offices)
Notes due 2005
(Title of indenture securities)
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the
Trustee, describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee is now in effect
which includes the authority of the trustee to commence business and
to exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in
effect and includes the authority of the Trustee to commence business
and to exercise corporate trust powers was filed in connection with
the Registration Statement of Louisville Gas and Electric Company,
File No. 2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of Commercial Federal Corporation,
File No. 333-20711, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
1
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing
under the laws of the State of Illinois, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Chicago, and State of Illinois, on the 24th day
of September, 1998.
HARRIS TRUST AND SAVINGS BANK
By:
--------------------------
C. Potter
Assistant Vice President
<PAGE> 4
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents
that reports of examinations of said trustee by Federal and State authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
HARRIS TRUST AND SAVINGS BANK
By:
---------------------------
C. Potter
Assistant Vice President
2
<PAGE> 5
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of June 30, 1998, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close
of business on June 30, 1998, a state banking institution organized and
operating under the banking laws of this State and a member of the Federal
Reserve System. Published in accordance with a call made by the Commissioner of
Banks and Trust Companies of the State of Illinois and by the Federal Reserve
Bank of this District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and coin.................................. $1,417,965
Interest bearing balances............................................................ $303,574
Securities:......................................................................................... $0
a. Held-to-maturity securities $4,490,777
b. Available-for-sale securities
Federal funds sold and securities purchased under agreements to resell $263,100
Loans and lease financing receivables:
Loans and leases, net of unearned income ............................................. $9,238,306
LESS: Allowance for loan and lease losses............................................ $ 103,410
------
Loans and leases, net of unearned income, allowance, and reserve $9,134,896
(item 4.a minus 4.b)..................................................................
Assets held in trading accounts...................................................................... $192,782
Premises and fixed assets (including capitalized leases).............................................. $230,242
Other real estate owned............................................................................... $244
Investments in unconsolidated subsidiaries and associated companies................................... $23
Customer's liability to this bank on acceptances outstanding.......................................... $39,065
Intangible assets..................................................................................... $262,703
Other assets.......................................................................................... $1,090,011
-----------
TOTAL ASSETS $17,425,382
===========
</TABLE>
3
<PAGE> 6
<TABLE>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices............................................................................ $ 9,411,411
Non-interest bearing................................................................... $3,093,738
Interest bearing....................................................................... $6,317,673
In foreign offices, Edge and Agreement subsidiaries, and IBF's........................................ $ 1,501,440
Non-interest bearing................................................................... $ 33,412
Interest bearing....................................................................... $1,468,028
Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries, and
in IBF's:
Federal funds purchased & securities sold under agreements to repurchase.............................. $ 3,465,000
Trading Liabilities 83,843
Other borrowed money:................................................................................. $ 1,016,061
a. With remaining maturity of one year or less $0
b. With remaining maturity of more than one year
Bank's liability on acceptances executed and outstanding $39,065
Subordinated notes and debentures..................................................................... $225,000
Other liabilities..................................................................................... $408,338
-----------
TOTAL LIABILITIES $16,150,158
===========
EQUITY CAPITAL
Common stock.......................................................................................... $100,000
Surplus............................................................................................... $601,594
a. Undivided profits and capital reserves............................................................. $562,502
b. Net unrealized holding gains (losses) on available-for-sale securities $11,128
-----------
TOTAL EQUITY CAPITAL $ 1,275,224
===========
Total liabilities, limited-life preferred stock, and equity capital................................... $17,245,382
===========
</TABLE>
I, Pamela Piarowski, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
PAMELA PIAROWSKI
7/30/98
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
RICHARD E. TERRY
Directors.
4
