<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-50269
Prospectus Supplement to Prospectus dated April 29, 1998.
$300,000,000
THE KROGER CO.
6.80% NOTES DUE 2018
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Kroger will pay interest on the Notes on June 15 and December 15 of each
year. The first interest payment will be made on June 15, 1999. The Notes will
be issued only in denominations of $1,000 and integral multiples of $1,000.
Kroger has the right to redeem all or any portion of the Notes at any time at
the redemption price described in this prospectus supplement, plus accrued
interest.
----------------------
See "Risk Factors" beginning on page S-4 of the prospectus supplement to
read about certain factors you should consider before buying Notes.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Initial public offering price............................... 99.696% $299,088,000
Underwriting discount....................................... 0.875% $ 2,625,000
Proceeds, before expenses, to Kroger........................ 98.821% $296,463,000
</TABLE>
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Notes will accrue from December 11, 1998, and
must be paid by the purchaser if the Notes are delivered after December 11,
1998.
----------------------
The underwriters expect to deliver the Notes in book-entry form only
through the facilities of the Depository Trust Company against payment in New
York, New York on December 11, 1998.
GOLDMAN, SACHS & CO.
CHASE SECURITIES INC.
SALOMON SMITH BARNEY
----------------------
Prospectus Supplement dated December 9, 1998.
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THE COMPANY
Kroger was founded in 1883 and was incorporated in 1902. We maintain our
corporate offices in Cincinnati, Ohio, and are the nation's largest supermarket
operator measured by sales in 1997.
At the end of 1997, we operated 1,392 supermarkets in 24 states and 697
convenience stores in 15 states. We also franchised third parties to operate 119
convenience stores in 4 states. Kroger also operates manufacturing facilities
that permit us to offer quality, low-cost private label products.
RECENT DEVELOPMENTS
MERGER WITH FRED MEYER
On October 19, 1998, we announced our intention to merge with Fred Meyer,
Inc., an operator of more than 800 supermarkets and multidepartment stores. We
contemplate that Fred Meyer will become a wholly-owned subsidiary of Kroger once
the merger is completed. Each share of outstanding Fred Meyer common stock will
be converted into one share of Kroger common stock. Although the merger is
subject to regulatory and shareholder approvals, we expect to complete the
merger in early 1999. The merger will result in new circumstances for Kroger
that should be considered by purchasers of the Notes. See "Risk Factors." The
merger agreement is filed as an exhibit to Kroger's Current Report on Form 8-K
dated October 20, 1998 which is incorporated herein by reference.
FRED MEYER
The following information relating to Fred Meyer has been taken from or
based upon publicly available documents on file with the Securities and Exchange
Commission, including Fred Meyer's Annual Report on Form 10-K for the year ended
January 31, 1998 and other publicly available information. Fred Meyer's
financial statements that are incorporated herein by reference as well as its
other publicly filed documents are available from the SEC. See "Available
Information" in the Prospectus.
Fred Meyer, Inc. is one of the largest domestic food retailers, operating
more than 800 supermarkets and multidepartment stores. Fred Meyer was
incorporated in Delaware in 1997 and commenced operations on September 9, 1997
as the successor to Fred Meyer Stores, Inc. (formerly known as Fred Meyer, Inc.)
and Smith's Food & Drug Centers, Inc. ("Smith's") which it acquired in a merger
in September 1997. In March 1998, Fred Meyer acquired Quality Food Centers, Inc.
("QFC") and Food 4 Less Holdings, Inc. ("Ralphs/Food 4 Less") in two separate
mergers. Fred Meyer is a geographically diversified food retailer that operates
multiple formats that appeal to customers across a wide range of income
brackets. In the Pacific Northwest, Southwest and Intermountain states, Fred
Meyer operates multidepartment stores principally under the Fred Meyer banner
and food and drug combination stores principally under the Smith's Food & Drug
Centers banner; in Southern California, Fred Meyer operates conventional
supermarkets under the Ralphs and Hughes Family Markets banners and price-impact
warehouse supermarkets under the Food 4 Less banner; and in the Seattle/Puget
Sound region, Fred Meyer also operates premium supermarkets principally under
the QFC banner.
At August 15, 1998, Fred Meyer operated 119 multidepartment stores in the
Pacific Northwest and Intermountain regions. The average Fred Meyer
multidepartment store is 142,100 square feet with a flexible store format
offering a full-service food department and a variety of nonfood departments.
These stores are organized into departments and sections within departments that
specialize in the sale of particular products such as food, apparel, home
electronics, products for the home, general merchandise and fine jewelry. Fred
Meyer's stores are generally positioned as the lowest priced full-service food
retailer in each of Fred Meyer's major markets.
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At August 15, 1998, Fred Meyer operated a total of 157 stores through
Smith's, primarily in the Intermountain and Southwest states, averaging 66,800
square feet per store. Substantially all of the Smith's stores offer shopping
convenience through a food and drug combination format which features a
full-line supermarket with drug and pharmacy departments.
At August 15, 1998, Fred Meyer operated, through QFC, 84 QFC stores,
primarily in the Seattle/ Puget Sound region. The QFC stores range in size from
14,600 to 67,200 square feet, averaging 33,630 square feet per store, and offer
a wide variety of high-quality meat, seafood, produce, deli and bakery items.
At August 15, 1998, Fred Meyer operated in Southern California, through
Ralphs/Food 4 Less, 313 conventional supermarkets, averaging 36,800 square feet
per store, principally under the Ralphs banner and 82 price-impact supermarkets
in a warehouse format, averaging 53,300 square feet per store, under the Food 4
Less banner. Ralphs stocks between 35,000 and 45,000 merchandise items in its
stores, including approximately 2,800 private-label products. Ralphs stores
offer name-brand grocery products, quality and freshness in their produce, meat,
seafood, delicatessen and bakery products and a broad selection in all
departments. Most Ralphs stores offer service delicatessen departments,
on-premises bakery facilities and seafood departments. Food 4 Less is a
warehouse-style, price-impact store which is positioned to offer the lowest
overall prices in its marketing areas by passing on to the consumer savings
achieved through labor efficiencies and lower overhead associated with the
warehouse format, while providing the product selection and variety associated
with a conventional format. Fred Meyer is in the process of selling certain of
its Ralphs stores, pursuant to a settlement agreement with the state of
California entered into at the time of Fred Meyer's acquisitions of Ralphs/ Food
4 Less and QFC.
Fred Meyer owns and operates several food processing facilities to better
support its stores and realize additional profit opportunities. These facilities
include dairies, a bakery, a cultured dairy products plant and an ice cream
processing plant.
USE OF PROCEEDS
The net proceeds from this offering are estimated to be approximately
$296.3 million. We intend to use those proceeds to repay amounts outstanding
under our Five-Year Credit Agreement and our 364-Day Credit Agreement. Both
agreements (collectively, the "Credit Agreement") are dated May 28, 1997, among
Kroger and the banks that are parties thereto. We expect to borrow under the
Credit Agreement and to use the proceeds to repurchase or redeem our outstanding
indebtedness. We also expect to use proceeds of borrowings for other general
corporate purposes.
The interest rate for borrowings under the Credit Agreement is detailed in
the Credit Agreement. We filed the Credit Agreement as an exhibit to our Current
Report on Form 8-K dated June 2, 1997.
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RISK FACTORS
YOU SHOULD CONSIDER THE FOLLOWING MATTERS IN DECIDING WHETHER TO PURCHASE
THE NOTES.
AFTER THE MERGER WE WILL HAVE SIGNIFICANT INDEBTEDNESS
As of November 4, 1998, the total outstanding indebtedness of Kroger and
Fred Meyer was approximately $8.7 billion, including approximately $3.6 billion
under several bank credit facilities. We expect that following the merger the
combined company will have credit facilities totaling $5.5 billion. We will
reserve approximately $1 billion of that amount to support outstanding
commercial paper and competitive bid borrowings. That will leave approximately
$0.9 billion available for additional borrowings. Completion of the Fred Meyer
merger would violate the existing terms of Fred Meyer's bank credit facilities
and, in certain circumstances, the existing terms of Kroger's Credit Agreement.
We cannot assure you that the lenders will approve the amendments required under
the terms of these bank credit facilities to permit the completion of the merger
or, absent these amendments, that the bank credit facilities could be
refinanced. Completion of the merger is not conditioned on these amendments
being approved. To increase the likelihood of the amendments being approved,
Kroger has obtained the commitment of Chase Securities Inc. and The Chase
Manhattan Bank to acquire by assignment, if necessary, up to 51% of the
outstanding commitments under each of the existing bank credit facilities. By
doing so, these Chase entities could approve the required amendments on their
own. However, this commitment cannot assure you that the amendments will be
approved. The amendments may not be approved if the Chase entities are unable to
acquire 51% of the commitments under each of the existing bank credit facilities
or certain conditions to their obligations are not satisfied. In connection with
obtaining these amendments, the cost of borrowing under Kroger's existing bank
credit facilities will increase. If the merger is completed without these
amendments being approved and replacement financing is not arranged, all
indebtedness under these bank credit facilities would be in default and would
have to be repaid. In addition, completion of the merger would violate the terms
of Fred Meyer's existing $500 million five-year operating lease facility unless
the operating lease facility is amended or repaid from the bank credit
facilities, as currently contemplated. Other indebtedness of the combined
company may also have to be repaid because of a default under the bank credit
facilities and a possible default under the operating lease. These defaults
would have a material adverse effect on the combined company's business,
financial condition and results of operations. In addition, acceleration of
amounts due under the credit facilities prior to maturity will cause an event of
default under the Notes. Although amendments have not yet been executed, we have
reached an agreement in principle to obtain the amendments.
Upon consummation of the merger, we will have greater indebtedness and a
lower earnings to fixed charges ratio than we currently have. The increased
indebtedness and lower earnings to fixed charges ratio may have the effect,
among other things, of reducing the flexibility of Kroger to respond to changing
business and economic conditions and increasing borrowing costs.
The degree to which the combined company will be leveraged could adversely
affect the combined company's ability to obtain additional financing for working
capital, acquisitions or other purposes and could make it more vulnerable to
economic downturns and competitive pressures. Future capital requirements and
the sufficiency of available funds will depend on numerous factors that are
difficult to predict, including results of operations, the timing and cost of
acquisitions and efforts to expand existing operations. Based upon the current
level of operations and anticipated cost savings, we believe (subject to the
receipt of the amendments to the existing credit facilities discussed above)
that cash flow from operations, together with borrowings under existing credit
facilities and other sources of liquidity, will be adequate to meet the combined
company's anticipated requirements for working capital, capital expenditures,
interest payments and scheduled principal payments over the next several years.
We cannot assure you, however, that the combined company's business will
generate cash flow at or above current levels or that anticipated cost savings
can be fully achieved. If the combined company is unable to generate sufficient
cash flow from operations in the future to service its debt and make necessary
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capital expenditures, the combined company will be required to refinance all or
a portion of its existing debt, obtain additional financing, forego strategic
decisions or delay, scale back or eliminate certain aspects of its operations.
Any of these actions could have a material adverse effect on the combined
company's business, financial condition or results of operations.
THE SUPERMARKET INDUSTRY IS VERY COMPETITIVE
The retail merchandising business in general, and the supermarket industry
in particular, is highly competitive and generally characterized by narrow
profit margins. The combined company's competitors include national and regional
supermarket chains, discount stores, independent and specialty grocers, drug and
convenience stores, large category-dominant stores and the newer "alternative
format" food stores, including warehouse club stores, deep discount drug stores,
"supercenters" and conventional department stores. Competitors include, among
others, Albertson's, Costco, Food Lion, Lucky, Meijer, Safeway, Sam's, Target,
Walgreen's, Wal-Mart and Winn-Dixie. Retail businesses generally compete on the
basis of location, quality of products and service, price, product variety and
store condition. The combined company's ability to compete depends in part on
its ability to maintain and remodel existing stores, develop new stores in
advantageous locations and offer competitive prices and service.
INTEGRATION UNCERTAINTIES
The merger with Fred Meyer involves the integration of two companies that
have previously operated independently. The integration of businesses involves a
number of special risks, including the diversion of management's attention to
the integration of operations, difficulties in the integration of operations and
systems, the assimilation and retention of employees, challenges in retaining
customers and potential adverse short-term effects on operating results. In
addition, the significant increase in size of Fred Meyer's operations resulting
from its recent acquisitions of Smith's Food & Drug Centers, Inc., Quality Food
Centers, Inc. and Food 4 Less Holdings, Inc. (including Ralphs Grocery Company)
has already imposed substantial integration demands on Fred Meyer's management.
We cannot assure you that the combined company will be able to maintain the
levels of operating efficiency which Kroger and Fred Meyer had achieved or might
achieve separately. In addition, we may not be able to achieve the synergies
that we hope to achieve after the merger. If we do not successfully integrate
the operations of the combined company (including the entities which Fred Meyer
is continuing to integrate), or if we experience a loss of key management
personnel, customers or sales, there may be a material adverse effect on the
combined company's business, financial condition or results of operations.
MERGER RELATED COSTS
The merger with Fred Meyer will result in a charge to operations of
approximately $75 million for transaction fees and costs incidental to the
merger. The costs of integration of the two companies will result in additional
non-recurring charges to the results of operations of the combined company;
however, the actual amount of these charges cannot be determined until the
transition plan relating to the integration of operations is completed. It is
expected that these charges will have a material effect on the combined
company's results of operations for the quarter in which the merger is completed
and additional significant charges resulting from the merger may also be
recognized in subsequent quarters.
RISKS GENERALLY ASSOCIATED WITH ACQUISITIONS
An element of Kroger's growth strategy is the pursuit of strategic
acquisitions that either expand or complement its business, and Kroger routinely
reviews potential acquisition opportunities. Acquisitions involve a number of
special risks, including the risks pertaining to integration of the business
acquired that are noted above under " -- Integration Uncertainties." In
addition, Kroger may incur debt to finance future acquisitions and may issue
securities in connection with future acquisitions which may have a dilutive
effect on its shares. If we are unable to successfully complete and integrate
strategic
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acquisitions in a timely manner, there could be a material adverse effect on the
business, financial condition, results of operations and growth strategy of the
combined company.
THE MERGER MAY NOT BE CONSUMMATED
The Merger Agreement is subject to conditions, some of which are beyond our
control. If the conditions are not satisfied or waived, the merger may not
occur.
COMPUTER TECHNOLOGIES; YEAR 2000
We have assessed and continue to assess the potential impact of the
situation commonly referred to as the "Year 2000 Issue." The Year 2000 Issue,
which affects most corporations, concerns the inability of information systems,
primarily computer software programs, to properly recognize and process date
sensitive information relating to the year 2000 and beyond. For further
information regarding our Year 2000 compliance efforts see our Form 10-Q for the
quarter ended October 3, 1998 which is incorporated herein by reference.
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DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes (referred to
in the accompanying Prospectus as the "Offered Debt Securities") supplements,
and to the extent inconsistent therewith replaces, the description of the
general terms and provisions of the Debt Securities set forth in the Prospectus,
to which description reference is hereby made. The Notes will be issued under a
Senior Indenture dated as of May 1, 1998 (as amended and supplemented from time
to time, the "Senior Indenture"), between The Kroger Co. ("the Company") and
Star Bank, National Association, as Trustee (the "Senior Trustee"). Certain
defined terms in the Indenture are capitalized herein. Whenever a defined term
is referred to and not herein defined, the definition is contained in the
Indenture.
GENERAL
The Notes offered will be limited to $300,000,000 aggregate principal
amount and will mature on December 15, 2018. The Notes will bear interest from
December 11 at the rate per annum shown on the front cover of this Prospectus
Supplement payable semiannually on June 15 and December 15 of each year and at
maturity (each such date is herein called an "Interest Payment Date"),
commencing June 15, 1999, to the person in whose name the Note (or one or more
predecessor Notes) is registered at the close of business on the record date.
The record date for interest payment is the June 1 or December 1, as the case
may be, next preceding such Interest Payment Date.
The Notes rank pari passu in right of payment with any existing and future
unsecured senior indebtedness of the Company. They rank senior to all existing
and future subordinated indebtedness of the Company.
The Notes are unsecured and not entitled to any sinking fund.
The Notes will be issued only in registered, book-entry form, in
denominations of $1,000 and any integral multiple thereof.
In the case where any Interest Payment Date or the maturity date of the
Notes does not fall on a Business Day, payment of interest or principal
otherwise payable on such day need not be made on such day. Payment may be made
on the next succeeding Business Day with the same force and effect as if made on
such interest Payment Date or the maturity date of the Notes, as the case may
be, and no interest shall accrue for the period from and after such Interest
Payment Date or maturity date. The term "Business Day" shall mean any day other
than a Saturday or Sunday or a day on which banking institutions in New York
City or Cincinnati, Ohio are authorized or obligated by law or executive order
to close.
OPTIONAL REDEMPTION
The Notes will be redeemable, in whole or in part, at the option of the
Company at any time at a redemption price equal to the greater of (i) 100% of
the principal amount of such Notes or (ii) as determined by a Quotation Agent
(as defined below), the sum of the present values of the remaining scheduled
payments of principal and interest thereon (not including any portion of such
payments of interest accrued as of the date of redemption) discounted to the
date of redemption on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as defined below) plus 12.5
basis points plus, in each case, accrued interest thereon to the date of
redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
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"Comparable Treasury Issue" means the United States Treasury security
selected by a Quotation Agent as having a maturity comparable to the remaining
term of the Notes to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (ii) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.
"Reference Treasury Dealer" means (i) Goldman, Sachs & Co. and its
successors; provided, however, that if the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer,
and (ii) any other Primary Treasury Dealer selected by the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the Notes to be redeemed.
Unless the Company defaults in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption.
COVENANTS
The Senior Indenture provides that the following covenants will be
applicable to the Company:
Limitations on Liens. The Company covenants that, so long as any Notes
remain outstanding, it will not, and will not permit any Restricted Subsidiary
(as defined below) to issue, assume or guarantee any Indebtedness which is
secured by a mortgage, pledge, security interest, lien or encumbrance of any
kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any of the foregoing)
(each a "lien") upon any Operating Property or Operating Asset, whether now
owned or hereafter acquired, of the Company or any Restricted Subsidiary without
effectively providing that the Notes (together with, if the Company shall so
determine, any other Indebtedness of the Company ranking equally with the Notes)
shall be equally and ratably secured by a lien on such assets ranking ratably
with or equal to (or at the Company's option prior to) such secured
Indebtedness, except that the foregoing restriction shall not apply to (a) liens
on any property or assets of any corporation existing at the same time such
corporation becomes a Restricted Subsidiary provided that such lien does not
extend to any other property of the Company or any of its Restricted
Subsidiaries; (b) liens on any property or assets (including stock) existing at
the time of acquisition thereof, or to secure the payment of the purchase price
of such property or assets, or to secure indebtedness incurred, assumed or
guaranteed by the Company or a Restricted Subsidiary for the purpose of
financing the purchase price of such property or of improvements or construction
thereon or attaching to property substituted by the Company to obtain the
release of a lien on other property of the Company on which a lien then exists,
which indebtedness is incurred, assumed or guaranteed prior to, at the time of,
or within 18 months after such acquisition (or in the case of real property,
completion of such improvement or construction or commencement of full
operations at such property, whichever is later (which in the case of a retail
store is the opening of the store for business to the public)) provided that
such lien does not extend to any other property of the Company or any of its
Restricted Subsidiaries; (c) liens securing indebtedness owing by any Restricted
Subsidiary to the
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Company or another Restricted Subsidiary; (d) liens on any property or assets 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
purchase, lease or other acquisition of the assets of a corporation or firm as
an entirety or substantially as an entirety by the Company or a Restricted
Subsidiary provided that such lien does not extend to any other property of the
Company or any of its Restricted Subsidiaries; (e) liens on any property or
assets of the Company or a Restricted Subsidiary in favor of the United States
of America or any State thereof, or in favor of any other country or political
subdivision thereof, to secure certain payments pursuant to any contract or
statute or to secure any indebtedness incurred or guaranteed for the purpose of
financing all or any part of the purchase price (or, in the case of real
property, the cost of construction) of the property or assets subject to such
liens (including but not limited to, liens incurred in connection with pollution
control, industrial revenue or similar financing); (f) liens existing on
properties or assets of the Company or any Restricted Subsidiary existing on the
date hereof; provided that such liens shall secure only those obligations which
they secure on the date hereof or any extension, renewal or replacement thereof;
(g) any extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part, of any lien referred to in the foregoing
clauses (a) to (f), inclusive; (h) certain statutory liens or other similar
liens arising in the ordinary course of business of the Company or a Restricted
Subsidiary, or certain liens arising out of governmental contracts; (i) certain
pledges, deposits or liens made or arising under worker's compensation or
similar legislation or in certain other circumstances; (j) certain liens in
connection with legal proceedings, including certain liens arising out of
judgments or awards; (k) liens for certain taxes or assessments, landlord's
liens, mechanic's liens and liens and charges incidental to the conduct of the
business, or the ownership of the property or assets of the Company or of a
Restricted Subsidiary, which were not incurred in connection with the borrowing
of money and which do not in the opinion of the Company, materially impair the
use of such property or assets in the operation of the business of the Company
or such Restricted Subsidiary or the value of such property or assets for the
purposes thereof; or (I) liens not permitted by the foregoing clauses (a) to
(k), inclusive, if at the time of and after giving effect to, the creation or
assumption of such liens, the aggregate amount of all Indebtedness of the
Company and its Restricted Subsidiaries secured by all liens not so permitted by
the foregoing clauses (a) through (k), inclusive, together with the Attributable
Debt (as defined below) in respect of Sale and Lease-Back Transactions permitted
by clause (a) under "Limitation on Sale and Lease-Back Transactions" below, does
not exceed 10% of Consolidated Net Tangible Assets (as defined below).
Limitation on Sale and Lease-Back Transactions. So long as any Notes under
the Senior Indenture are outstanding, the Company will not, and will not permit
any Restricted Subsidiary to, enter into any arrangement with any person
providing for the leasing by the Company or a Restricted Subsidiary of any
Operating Property or Operating Asset (other than any such arrangement involving
a lease for a term, including renewal rights, for not more than three years and
leases between the Company and a Subsidiary or between Subsidiaries), whereby
such Operating Property or Operating Asset has been or is to be sold or
transferred by the Company or a Restricted Subsidiary to such person (a "Sale
and Lease-Back Transaction") unless (a) the Company or such Restricted
Subsidiary would, at the time of entering into a Sale and Lease-Back
Transaction, be entitled to incur Indebtedness secured by a lien on the
Operating Property or Operating Asset to be leased in an amount at least equal
to the Attributable Debt in respect of such transaction without equally and
ratably securing the Notes pursuant to the provisions described under
"Limitations on Liens" above, or (b) the proceeds of the sale of the Operating
Property or Operating Assets to be leased are at least equal to their fair
market value and an amount in cash equal to the net proceeds is applied, within
180 days of the effective date of such transactions to the purchase or
acquisition (or, in the case of Operating Property, the construction) of
Operating Property or Operating Assets or to the retirement, repurchase,
redemption or repayment (other than at maturity or pursuant to a mandatory
sinking fund or redemption provision and other than Indebtedness owned by the
Company or any Restricted Subsidiary) of Notes or of Funded Indebtedness (as
defined below) of the Company ranking on a parity with or senior to the Notes,
or in the case of a Sale and Lease-Back Transaction by a Restricted Subsidiary,
of Funded Indebtedness of
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such Restricted Subsidiary, provided that in connection with any such
retirement, any related loan commitment or the like shall be reduced in an
amount equal to the principal amount so retired. The foregoing restriction shall
not apply to, in the case of any Operating Property or Operating Assets acquired
or constructed subsequent to the date eighteen months prior to the date of the
Indenture, any Sale and Lease-Back Transaction with respect to such Operating
Asset or Operating Property (including presently owned real property upon which
such Operating Property is to be constructed) if a binding commitment is entered
into with respect to such Sale and Lease-Back Transaction within 18 months after
the later of the acquisition of the Operating Property or Operating Asset or the
completion of improvements or construction thereon or commencement of full
operations at such Operating Property (which in the case of a retail store is
the opening of the store for business to the public).
DEFINITIONS
"Attributable Debt" means in connection with a Sale and Lease-Back
Transaction the total net amount of rent required to be paid during the
remaining primary term of such lease, discounted at a rate per annum equal to
the interest rate on the Notes, calculated in accordance with generally accepted
accounting principles. The net amount of rent required to be paid under any such
lease for any such period shall be the aggregate amount of rent payable by the
lessee with respect to such period after excluding amounts required to be paid
on account of maintenance, repairs, insurance, taxes, assessments, utility,
operating and labor costs and similar charges.
"Capital Lease" means any lease of property which, in accordance with
generally accepted accounting principles, should be capitalized on the lessee's
balance sheet or for which the amount of the asset and liability thereunder as
if so capitalized should be disclosed in a note to such balance sheet; and
"Capitalized Lease Obligation" means the amount of the liability which should be
so capitalized or disclosed.
"Consolidated Net Tangible Assets" means, for the Company and its
Subsidiaries on a consolidated basis determined in accordance with generally
accepted accounting principles, the aggregate amounts of assets (less
depreciation and valuation reserves and other reserves and items deductible from
gross book value of specific asset accounts under generally accepted accounting
principles) which under generally accepted accounting principles would be
included on a balance sheet after deducting therefrom (a) all liability items
except deferred income taxes, commercial paper, short-term bank Indebtedness,
Funded Indebtedness, other long-term liabilities and shareholders' equity and
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles.
"Funded Indebtedness" means any Indebtedness maturing by its terms more
than one year from the date as of which the determination is made, including (i)
any Indebtedness having a maturity of 12 months or less but by its terms being
renewable or extendible at the option of the borrower beyond 12 months from such
date of determination and (ii) rental obligations payable more than 12 months
from such date under Capital Leases (such rental obligations to be included as
Funded Indebtedness at the amount so capitalized at the date of such computation
and to be included for the purposes of the definition of Consolidated Net
Tangible Assets both as an asset and as Funded Indebtedness at the amount so
capitalized).
"Operating Assets" means all merchandise inventories, furniture, fixtures
and equipment (including all transportation and warehousing equipment but
excluding office equipment and data processing equipment) owned or leased
pursuant to Capital Leases by the Company or a Restricted Subsidiary.
"Operating Property" means all real property and improvements thereon owned
or leased pursuant to Capital Leases by the Company or a Restricted Subsidiary
and constituting, without limitation, any store, warehouse, service center or
distribution center wherever located, provided that such term shall not include
any store, warehouse, service center or distribution center which the Company's
Board of
S-10
<PAGE> 11
Directors declares by written resolution not to be of material importance to the
business of the Company and its Restricted Subsidiaries.
"Restricted Subsidiaries" means all Subsidiaries other than Non-Restricted
Subsidiaries. "Non-Restricted Subsidiary" means any Subsidiary that the
Company's Board of Directors has in good faith declared pursuant to a written
resolution not to be of material importance, either singly or together with all
other Non-Restricted Subsidiaries, to the business of the Company and its
consolidated Subsidiaries taken as a whole.
"Subsidiary" means (i) any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Company and/or one or more Subsidiaries
or (ii) any partnership of which more than 50% of the partnership interest is
owned by the Company or any Subsidiary.
The covenants applicable to the Notes would not necessarily afford holders
protection in the event of a highly leveraged or other transaction involving the
Company or in the event of a material adverse change in the Company's financial
condition or results of operation, and the Notes do not contain any other
provisions that are designed to afford protection in the event of a highly
leveraged transaction involving the Company.
MERGER AND CONSOLIDATION
The Senior Indenture provides that the Company will not merge or
consolidate with any corporation, partnership or other entity and will not sell,
lease or convey all or substantially all its assets to any entity, unless the
Company shall be the surviving entity, or the surviving entity or the successor
entity that acquires all or substantially all the assets of the Company shall be
a corporation or partnership organized under the laws of the United States or a
State thereof or the District of Columbia and shall expressly assume all
obligations of the Company under the Senior Indenture and the Notes issued
thereunder, and immediately after such merger, consolidation, sale, lease or
conveyance, the Company or such successor entity shall not be in default in the
performance of the covenants and conditions of the Senior Indenture to be
performed or observed by the Company.
EVENTS OF DEFAULT
The "Events of Default" with respect to the Notes will consist of the
events set forth in clauses (a) through (e) as described in the first paragraph
under "Description of Debt Securities--Events of Default and Notice Thereof" in
the Prospectus, except that the dollar amount in clause (d) thereof is increased
to $50,000,000.
BOOK-ENTRY SYSTEM
Upon issuance, the Notes will be represented by one or more global
securities (the "Book-Entry Notes"). Each global security representing the
Book-Entry Notes will be deposited with, or on behalf of, The Depository Trust
Company, as Depositary (the "Depositary"), and registered in the name of a
nominee of the Depositary. Book-Entry Notes will not be exchangeable at the
option of the Holder for certificated Notes and, except under the circumstances
described below, will not otherwise be issuable in definitive form.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the Banking Law of the State of
New York, 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 Depositary was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-
S-11
<PAGE> 12
entry changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also 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.
Upon issuance of the Book-Entry Notes, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Notes represented by such Book-Entry Notes to the accounts of institutions
that have accounts with the Depositary or its nominee ("participants"). The
accounts to be credited shall be designated by the Underwriters. Ownership of
beneficial interests in the Book-Entry Notes will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in such Book-Entry Notes will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary or
its nominee (with respect to participants' interests) for such Book-Entry Notes
or by participants or persons that hold through participants. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in the Book-Entry Notes.
So long as the Depositary or its nominee, is the registered owner of the
Book-Entry Notes, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Book-Entry Notes for all purposes
under the Senior Indenture. Except as set forth below, owners of beneficial
interests in such Book-Entry Notes will not be entitled to have the Notes
represented by such Book-Entry Notes registered in their names, will not receive
or be entitled to receive physical delivery of Notes in definitive form and will
not be considered the owners or holders thereof under the Senior Indenture.
Principal and interest payments on Book-Entry Notes registered in the name
of or held by the Depositary or its nominee will be made to the Depositary or
its nominee, as the case may be, as the registered owner or holder of the
Book-Entry Notes. Neither the Company, the Trustee nor any paying agent for such
Book-Entry Notes will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in Book-Entry Notes or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depositary, upon receipt of any payments of
principal or interest in respect of the Book-Entry Notes, will credit
immediately the accounts of the related participants with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Book-Entry Notes as shown on the records of the Depositary. The Company
also expects that payments by participants to owners of beneficial interests in
such Book-Entry Notes 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.
Unless and until it is exchanged, in whole or in part, for Notes in
definitive form in accordance with the terms of the Notes, the Book-Entry Notes
may not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor of the Depositary or a nominee of such successor. If the Depositary is
at any time unwilling or unable to continue as depository or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and a successor Depositary is not appointed by
the Company within 90 days, the Company will issue Notes in definitive
registered form in exchange for the Book-Entry Notes. In addition, the Company
may at any time and in its sole discretion determine not to have any Notes
represented by one or more Book-Entry Notes. Further, if an event of default, or
an event which, with the giving of notice or lapse of time, or both, would
constitute an event of default under
S-12
<PAGE> 13
the Senior Indenture occurs and is continuing with respect to the Notes, or if
the Company so specifies with respect to the Notes, the Depositary may exchange
the Book-Entry Notes for Notes in definitive registered form. In any such
instance, an owner of a beneficial interest in a Book-Entry Note will be
entitled to physical delivery in definitive form of Notes represented by such
Book-Entry Note in principal amount equal to such beneficial interest and to
have such Notes registered in its name.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Under terms satisfactory to the Senior Trustee, the Company may discharge
certain obligations to holders of the Notes which have not already been
delivered to the Senior Trustee for cancellation and which have either become
due and payable or are by their terms due and payable within one year (or
scheduled for redemption within one year) by irrevocably depositing with the
Senior Trustee cash or U.S. Government Obligations (as defined in the Senior
Indenture) as trust funds in an amount certified to be sufficient to pay at
maturity (or upon redemption) the principal of and interest on the Notes.
The Company may also discharge any and all of its obligations to holders of
the Notes at any time ("defeasance"), but may not thereby avoid its duty to
register the transfer or exchange of the Notes, to replace any temporary,
mutilated, destroyed, lost, or stolen Notes or to maintain an office or agency
in respect of such series of the Notes. Defeasance may be effected only if,
among other things: (i) the Company irrevocably deposits with the Trustee cash
or U.S. Government Obligations as trust funds in an amount certified to be
sufficient to pay at maturity the principal of and interest on all outstanding
Notes; and (ii) the Company delivers to the Senior Trustee an opinion of counsel
to the effect that the holders of the Notes will not recognize income, gain or
loss for United States federal income tax purposes as a result of such
defeasance and that defeasance will not otherwise alter such holders' United
States federal income tax treatment of principal and interest payments on the
Notes (such opinion must be based on a ruling of the Internal Revenue Service or
a change in United States federal income tax law occurring after the date of the
Senior Indenture, since such a result would not occur under current tax law).
SAME-DAY 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.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, the Notes
will trade in the Depositary's same-day funds settlement system until maturity,
and secondary market trading activity in the Notes will therefore be required by
the Depositary to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
THE TRUSTEE
Star Bank, National Association, is the Trustee under the Indenture. In the
performance of its duties, the Trustee is entitled to indemnification for any
act which would involve it in expense or liability and will not be liable as a
result of any action taken in connection with the performance of its duties
except for its own gross negligence or default. The Trustee is protected in
acting upon any direction or document reasonably believed by it to be genuine
and to be signed by the proper party or parties or upon the opinion or advice of
counsel. The Trustee may resign upon written notice to the Company as provided
in the Senior Indenture. The Trustee may acquire obligations of the Company for
its own account. The Trustee performs certain banking and other services for the
Company, and is a Lender under the Credit Agreement.
S-13
<PAGE> 14
UNDERWRITING
The Company and the underwriters for the offering (the "Underwriters")
named below have entered into an underwriting agreement and a pricing agreement
with respect to the Notes. Subject to certain conditions, each Underwriter has
severally agreed to purchase the number of Notes indicated in the following
table.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
----------- ------------
<S> <C>
Goldman, Sachs & Co......................................... $150,000,000
Chase Securities Inc........................................ 75,000,000
Salomon Smith Barney Inc.................................... 75,000,000
------------
Total............................................. $300,000,000
============
</TABLE>
Notes sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus
Supplement. Any Notes sold by the Underwriters to securities dealers may be sold
at a discount from the initial public offering price of up to 0.50% of the
principal amount of the Notes. Any such securities dealers may resell any Notes
purchased from the Underwriters to certain other brokers or dealers at a
discount from the initial public offering price of up to 0.25% of the principal
amount of the Notes. If all the Notes are not sold at the initial offering
price, the Underwriters may change the offering price and the other selling
terms.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
In connection with the offerings, the Underwriters may purchase and sell
Notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater number of
Notes than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Notes while the
offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased Notes sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Notes. As a result, the price of the Notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
From time to time, certain of the Underwriters or their affiliates have
provided various commercial or investment banking services and other services to
the Company and its affiliates. In addition, Chase Securities Inc. and Salomon
Smith Barney Inc. are affiliates of administrative agents and lenders under the
Credit Agreement.
Affiliates of the Underwriters will in aggregate receive more than 10% of
the proceeds of this offering as a result of the repayment of borrowings under
the Credit Agreement. Accordingly, this offering is being conducted in
accordance with Rule 2710(c)(8) of the National Association of Securities
Dealers, Inc.
S-14
<PAGE> 15
The Company estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$200,000.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Company by Paul W.
Heldman, Esq., Senior Vice President, Secretary and General Counsel of the
Company, and for the Underwriters by Fried, Frank, Harris, Shriver & Jacobson (a
partnership including professional corporations), New York, New York. Mr.
Heldman may rely as to matters of New York law upon the opinion of Fried, Frank,
Harris, Shriver & Jacobson, and Fried, Frank, Harris, Shriver & Jacobson may
rely as to matters of Ohio law upon the opinion of Mr. Heldman. As of November
30, 1998, Mr. Heldman owned approximately 28,958 shares of the Company's Common
Stock and had options to acquire an additional 228,750 shares. Fried, Frank,
Harris, Shriver & Jacobson from time to time performs legal services for the
Company.
EXPERTS
The consolidated financial statements of Fred Meyer, Inc. as of January 31,
1998 and February 1, 1997 and for the fiscal years ended January 31, 1998,
February 1, 1997 and February 3, 1996, incorporated by reference in this
Prospectus to the Fred Meyer, Inc. Form 8-K/A, dated March 9, 1998, have been
incorporated herein in reliance on the report of Deloitte & Touche LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
FORWARD-LOOKING STATEMENTS
The Prospectus and this Prospectus Supplement contain, or incorporate by
reference, certain statements that may be deemed "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements, other than statements of historical facts, that
address activities, events or developments that the Company intends, expects,
projects, believes or anticipates will or may occur in the future are
forward-looking statements. Such statements are based on certain assumptions and
assessments made by management of the Company in light of its experience and its
perception of historical trends, current conditions, expected future
developments and other factors it believes to be appropriate. The
forward-looking statements included in the Prospectus and this Prospectus
Supplement are also subject to a number of material risks and uncertainties,
including but not limited to economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices, and other factors discussed in the Company's filings under
the Securities Act and the Exchange Act. Prospective investors are cautioned
that such forward-looking statements are not guarantees of future performance
and that actual results, developments and business decisions may differ from
those envisaged by such forward-looking statements.
S-15
<PAGE> 16
PROSPECTUS
$800,000,000
THE KROGER CO.
SECURITIES
------------------------
The Kroger Co., an Ohio corporation (the "Company"), may offer from time to
time (i) its debt securities (the "Debt Securities"), which may be any of senior
secured Debt Securities, senior unsecured Debt Securities, senior subordinated
Debt Securities or subordinated Debt Securities, in each case consisting of
bonds, debentures, notes and/or other evidences of indebtedness, (ii) shares of
its common stock, $1 par value (the "Common Stock"), (iii) shares of its
preferred stock, $100 par value (the "Preferred Stock"), in one or more series,
which may be issued in the form of depositary shares (the "Depositary Shares"),
evidenced by depositary receipts (the "Depositary Receipts"), and (iv) warrants
to purchase Debt Securities, or shares of Common Stock or Preferred Stock (the
"Warrants"), in each case, as will be designated by the Company at the time of
the offering thereof. The Debt Securities, the Common Stock, the Preferred
Stock, the Depositary Shares and the Warrants are collectively referred to in
this Prospectus as the "Securities" and will have an aggregate initial offering
price of up to $800,000,000, or the equivalent thereof in U.S. dollars if any
Securities are denominated in a currency other than U.S. dollars or in currency
units. The Securities may be offered separately or together (in any combination)
and as separate series, in any case in amounts, at prices and on terms to be
determined at the time of sale.
The form in which the Securities are to be issued, their specific title or
designation, authorized denominations, aggregate principal amount or aggregate
initial offering price, maturity, if any, rate or rates (which may be fixed or
variable) (or the manner of calculation thereof) and times of payment of
interest or dividends, if any, redemption, repayment, conversion, exchange and
sinking fund terms, if any, voting or other rights, if any, exercise price and
detachability, if any, additional covenants, if any, and other specific terms
will be set forth in a Prospectus Supplement (including any related terms sheet)
relating to such Securities (the "Prospectus Supplement"), together with the
terms of offering of such Securities. If so specified in the applicable
Prospectus Supplement, Debt Securities of a series may be issued in whole or in
part in the form of one or more temporary or permanent global securities. The
Prospectus Supplement will also contain information, as applicable, about
certain material United States federal income tax considerations relating to the
particular Securities offered thereby. The Prospectus Supplement will also
contain information, where applicable, as to any listing on a national
securities exchange of the Securities covered by such Prospectus Supplement.
The Common Stock is traded on the New York Stock Exchange under the symbol
"KR." On April 15, 1998, the last reported sale price of the Common Stock, as
reported on the New York Stock Exchange Composite Tape, was $45.375 per share.
The Securities may be offered directly to one or more purchasers, through
agents designated from time to time by the Company or to or through underwriters
or dealers. If any agents or underwriters are involved in the sale of the
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of a Prospectus Supplement describing the method and terms of the
offering of such Securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is April 29, 1998.
<PAGE> 17
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES OFFERED
HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT
COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "PLAN OF DISTRIBUTION."
------------------------
AVAILABLE INFORMATION
The Kroger Co. (together with its consolidated subsidiaries and affiliates,
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"). Reports, proxy statements
and other information filed with the Commission can be inspected and copied at
the Commission's public reference facilities at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511
and 7 World Trade Center, New York, New York 10048. Copies of such material can
be obtained by mail from the Commission's Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy
statements and other information also can be inspected at the offices of the New
York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York 10005.
The Commission maintains a web site (http://www.sec.gov) that contains reports,
proxy and information statements, and other information regarding registrants
that file electronically.
The Company has filed a registration statement on Form S-3 (herein,
together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement and the exhibits filed as a part thereof. Statements contained herein
concerning any document filed as an exhibit are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is qualified in its
entirety by such references.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus:
1. Annual Report on Form 10-K for the fiscal year ended December 27,
1997.
2. Reports on Form 8-K dated January 22, 1998, February 25, 1998, and
April 15, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities will be deemed to be incorporated
herein by reference and to be a part hereof from the respective dates of filing
of such documents.
Any statement contained in a document incorporated or deemed incorporated
by reference herein will be deemed to be modified or superseded for purposes of
this Prospectus and the Registration Statement of which it is a part to the
extent that a statement contained herein or in any other subsequently filed
document which is also incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or such Registration Statement.
2
<PAGE> 18
The Company will provide without charge to each person, including a
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to The Kroger Co., 1014 Vine
Street, Cincinnati, Ohio 45202, Attention: Paul W. Heldman, (513) 762-4000.
THE COMPANY
The Company was founded in 1883, incorporated in 1902, and maintains its
principal executive offices in Cincinnati, Ohio. The Company is the nation's
largest supermarket operator measured by total sales for 1997. At December
27,1997, the Company operated 1,392 supermarkets in 24 states and 697
convenience stores in 15 states. Additionally the Company had 119 franchised
convenience stores in 4 states. The Company also operates food processing
facilities which enable the Company's stores to offer quality, low-cost private
label perishable and non-perishable products, and an efficient warehouse and
distribution system which supplies products to its stores.
USE OF PROCEEDS
The Company will apply the net proceeds from the sale of the Securities to
repay amounts outstanding under its revolving credit facilities. From time to
time, the Company expects to use borrowings under its revolving credit
facilities to repurchase or redeem outstanding indebtedness of the Company, or
for other general corporate purposes.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the consolidated ratio of earnings to fixed
charges for the Company. For purposes of determining the ratio of earnings to
fixed charges, "earnings" includes earnings before tax expense, cumulative
effect of change in accounting for income taxes and extraordinary loss, plus
fixed charges (excluding capitalized interest) and "fixed charges" consists of
interest (including capitalized interest) on all indebtedness, amortization of
deferred financing costs and that portion of rental expense which the Company
believes to be representative of interest.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
- ----------------------------------------------------------------------
DECEMBER 27, DECEMBER 28, DECEMBER 30, DECEMBER 31, JANUARY 1,
1997 1996 1995 1994 1994
(52 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS)
- ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
2.5 2.2 2.0 1.8 1.5
</TABLE>
DESCRIPTION OF DEBT SECURITIES
Offered Debt Securities (as defined below) will constitute either senior or
subordinated debt of the Company and will be issued, in the case of Offered Debt
Securities that will be senior debt ("Senior Debt Securities"), under an
Indenture (the "Senior Indenture"), between the Company and a trustee to be
selected by the Company (the "Senior Trustee"), and, in the case of Offered Debt
Securities that will be subordinated debt ("Subordinated Debt Securities"),
under an Indenture (the "Subordinated Indenture"), between the Company and a
trustee to be selected by the Company (the "Subordinated Trustee"). The Senior
Indenture and the Subordinated Indenture are sometimes hereinafter referred to
individually as an "Indenture" and collectively as the "Indentures", and the
Senior Trustee and the Subordinated Trustee are hereinafter referred to as the
"Trustee". The statements under this caption relating to the Debt Securities and
the Indentures are summaries and do not purport to be complete. Such summaries
make use of terms defined in the Indentures and are qualified in their entirety
by express reference to the Indentures and the cited provisions thereof, the
forms of which are filed as
3
<PAGE> 19
exhibits to the Registration Statement. For purposes of this description of the
Debt Securities the term "Company" refers only to The Kroger Co. and does not
include The Kroger Co.'s consolidated subsidiaries.
The particular terms of each issue of Debt Securities (the "Offered Debt
Securities"), as well as any modifications or additions to the following general
terms which may be applicable in the case of such Offered Debt Securities, will
be described in the Prospectus Supplement relating to such Offered Debt
Securities. Accordingly, for a description of the terms of a particular issue of
Offered Debt Securities, reference must be made both to the Prospectus
Supplement relating thereto and the following description.
GENERAL
The Debt Securities will represent general unsecured senior or subordinated
obligations of the Company or, in the case of Offered Debt Securities that are
secured Debt Securities, secured obligations of the Company. The Debt Securities
may be issued in one or more series with the same or various maturities.
Capitalized terms used herein shall have the meanings established in the
Indenture unless otherwise defined herein.
As of the date of this Prospectus, Debt Securities relating to this
Prospectus may be issued from time to time up to an aggregate principal amount
of $800,000,000 or the equivalent thereof. Reference is made to the Prospectus
Supplement for the following terms of the Offered Debt Securities: (i) the
title, aggregate principal amount and authorized denominations of the Offered
Debt Securities; (ii) the percentage of their principal amount at which such
Offered Debt Securities will be issued; (iii) the date or dates on which the
Offered Debt Securities will mature; (iv) the rate or rates (which may be fixed
or variable) per annum, if any, at which the Offered Debt Securities will bear
interest and the date from which such interest may accrue; (v) the times and
places at which principal and any such interest will be payable; (vi) any
redemption or sinking fund provisions; (vii) the currency of payment of
principal of, premium, if any, and interest on the Offered Debt Securities;
(viii) any index or other basis used to determine the amount of payments of
principal of and interest on the Offered Debt Securities; (ix) whether the
Offered Debt Securities of any series will be represented by a single global
note registered in the name of a depositary's nominee and, if so, the depositary
for and the method of transferring beneficial interests in the global note; (x)
whether the Offered Debt Securities will be issuable in registered form or
bearer form or both and, if Offered Debt Securities in bearer form are issuable,
restrictions applicable to the exchange of one form for another and to the
offer, sale and delivery of Offered Debt Securities in bearer form; (xi) ranking
as Subordinated Debt Securities, if applicable, and the terms of any such
subordination; (xii) if the Offered Debt Securities are secured, the security
therefor; and (xiii) any other terms relating to the Offered Debt Securities not
inconsistent with the Indenture, including any terms which may be required by or
advisable under United States laws or regulations or advisable in connection
with the marketing of Offered Debt Securities.
Offered Debt Securities may be presented for transfer in the manner, at the
places and subject to the restrictions set forth in the Offered Debt Securities
and the Prospectus Supplement. Such services will be provided without charge,
other than any tax or other governmental charge payable in connection therewith,
but subject to the limitations provided in the Indentures. Offered Debt
Securities in bearer form and the coupons, if any, appertaining thereto will be
transferable by delivery.
The indentures under which certain of the Company's outstanding
indebtedness was issued restrict the Company's ability to redeem, defease or
otherwise acquire the Debt Securities.
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be sold at a substantial discount below their stated
principal amount. Federal income tax consequences and other considerations
applicable thereto will be described in the Prospectus Supplement relating
thereto.
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EVENTS OF DEFAULT AND NOTICE THEREOF
The Indentures will define "Events of Default" with respect to any series
of Debt Securities as being any one of the following events and such other
events as may be established for a particular series of Debt Securities: (a)
failure to pay interest on Debt Securities of such series for 30 days after it
becomes due; (b) failure to pay principal (or premium or sinking fund payment,
if any) on Debt Securities of such series when due at maturity, upon redemption,
by declaration or otherwise; (c) failure to perform any other covenants for 60
days after notice (other than a covenant included in the Indentures solely for
the benefit of Debt Securities of any series other than such Debt Securities);
(d) a default under any indebtedness for borrowed money in excess of $30,000,000
constituting a failure to pay when due or resulting in such indebtedness
becoming due prior to maturity; (e) certain events of bankruptcy, insolvency or
reorganization; and (f) any other Event of Default provided with respect to Debt
Securities of such series. (Section 501.) No Event of Default (except an Event
of Default described in (c), (d) or (e) above) with respect to a particular
series of Debt Securities issued under the Indenture necessarily constitutes an
Event of Default with respect to any other series of Debt Securities issued
thereunder.
Each Indenture will provide that the Trustee shall, within 90 days after
the occurrence of a default with respect to any series of Debt Securities or all
Debt Securities, give to the holders of such series of Debt Securities or all
Debt Securities, as the case may be, notice of all uncured defaults known to it
(the term "default" to include the events specified above without grace
periods); provided, that except in the case of default in the payment of
principal (or premium or sinking fund payment, if any) or interest on any series
of the Debt Securities, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interest of the holders of the Debt Securities of such series. (Section
602.)
The Company will be required to furnish to the Trustee annually after the
first issue of the Debt Securities under the Indenture a statement of certain
officers of the Company to the effect that to the best of their knowledge the
Company is not in default in the performance and observance of the terms of the
Indenture or, if they have knowledge that the Company is in default, specifying
such default. (Section 1004.)
If an Event of Default described in clause (a) or (b) above with respect to
Debt Securities of any series at the time Outstanding or an Event of Default
specified pursuant to clause (f) with respect to Debt Securities of a particular
series occurs and is continuing, then in every such case, unless the principal
of all such Debt Securities shall have become due and payable, the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may in writing to the Company declare the principal
amount (or, if the Debt Securities of that series are Original Issue Discount
Securities (as defined in the Indenture), such portion of the principal amount
as may be specified in the terms of that series) of all of the Debt Securities
of that series, to be due and payable five business days after the receipt by
the Company and the Administrative Agents of such written notice. If an Event of
Default described in clause (c), (d) or (e) above occurs and is continuing, then
in every such case the Trustee or the Holders of not less than 25% in principal
amount of all the Debt Securities then Outstanding may in writing to the Company
declare the principal amount (or, if any such Debt Securities are Original Issue
Discount Securities, such portion of the principal amount as may be specified in
the terms of that series) of all of the Debt Securities to be due and payable
five business days after the receipt by the Company of such written notice;
provided, that each of the two preceding provisions shall not restrict the
availability of other rights or remedies that the Trustee or the Holders may
have. However, at any time after such a declaration of acceleration with respect
to Debt Securities of such series (or of all Outstanding Securities, as the case
may be) has been made, but before the maturity thereof, the Holders of a
majority in principal amount of Outstanding Securities of such series (or of all
Outstanding Securities, as the case may be) may, subject to certain conditions,
rescind and annul such acceleration if all Events of Default, other than the
non-payment of accelerated principal (or specified portion thereof) with respect
to Debt Securities of such series (or of all Outstanding Securities, as the case
may be) have been cured or waived as provided in the Indenture. (Section 502.)
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<PAGE> 21
Each Indenture also provides that the Holders of not less than a majority
in principal amount of the Debt Securities of a series (or of all Outstanding
Securities, as the case may be) may, subject to certain limitations, waive
certain defaults. Subject to certain limitations, the Holders of not less than a
majority of the principal amount of the Debt Securities of any series may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee.
(Sections 512 and 513.) Each Indenture will provide that in case an Event of
Default shall occur (which shall not have been cured or waived), the Trustee
will be required to exercise such of its rights and powers under the Indenture
and to use the degree of care and skill in their exercise that a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs. (Section 601.) Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any of the Holders of the Debt Securities unless they shall have
offered to the Trustee reasonable security or indemnity. (Section 603.)
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to acceleration of a portion of the principal
amount of such Original Issue Discount Securities upon the occurrence of an
Event of Default and the continuation thereof.
MODIFICATION OF THE INDENTURE
Each Indenture will provide that with certain exceptions, the Indenture,
the rights and obligations of the Company and the rights of the Holders of the
Debt Securities may be modified by the Company and the Trustee with the consent
of the Holders of not less than 50% in aggregate principal amount of all series
of Debt Securities directly affected by such modification; but no such
modification may be made, without the consent of each Holder of such Debt
Securities affected thereby, which would (i) change the stated maturity of any
Debt Security, or any installment of interest, if any, on any such Debt
Security, or reduce the principal amount thereof, or reduce any premium payable
upon the redemption thereof, or reduce the rate of interest thereon, or reduce
the principal amount payable on acceleration with respect to an Original Issue
Discount Security, or change the place or currency of payment of principal or
any premium or interest on any such Debt Security; (ii) reduce the above-stated
percentage of Debt Securities, the consent of the Holders of which is required
to modify or alter the Indenture; (iii) impair the right to institute suit for
the enforcement of any payment of the principal of, and premium, if any, and
interest on any such Debt Security; (iv) modify the foregoing requirements
except to increase the percentage of outstanding Debt Securities or to provide
that certain other provisions cannot be modified or waived without the consent
of the Holders of all outstanding Debt Securities; or (v) modify the provisions
of the Subordinated Indenture with respect to the subordination of the
Subordinated Debt Securities in a manner adverse to the Holders of such Debt
Securities. (Section 902.) The Company may set a record date for any Act of the
Holders with respect to consenting to any amendment (Section 104.)
THE TRUSTEES
Each Indenture contains limitations on the right of the Trustee, as a
creditor of the Company, to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. In addition, the Trustee may be deemed to have a conflicting interest
and may be required to resign as Trustee if at the time of a default under the
Indenture it is a creditor of the Company.
As of the date hereof, the Company has not selected a Trustee for either
the Senior Indenture or the Subordinated Indenture.
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CONSOLIDATION, MERGER AND SALE OF ASSETS
The Prospectus Supplement will contain provisions regarding the ability of
the Company to consolidate or merge with or into, or convey, transfer or lease
its properties or assets to any Person.
CERTAIN DEFINITIONS
"Indebtedness" means (without duplication), with respect to any Person, (i)
every obligation of such Person for money borrowed, (ii) every obligation of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) every obligation of such Person issued or assumed as the deferred purchase
price of property, every conditional sale obligation and every obligation under
any title retention agreement, in each case if on terms permitting any portion
of the purchase price to be paid beyond one year from the date of purchase (but
excluding trade accounts payable arising in the ordinary course of business
which are not overdue by more than 90 days or which are being contested in good
faith), (iv) every obligation of such Person issued or contracted for as payment
in consideration of the purchase by such Person or an Affiliate of such Person
of the stock or substantially all of the assets of another Person or a merger or
consolidation to which such Person or an Affiliate of such Person was a party,
(v) every obligation of the type referred to in clauses (i) through (iv) of
other Persons and all dividends of other Persons for the payment of which, in
either case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, and (vi) every obligation of the type referred
to in clauses (i) through (v) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured.
"Indebtedness," however, does not include any obligation of any Person under any
interest rate swap, cap, collar or similar arrangement.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
If Subordinated Debt Securities are issued, a Prospectus Supplement
relating thereto will describe the terms whereby such Subordinated Debt
Securities will be made subordinate and subject in right of payment to the prior
payment in full of senior indebtedness of the Company, and such description will
include a definition of what constitutes "senior indebtedness" of the Company.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 350,000,000 shares
of Common Stock, par value $1 per share, and 5,000,000 shares of cumulative
preferred stock, par value $100 per share. As of March 17, 1998, 255,664,563
shares of Common Stock were issued and outstanding. No shares of preferred stock
are outstanding.
COMMON STOCK
All of the outstanding shares of Common Stock are, and the shares of Common
Stock issuable hereunder will be when issued, fully paid and nonassessable.
Subject to the rights of the holders of any shares of preferred stock that may
be issued in the future, the holders of Common Stock (i) are entitled to such
dividends as the Board of Directors in its discretion may validly declare, (ii)
in the event of liquidation, will share ratably in the net assets of the
Company, and (iii) are entitled to cast one vote per share except that they are
entitled to cumulative votes for the election of directors. The Common Stock has
no conversion rights, nor are there any preemptive, subscription, redemption or
call provisions applicable to the Common Stock.
TRANSFER AGENT
The Bank of New York is the transfer agent and registrar for the Company's
Common Stock.
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PREFERRED STOCK
General
The Company may issue, from time to time, shares of one or more series of
Preferred Stock.
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The particular terms of any series of
Preferred Stock offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply to the series of Preferred Stock so
offered will be described in a Prospectus Supplement relating to such Preferred
Stock. The following summary of certain provisions of the Preferred Stock does
not purport to be complete and is subject to, and is qualified in its entirety
by express reference to, the provisions of the Company's Amended Articles of
Incorporation, as amended (the "Articles of Incorporation"), and each
Certificate of Designation relating to a specific series of the Preferred Stock
(each, a "Certificate of Designation"), which will be in the form filed as an
exhibit to, or incorporated by reference in, the Registration Statement at or
prior to the time of issuance of such series of Preferred Stock.
Pursuant to the Articles of Incorporation, the Company has the authority to
issue 5,000,000 shares of voting cumulative Preferred Stock. As of the date of
this Prospectus, 2,000,000 shares were available for issuance. Of these amounts,
50,000 shares have been designated Series A Preferred Shares, for issuance
pursuant to Preferred Stock Purchase Rights issued under the Company's warrant
dividend plan. The Board of Directors of the Company is authorized to issue
shares of Preferred Stock, in one or more series, and to fix for each such
series relative, participating, optional or other special rights and such
qualifications, limitations or restrictions, as are permitted by the Ohio
Revised Code.
The Board of Directors of the Company is authorized to determine for each
series of Preferred Stock, and the Prospectus Supplement will set forth with
respect to such series, the following: (i) the designation and number of shares
of such series, (ii) the dividend rate of such series, (iii) the dates of
payment of dividends on shares of such series and the dates from which they are
cumulative, (iv) the redemption rights of the Company with respect to shares of
such series and the price or prices at which shares of such series may be
redeemed, (v) the amount or amounts payable to holders of shares of such series
on any voluntary or involuntary liquidation, dissolution or winding up of the
Company, which may be different for voluntary and involuntary liquidation,
dissolution, or winding up, (vi) the amount of the sinking fund, if any, to be
applied to the purchase or redemption of shares of such series and the manner of
its application, (vii) whether or not the shares of such series will be made
convertible into, or exchangeable for, shares of any other class or classes or
of any other series of the same class of stock of the Company, and if made so
convertible or exchangeable, the conversion price or prices, or the rates of
exchange, and the adjustments, it any, at which such conversion or exchange may
be made, and (viii) whether or not the issue of any additional shares of such
series or any future series in addition to such series or any other class of
stock will be subject to any restrictions and, if so, the nature of such
restrictions.
Dividends
Holders of shares of Preferred Stock will be entitled to receive, when and
as declared by the Board of Directors of the Company out of funds of the Company
legally available therefor, cash dividends payable on such dates and at such
rates, if any, per share as set forth in the applicable Prospectus Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, each
series of Preferred Stock will rank equally to any other series of Preferred
Stock. If at any time the Company has failed to pay accrued dividends on any
senior series at the time dividends are payable on a junior series, the Company
may not pay any dividend on such junior series of Preferred Stock or redeem or
otherwise repurchase shares of such junior series of Preferred Stock until such
accumulated but unpaid dividends
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on the senior series have been paid or set aside for payment in full by the
Company. As of the date of this Prospectus, the Company's Articles of
Incorporation provide that all shares of Preferred Stock will rank equally.
Unless otherwise set forth in the applicable Prospectus Supplement, no
dividends (other than in Common Stock or other capital stock ranking junior to
the Preferred Stock of any series as to dividends and upon liquidation) will be
declared or paid or set aside for payment, nor will any other distribution be
declared or made upon the Common Stock, or any other capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of such series
as to dividends, nor will any Common Stock or any other capital stock of the
Company ranking junior to or on a parity with the Preferred Stock of such series
as to dividends be redeemed, purchased or otherwise acquired for any
consideration (or any monies be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Company (except by
conversion into or exchange for other capital stock of the Company ranking
junior to the Preferred Stock of such series as to dividends) unless, full
cumulative dividends on the Preferred Stock of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof set apart for all past dividend periods and the then current
dividend period; provided, however, that any monies theretofore deposited in any
sinking fund with respect to any Preferred Stock of the Company in compliance
with the provisions of such sinking fund may thereafter be applied to the
purchase or redemption of such Preferred Stock in accordance with the terms of
such sinking fund, regardless of whether at the time of such application full
cumulative dividends upon shares of the Preferred Stock outstanding on the last
dividend payment date have been paid or declared and set apart for payment; and
provided, further, that any such junior or parity Preferred Stock of the Company
or Common Stock of the Company may be converted into or exchanged for stock of
the Company ranking junior to the series of Preferred Stock then senior to such
junior or parity Preferred Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period will be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear
interest.
Convertibility
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable Prospectus
Supplement.
Redemption and Sinking Fund
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the applicable Prospectus Supplement.
Liquidation Rights
Unless otherwise set forth in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding-up of the Company, the holders
of shares of each series of Preferred Stock are entitled to receive out of
assets of the Company available for distribution to stockholders, before any
distribution of assets is made to holders of: (i) any other shares of Preferred
Stock of the Company ranking junior to such series of Preferred Stock as to
rights upon liquidation, dissolution or winding-up; or (ii) shares of Common
Stock, liquidating distributions per share in the amount of the liquidation
preference specified in the applicable Prospectus Supplement for such series of
Preferred Stock plus any dividends accrued and accumulated but unpaid to the
date of final distribution, but, in either case, the holders of each series of
Preferred Stock will not be entitled to receive the liquidating distribution of,
plus such dividends on, such shares until the liquidation preference of any
shares of the Company's capital stock ranking senior to such series of the
Preferred Stock as to the rights upon liquidation, dissolution or winding-up
have been paid (or a sum set aside therefor sufficient to provide for payment)
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in full. If upon any liquidation, dissolution or winding-up of the Company,
funds available for such purpose are insufficient to pay in full the amounts
payable with respect to any series of the Preferred Stock, and any other
Preferred Stock ranking as to any such distribution on a parity with such series
of the Preferred Stock, the holders of such series of the Preferred Stock of the
Company and such other parity Preferred Stock will share ratably in any such
distribution of assets in proportion to the full respective preferential amounts
to which they are entitled. Unless otherwise specified in a Prospectus
Supplement for a series of Preferred Stock, after payment of the full amount of
the liquidating distribution to which they are entitled, the holders of shares
of Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Company. Neither a consolidation or merger of the
Company with another corporation nor a sale of securities will be considered a
liquidation, dissolution or winding-up of the Company.
Voting Rights
Holders of Preferred Stock will be entitled to one vote per share held,
unless otherwise set forth in the applicable Prospectus Supplement, or as
otherwise from time to time required by law.
Miscellaneous
The holders of Preferred Stock will have no preemptive rights. The
Preferred Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable. There are no restrictions on
repurchase or redemption of the Preferred Stock on account of any arrearage on
sinking fund installments except as may be set forth in an applicable Prospectus
Supplement. Payment of dividends on any series of Preferred Stock may be
restricted by loan agreements, indentures or other agreements entered into by
the Company. The accompanying Prospectus Supplement will describe any material
contractual restrictions on dividend payments. Such Prospectus Supplement also
will describe any material United States federal income tax considerations
applicable to the Preferred Stock.
No Other Rights
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the applicable Prospectus Supplement, the
Articles of Incorporation or the applicable Certificate of Designation, or as
otherwise required by law.
Transfer Agent and Registrar
The transfer agent and registrar for each series of Preferred Stock will be
designated in the applicable Prospectus Supplement.
PREFERRED STOCK PURCHASE RIGHTS
On February 28,1986, the Company adopted a warrant dividend plan providing
for stock purchase rights to owners of the Company's common stock. The Plan was
amended and restated as of April 4, 1997. Each right, when exercisable, entitles
the holder to purchase from the Company one ten-thousandth of a share of Series
A Preferred Shares, par value $100 per share, at $87.50 per one ten-thousandth
of a share. The rights will become exercisable, and separately tradeable, ten
days after a person or group acquires 10% or more of the Company's common stock
or ten business days following a tender offer or exchange offer resulting in a
person or group having beneficial ownership of 10% or more of the Company's
common stock. In the event the rights become exercisable and thereafter the
Company is acquired in a merger or other business combination, each right will
entitle the holder to purchase common stock of the surviving corporation, for
the exercise price, having a market value of twice the exercise price of the
right. Under certain other circumstances, including certain acquisitions of the
Company in a merger or other business combination transaction, or if 50% or more
of
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the Company's assets or earning power are sold under certain circumstances, each
right will entitle the holder to receive upon payment of the exercise price,
shares of common stock of the acquiring company with a market value of two times
the exercise price. At the Company's option, the rights, prior to becoming
exercisable, are redeemable in their entirety at a price of $.01 per right. The
rights are subject to adjustment and expire March 19, 2006. This summary
description of the Plan is qualified in its entirety by the terms of the plan
more particularly set forth in the Company's Form 8-A/A dated April 4, 1997.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may, at its option, elect to offer fractional shares of the
Preferred Stock of a series rather than full shares of the Preferred Stock of
such series. In the event such option is exercised, the Company will issue
Depositary Receipts for Depositary Shares, each of which will represent a
fraction (to be set forth in the Prospectus Supplement relating to a particular
series of Preferred Stock) of a share of a particular series of Preferred Stock
as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement")
among the Company, a depositary to be named in the applicable Prospectus
Supplement (the "Preferred Stock Depositary") and the holders from time to time
of Depositary Receipts issued thereunder. Subject to the terms of the Deposit
Agreement, each holder of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including dividend, voting, redemption, subscription and
liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement to those persons purchasing Depositary Shares.
The following description of the terms of the Depositary Shares sets forth
certain general terms and provisions of the Depositary Shares to which any
Prospectus Supplement may relate. The particular terms of the Depositary Shares
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may apply to the Depositary Shares so offered will be
described in a Prospectus Supplement relating to such Depositary Shares. The
forms of Deposit Agreement and Depositary Receipt will be filed with the
Commission as exhibits to a document incorporated by reference in the
Registration Statement prior to the date of any Prospectus Supplement relating
to an offering of the Depositary Shares.
Immediately following the issuance of fractional shares of a series of
Preferred Stock by the Company, the Company will deposit such shares with the
Preferred Stock Depositary, which will then issue and deliver the Depositary
Receipts to the purchasers thereof. Depositary Receipts will only be issued
evidencing whole Depositary Shares. A Depositary Receipt may evidence any number
of whole Depositary Shares.
Pending the preparation of definitive engraved Depositary Receipts, the
Preferred Stock Depositary may, upon the written order of the Company, issue
temporary Depositary Receipts substantially identical to (and entitling the
holders thereof to all the rights pertaining to) the definitive Depositary
Receipts but not in definitive form. Definitive Depositary Receipts will be
prepared thereafter without unreasonable delay, and such temporary Depositary
Receipts will be exchangeable for definitive Depositary Receipts at the
Company's expense.
The following summary of certain provisions which will be included in the
Deposit Agreement with respect to the Depositary Shares does not purport to be
complete and is subject to, and is qualified in its entirety by express
reference to, all the provisions of the Deposit Agreement, including the
definitions therein of certain terms.
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DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Stock represented by the
Depositary Shares to the record holders of the Depositary Shares in proportion
to the number of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Shares entitled thereto in proportion to the number of Depositary
Shares owned by such holders, unless the Preferred Stock Depositary determines
that such distribution cannot be made proportionately among such holders or that
it is not feasible to make such distributions, in which case the Preferred Stock
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including the sale (at public or private sale) of the securities or other
property thus received, or any part thereof, at such place or places and upon
such terms as it may deem proper.
The amount distributed in any of the foregoing cases will be reduced by any
amounts required to be withheld by the Company or the Preferred Stock Depositary
on account of taxes or other governmental charges.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Preferred Stock Depositary resulting from any redemption, in
whole or in part, of such series of the Preferred Stock held by the Preferred
Stock Depositary. The redemption price per Depositary Share will be the fraction
of the redemption price per share payable with respect to such series of the
Preferred Stock equal to the fraction of a share of such Preferred Stock
represented by a Depositary Share. If the Company redeems shares of a series of
Preferred Stock held by the Preferred Stock Depositary, the Preferred Stock
Depositary will redeem as of the same redemption date the number of Depositary
Shares representing the shares of Preferred Stock so redeemed. If less than all
the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed
will be selected by lot or substantially equivalent method determined by the
Preferred Stock Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
monies payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption, upon
surrender to the Preferred Stock Depositary of the Depositary Receipts
evidencing such Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
the Preferred Stock are entitled to vote, the Preferred Stock Depositary will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such series of Preferred Stock. Each record
holder of such Depositary Shares on the record date (which will be the same date
as the record date for the related series of Preferred Stock) will be entitled
to instruct the Preferred Stock Depositary as to the exercise of the voting
rights pertaining to the number of shares of the series of Preferred Stock
represented by such holder's Depositary Shares. The Preferred Stock Depositary
will endeavor, insofar as practicable, to vote or cause to be voted the number
of shares of the Preferred Stock represented by such Depositary Shares in
accordance with such instructions, provided the Preferred Stock Depositary
receives such instructions sufficiently in advance of such meeting to enable it
to so vote or cause to be voted the shares of Preferred Stock, and the Company
will agree to take all reasonable action that may be deemed necessary by the
Preferred Stock Depositary in order to enable the Preferred Stock Depositary to
do so. The Preferred Stock Depositary will abstain from voting shares of the
Preferred
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<PAGE> 28
Stock represented by Depositary Shares to the extent it does not receive
specific instructions from the holders of Depositary Shares representing such
Preferred Stock.
WITHDRAWAL OF STOCK
Upon a holder's surrender of Depositary Receipts at the corporate trust
office of the Preferred Stock Depositary and upon such holder's payment of the
taxes, charges and fees provided for in the Deposit Agreement and subject to the
terms thereof, the holder of the Depositary Shares evidenced thereby will be
entitled to delivery at such office, to or upon his or her order, of the number
of whole shares of the related series of Preferred Stock and any money or other
property, if any, represented by such Depositary Shares.
Holders of Depositary Shares will be entitled to receive whole shares of
the related series of Preferred Stock, but holders of such whole shares of
Preferred Stock will not thereafter be entitled to deposit such shares of
Preferred Stock with the Preferred Stock Depositary or to receive Depositary
Shares therefor. If the Depositary Receipts delivered by the holders evidence a
number of Depositary Shares in excess of the number of Depositary Shares
representing the number of whole shares of the related series of Preferred Stock
to be withdrawn, the Preferred Stock Depositary will deliver to such holder or
upon such holder's order at the same time a new Depositary Receipt evidencing
such excess number of Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Preferred Stock Depositary.
However, any amendment that materially adversely alters the rights of the
holders of Depositary Shares will not be effective unless such amendment has
been approved by the holders of a majority of the Depositary Shares then
outstanding. Every holder of a Depositary Receipt at the time such amendment
becomes effective will be deemed, by continuing to hold such Depositary Receipt,
to be bound by the Deposit Agreement as so amended. Notwithstanding the
foregoing, in no event may any amendment impair the right of any holder of any
Depositary Shares, upon surrender of the Depositary Receipts evidencing such
Depositary Shares and subject to any conditions specified in the Deposit
Agreement, to receive shares of the related series of Preferred Stock and any
money or other property represented thereby, except in order to comply with
mandatory provisions of applicable law. The Deposit Agreement may be terminated
by the Company at any time upon not less than 60 days' prior written notice to
the Preferred Stock Depositary, in which case, on a date that is not later than
30 days after the date of such notice, the Preferred Stock Depositary will
deliver or make available for delivery to holders of Depositary Shares, upon
surrender of the Depositary Receipts evidencing such Depositary Shares, such
number of whole or fractional shares of the related series of Preferred Stock as
are represented by such Depositary Shares. The Deposit Agreement will
automatically terminate after all outstanding Depositary Shares have been
redeemed or there has been a final distribution in respect of the related series
of Preferred Stock in connection with any liquidation, dissolution or winding-up
of the Company and such distribution has been distributed to the holders of
Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and the governmental
charges arising solely from the existence of the depositary arrangements. The
Company will pay the charges of the Preferred Stock Depositary, including
charges in connection with the initial deposit of any series of Preferred Stock
represented by Depositary Shares and the initial issuance of the Depositary
Shares and all withdrawals of shares of the related series of Preferred Stock,
except that holders of Depositary Shares will pay other transfer and other taxes
and governmental charges and such other charges as are expressly provided in the
Deposit Agreement to be for their accounts.
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<PAGE> 29
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company written notice of its election to do so, and the Company may at any time
remove the Depositary, any such resignation or removal to take effect upon the
appointment of a successor Preferred Stock Depositary, which successor Preferred
Stock Depositary must be appointed within 60 days after delivery of the notice
of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward to the holders of Depositary
Shares all reports and communications from the Company that are delivered to the
Preferred Stock Depositary and which the Company is required to furnish to the
holders of the Preferred Stock.
The Preferred Stock Depositary's corporate trust office will be identified
in the applicable Prospectus Supplement. Unless otherwise set forth in the
applicable Prospectus Supplement, the Preferred Stock Depositary will act as
transfer agent and registrar for Depositary Receipts and if shares of a series
of Preferred Stock are redeemable, the Preferred Stock Depositary will act as
redemption agent for the corresponding Depositary Receipts.
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue, together with other Securities or separately,
warrants for the purchase of (i) Debt Securities (the "Debt Warrants"), (ii)
Common Stock (the "Common Stock Warrants") or (iii) Preferred Stock (the
"Preferred Stock Warrants" and, collectively with the Debt Warrants and the
Common Stock Warrants, the "Warrants").
The Warrants will be issued under Warrant Agreements (as defined below) to
be entered into between the Company and a bank or trust company, as warrant
agent (the "Warrant Agent"), all to be set forth in the applicable Prospectus
Supplement relating to Warrants for which this Prospectus is being delivered.
Copies of the form of agreement for each Warrant (each, a "Debt Securities
Warrant Agreement," a "Common Stock Warrant Agreement" or a "Preferred Stock
Warrant Agreement," as the case may be, or collectively, the "Warrant
Agreements"), including the forms of certificates representing the Warrants (the
"Debt Warrant Certificate(s)," the "Common Stock Warrant Certificate(s)" or the
"Preferred Stock Warrant Certificate(s)," as the case may be, or collectively,
the "Warrant Certificates"), reflecting the provisions to be included in such
agreements that will be entered into with respect to the particular offerings of
each type of Warrant will be, in each case, filed with the Commission as an
exhibit to a document incorporated by reference in the Registration Statement
prior to the date of any Prospectus Supplement relating to an offering of such
Warrant.
The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply to
the Warrants so offered will be described in a Prospectus Supplement relating to
such Warrants. The following summary of certain provisions of the Warrants, the
Warrant Agreements and the Warrant Certificates does not purport to be complete
and is subject to, and is qualified in its entirety by express reference to, all
of the provisions of the Warrant Agreements and Warrant Certificates, including
the definitions therein of certain terms.
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<PAGE> 30
DEBT WARRANTS
General
Reference is made to the applicable Prospectus Supplement for the terms of
Debt Warrants for which this Prospectus is being delivered, the Debt Securities
Warrant Agreement relating to such Debt Warrants and the Debt Warrant
Certificate(s) representing such Debt Warrants, including the following: (i) the
designation, aggregate principal amount and terms of the Debt Securities
purchasable upon exercise of such Debt Warrants and the procedures and
conditions relating to the exercise of such Debt Warrants; (ii) the designation
and terms of any related Debt Securities with which such Debt Warrants are
issued and the number of such Debt Warrants issued with each such Debt Security;
(iii) the date, if any, on and after which such Debt Warrants and the related
Debt Securities will be separately transferable; (iv) the principal amount of
Debt Securities purchasable upon exercise of each Debt Warrant and the price at
which such principal amount of Debt Securities may be purchased upon such
exercise; (v) the date on which the right to exercise such Debt Warrants will
commence and the date on which such right will expire; (vi) a discussion of the
material United States federal income tax considerations applicable to the
exercise of Debt Warrants; (vii) whether the Debt Warrants represented by the
Debt Warrant Certificates will be issued in registered or bearer form, and, if
registered, where they may be transferred and registered; (viii) call provisions
of such Debt Warrants, if any; and (ix) any other terms of the Debt Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders of
the Debt Securities purchasable upon such exercise and will not be entitled to
payments of principal of (and premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise.
Exercise of Debt Warrants
Each Debt Warrant will entitle the holder to purchase for cash such
principal amount of Debt Securities at such exercise price as will in each case
be set forth in, or be determinable as set forth in the applicable Prospectus
Supplement relating to the Debt Warrants offered thereby. Debt Warrants may be
exercised at any time up to the date and time on such date set forth in the
applicable Prospectus Supplement. Thereafter, unexercised Debt Warrants will
become void.
Debt Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating to the Debt Warrants. Upon receipt of payment and the Debt
Warrant Certificate properly completed and duly executed at the corporate trust
office of the Warrant Agent or any other office indicated in the applicable
Prospectus Supplement, the Company will, as soon as practicable, forward the
Debt Securities purchasable upon such exercise. If less than all of the Debt
Warrants represented by such Debt Warrant Certificate are exercised, a new Debt
Warrant Certificate will be issued for the remaining amount of Debt Warrants.
COMMON STOCK WARRANTS
General
Reference is made to the applicable Prospectus Supplement for the terms of
Common Stock Warrants in respect of which this Prospectus is being delivered,
the Common Stock Warrant Agreement relating to such Common Stock Warrants and
the Common Stock Warrant Certificates representing such Common Stock Warrants,
including the following: (i) the procedures and conditions relating to the
exercise of such Common Stock Warrants; (ii) the number of shares of Common
Stock, if any, issued with such Common Stock Warrants; (iii) the date, if any,
on and after which such Common Stock Warrants and any related shares of Common
Stock will be separately transferable; (iv) the offering price of such Common
Stock Warrants, if any; (v) the number of shares of Common Stock purchasable
upon
15
<PAGE> 31
exercise of such Common Stock Warrants and the price or prices at which such
shares may be purchased upon exercise; (vi) the date on which the right to
exercise such Common Stock Warrants will commence and the date on which such
right will expire; (vii) a discussion of the material United States federal
income tax considerations applicable to the exercise of Common Stock Warrants;
(viii) call provisions of such Common Stock Warrants, if any; and (ix) any other
terms of the Common Stock Warrants.
Common Stock Warrant Certificates will be exchangeable for new Common Stock
Warrant Certificates of different denominations and Common Stock Warrants may be
exercised at the corporate trust office of the Warrant Agent or any other office
indicated in the applicable Prospectus Supplement. Prior to the exercise of
their Common Stock Warrants, holders of Common Stock Warrants will not have any
of the rights of holders of Common Stock purchasable upon such exercise,
including, without limitation, the right to any dividend payments on the Common
Stock purchasable upon such exercise.
Exercise of Common Stock Warrants
Each Common Stock Warrant will entitle the holder to purchase for cash such
number of shares of Common Stock at such exercise price as will in each case be
set forth in, or be determinable as set forth in, the applicable Prospectus
Supplement relating to the Common Stock Warrants offered thereby. Common Stock
Warrants may be exercised at any time up to the date and time on such date set
forth in the applicable Prospectus Supplement. Thereafter, unexercised Common
Stock Warrants will become void.
Common Stock Warrants may be exercised as set forth in the applicable
Prospectus Supplement relating to the Common Stock Warrants. Upon receipt of
payment and the Common Stock Warrant Certificate properly completed and duly
executed at the corporate trust office of the Warrant Agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon as
practicable, forward a certificate representing the number of shares of Common
Stock purchasable upon such exercise. If less than all of the Common Stock
Warrants represented by such Common Stock Warrant Certificate are exercised, a
new Common Stock Warrant Certificate will be issued for the remaining amount of
Common Stock Warrants.
PREFERRED STOCK WARRANTS
General
Reference is made to the applicable Prospectus Supplement for the terms of
Preferred Stock Warrants for which this Prospectus is being delivered, the
Preferred Stock Warrant Agreement relating to such Preferred Stock Warrants and
the Preferred Stock Warrant Certificates representing such Preferred Stock
Warrants, including the following: (i) the designation and terms of the shares
of Preferred Stock purchasable upon exercise of such Preferred Stock Warrants
and the procedures and conditions relating to the exercise of such Preferred
Stock Warrants; (ii) the designation and terms of any related shares of
Preferred Stock with respect to which such Preferred Stock Warrants are issued
and the number of shares of such Preferred Stock, if any, issued with Preferred
Stock Warrants; (iii) the date, if any, on and after which such Preferred Stock
Warrants and any related shares of Preferred Stock will be separately
transferable; (iv) the offering price of such Preferred Stock Warrants, if any;
(v) the number of shares of Preferred Stock purchasable upon exercise of such
Preferred Stock Warrants and the initial price or prices at which such shares
may be purchased upon exercise; (vi) the date on which the right to exercise
such Preferred Stock Warrants will commence and the date on which such right
will expire; (vii) a discussion of the material United States federal income tax
considerations applicable to the exercise of Preferred Stock Warrants; (viii)
call provisions of such Preferred Stock Warrants, if any; and (ix) any other
terms of the Preferred Stock Warrants.
Preferred Stock Warrant Certificates will be exchangeable for new Preferred
Stock Warrant Certificates of different denominations and Preferred Stock
Warrants may be exercised at the corporate
16
<PAGE> 32
trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement. Prior to the exercise of their Preferred Stock
Warrants, holders of Preferred Stock Warrants will not have any of the rights of
holders of Preferred Stock purchasable upon such exercise, including, without
limitation, any right to any dividend payments on the Preferred Stock
purchasable upon such exercise.
Exercise of Preferred Stock Warrants
Each Preferred Stock Warrant will entitle the holder to purchase for cash
such number of shares of Preferred Stock at such exercise price as will in each
case be set forth in, or be determinable as set forth in, the applicable
Prospectus Supplement relating to the Preferred Stock Warrants offered thereby.
Preferred Stock Warrants may be exercised at any time up to the date and time on
such date set forth in the applicable Prospectus Supplement. Thereafter,
unexercised Preferred Stock Warrants will become void.
Preferred Stock Warrants may be exercised as set forth in the applicable
Prospectus Supplement relating to the Preferred Stock Warrants. Upon receipt of
payment and the Preferred Stock Warrant Certificate properly completed and duly
executed at the corporate trust office of the Warrant Agent or any other office
indicated in the applicable Prospectus Supplement, the Company will, as soon as
practicable, forward a certificate representing the number of shares of
Preferred Stock purchasable upon such exercise. If less than all of the
Preferred Stock Warrants represented by such Preferred Stock Warrant Certificate
are exercised, a new Preferred Stock Warrant Certificate will be issued for the
remaining amount of Preferred Stock Warrants.
PLAN OF DISTRIBUTION
The Company may offer and sell the Securities directly to purchasers or to
or through underwriters, dealers or agents. Any such underwriter, dealer or
agent involved in the offer and sale of the Securities for which this Prospectus
is delivered will be named in the applicable Prospectus Supplement. The
applicable Prospectus Supplement for the Securities issued thereunder will also
set forth the terms of the offering of such Securities, including the purchase
price of such Securities and the proceeds to the Company from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which such
Securities may be listed.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or from
time to time at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The applicable
Prospectus Supplement will describe the method of distribution of the
Securities.
If underwriters are used in an offering of Securities, the name of each
managing underwriter, if any, and any other underwriters and terms of the
transaction, including any underwriting discounts and other items constituting
compensation of the underwriters and dealers, if any, will be set forth in the
applicable Prospectus Supplement relating to such offering and the Securities
will be acquired by the underwriters for their own accounts and may be resold
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time. Underwriters, dealers and agents may be entitled, under agreements which
may be entered into with the Company, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Securities Act, and to reimbursement by the Company of certain expenses.
If a dealer is used in an offering of Securities, the Company will sell
such Securities to the dealer, as principal. The dealer may then resell such
Securities to the public at varying prices to be determined
17
<PAGE> 33
by such dealer at the time of resale. The name of the dealer and the terms of
the transaction will be set forth in the applicable Prospectus Supplement
relating thereto.
If an agent is used in an offering of Securities, the agent will be named,
and the terms of the agency will be set forth, in the applicable Prospectus
Supplement relating thereto. Unless otherwise indicated in such applicable
Prospectus Supplement, an agent will act on a best efforts basis for the period
of its appointment.
Dealers and agents named in an applicable Prospectus Supplement may be
deemed to be underwriters (within the meaning of the Securities Act) of the
Securities described therein and, under agreements which may be entered into
with the Company, may be entitled to indemnification by the Company against
certain civil liabilities under the Securities Act. Underwriters, dealers and
agents may be customers of, engage in transactions with or perform services for,
the Company in the ordinary course of business.
Offers to purchase Securities may be solicited, and sales thereof may be
made, by the Company directly to institutional investors or others, who may be
deemed to be underwriters within the meaning of the Securities Act with respect
to any resales thereof. The terms of any such offer will be set forth in the
applicable Prospectus Supplement relating thereto.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other agents of the Company to solicit offers by
certain institutional investors to purchase Securities from the Company pursuant
to contracts providing for payment and delivery at a future date. Institutional
investors with which such contracts may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such purchasers must be
approved by the Company. The obligations of any purchaser under any such
contract will not be subject to any conditions except that (i) the purchase of
the Securities must not at the time of delivery be prohibited under the laws of
any jurisdiction to which such purchaser is subject and (ii) if the Securities
are also being sold to underwriters, the Securities must not be subject to
delayed delivery. Underwriters and other agents will not have any responsibility
in respect of the validity or performance of such contracts.
In addition, the Securities may be offered and sold by the holders thereof
in one or more of the transactions described above, which transactions may be
effected at any time and from time to time. Upon any such sale of Securities,
the respective holders thereof and any broker, dealer or underwriter
participating therewith may be deemed to be underwriters within the meaning of
Section 2(11) of the Securities Act, and any commissions, discounts or
concessions upon such sale, or any profit on the resale of such shares, received
thereby in connection with such sale may be deemed to be underwriting
commissions or discounts under the Securities Act. The compensation, including
commissions, discounts, concessions and other profits, received by any broker,
dealer or underwriter in connection with the sale of any of such Securities may
be less than or in excess of customary commissions.
The anticipated date of delivery of Securities will be set forth in the
applicable Prospectus Supplement relating to each offering.
The Securities may or may not be listed on a national securities exchange
or a foreign securities exchange. No assurances can be given that there will be
a market for any of the securities.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for the Company by Paul
W. Heldman, Esq., Senior Vice President, Secretary and General Counsel of the
Company. As of March 31, 1998, Mr. Heldman owned approximately 28,958 shares of
the Company's Common Stock and had options to acquire an additional 208,750
shares.
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<PAGE> 34
EXPERTS
The consolidated financial statements of The Kroger Co. as of December 27,
1997 and December 28, 1996 and for the fiscal years ended December 27, 1997,
December 28, 1996, and December 30, 1995, which appear in the Company's Annual
Report on Form 10-K for the fiscal year ended December 27, 1997, incorporated by
reference in this Prospectus, have been incorporated herein in reliance on the
report of Coopers & Lybrand L.L.P. independent accountants, given on the
authority of that firm as experts in accounting and auditing.
Documents incorporated herein by reference in the future will include
financial statements, related schedules (if required) and auditors' reports
which financial statements and schedules will have been audited to the extent
and for the periods set forth in such reports by the firm or firms rendering
such reports and, to the extent so audited and consent to incorporation by
reference is given, will be incorporated herein by reference upon such reports
given upon the authority of such firms as experts in accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION
OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON
ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS AN OFFER TO
SELL ONLY THE NOTES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES AND IN
JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company.......................... S-2
Recent Developments.................. S-2
Use of Proceeds...................... S-3
Risk Factors......................... S-4
Description of the Notes............. S-7
Underwriting......................... S-14
Validity of the Notes................ S-15
Experts.............................. S-15
Forward-Looking Statements........... S-15
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
The Company.......................... 3
Use of Proceeds...................... 3
Consolidated Ratio of Earnings to
Fixed Charges...................... 3
Description of Debt Securities....... 3
Description of Capital Stock......... 7
Description of Depositary Shares..... 11
Description of Warrants.............. 14
Plan of Distribution................. 17
Validity of Securities............... 18
Experts.............................. 19
</TABLE>
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$300,000,000
THE KROGER CO.
6.80% SENIOR NOTES DUE 2018
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[KROGER LOGO]
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GOLDMAN, SACHS & CO.
CHASE SECURITIES INC.
SALOMON SMITH BARNEY
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