<PAGE>
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS SUBJECT TO COMPLETION
PURSUANT TO RULE 424 UNDER THE SECURITIES ACT OF 1933. REGISTRATION STATEMENTS
RELATING TO THESE SECURITIES HAVE BEEN DECLARED EFFECTIVE BY THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF 1933. A
FINAL PROSPECTUS SUPPLEMENT AND PROSPECTUS WILL BE DELIVERED TO PURCHASERS OF
THESE SECURITIES. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Pursuant to Rule 424(b)(5)
Registration No. 33-44684
Registration No. 333-28295
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED APRIL 1, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 1, 1998)
$300,000,000
LITTON INDUSTRIES, INC.
$100,000,000
[LOGO] % SENIOR NOTES DUE 2003
$200,000,000
% SENIOR DEBENTURES DUE 2018
-------------------
Interest on the % Senior Notes due 2003 (the "2003 Notes") and %
Senior Debentures due 2018 (the "2018 Debentures" and together with the 2003
Notes, the "Securities") of Litton Industries, Inc. ("Litton" or the "Company")
will accrue from the date of issuance and will be payable on and
of each year, commencing , 1998. The 2003 Notes are not redeemable
prior to maturity. The 2018 Debentures are 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 the 2018 Debentures and (ii) as
determined by an Independent Investment Banker (as defined herein), the sum of
the present values of the remaining scheduled payments of principal and interest
thereon discounted to the date of redemption on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate
(as defined herein), plus, in each case, accrued interest thereon to the date of
redemption. The Securities are senior unsecured obligations of Litton. See
"Description of the Securities".
The Securities offered hereby will be represented by global securities (the
"Global Securities") registered in the name of the nominee of The Depository
Trust Company (the "Depositary"). Beneficial interests in the Global Securities
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Except as described herein,
Securities in definitive form will not be issued.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
<S> <C> <C> <C>
Per % Senior Note due 2003.............................. % % %
Total....................................................... $ $ $
Per % Senior Debenture due 2018......................... % % %
Total....................................................... $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 1998.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting expenses payable by the Company estimated at $300,000.
-------------------
The Securities are offered by the several Underwriters, subject to prior
sale, when, as and if issued and accepted by them, subject to approval of
certain legal matters by counsel for the several Underwriters and certain other
conditions. The several Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Securities will be made through the book-entry facilities of the
Depositary on or about April , 1998.
-------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
-------------------
The date of this Prospectus Supplement is April , 1998.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF
THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY INCLUDE STABILIZING THE
PURCHASE OF SECURITIES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
THE COMPANY
Litton Industries, Inc. (hereafter together with its consolidated
subsidiaries referred to as the "Company" or "Litton" unless the context
otherwise indicates) is a high technology aerospace, defense and commercial
electronics corporation which provides advanced electronic, defense and
information systems and marine engineering and production to U.S. and world
markets. The Company also provides electronic components and materials to
customers worldwide. Approximately 67% of the Company's consolidated revenues
for the fiscal year ended July 31, 1997 were derived from sales to the U.S.
Government.
The Company's businesses are reported in four business segments: Advanced
Electronics, Information Systems, Marine Engineering and Production, and
Electronic Components and Materials. The Advanced Electronics segment is a major
supplier of electronic systems and related services to the U.S. and
international military electronics markets and also provides navigation systems
and electronic components to a variety of commercial customers. The Information
Systems segment provides information technology and systems integration in
defense as well as non-defense government and commercial sectors. The Marine
Engineering and Production segment is a leading designer and builder of complex
surface combatant ships for the U.S. Navy and also provides modernization,
overhaul, repair and design and engineering work. The Electronic Components and
Materials segment is an international supplier of electronic connectors,
multilayer circuit boards and other interconnect products, primarily for the
telecommunications and computer industries.
The Company has completed a number of acquisitions in the last two years as
it continues an acquisition strategy intended to reduce its dependence on
defense related businesses. In fiscal years 1996 and 1997, the Company acquired
PRC Inc. ("PRC"), Sperry Marine Inc. ("Sperry Marine"), Racal Marine Group
("Decca") and SAI Technology ("SAIT"). See "Business". On April 1, 1998, the
Company acquired TASC, Inc. and The Analytical Sciences Corporation Limited
("TASC U.K.") (collectively, "TASC"), which Litton believes will complement its
existing businesses in the Information Systems segment. All of these, and other,
acquisitions are expected to expand the Company's sales base going forward.
Additionally, Litton has continued its efforts to improve cost efficiencies and
to adjust the capacity of its operations to enhance competitiveness.
USE OF PROCEEDS
The net proceeds to be received by the Company from the issue and sale of
the Securities offered hereby will be used to repay outstanding borrowings under
the Company's credit agreement dated December 22, 1994, as amended to date,
among the Company and certain lenders set forth therein (the "1994 Credit
Agreement") and to retire a portion of the Company's outstanding commercial
paper incurred in connection with the acquisition of TASC. As of March 31, 1998,
borrowings under the 1994 Credit Agreement bore interest at 5.89% per annum and
the weighted average interest rate on the Company's commercial paper was 6.23%
per annum.
S-2
<PAGE>
RECENT EVENTS
ACQUISITION OF TASC
On April 1, 1998 the Company completed the acquisition of TASC from Primark
Corporation for a purchase price of $432 million in cash, subject to adjustment.
TASC, with revenues of approximately $440 million for its fiscal year ended
December 31, 1997, is a leading provider of information technology and services
to the national intelligence sector, the U.S. Department of Defense and to
non-defense government and commercial customers. The net proceeds to be received
by the Company from the issue and sale of the Securities offered hereby will be
used to repay outstanding borrowings under the 1994 Credit Agreement and to
retire a portion of the Company's outstanding commercial paper incurred in
connection with the acquisition of TASC.
TASC, Inc. provides a broad spectrum of technology based information
services and products primarily to U.S. government agencies principally involved
in national security and intelligence related activities. TASC, Inc.'s principal
commercial product is Computer Output to Laser Disk software used in document
management systems and has also recently initiated a business in precision
imaging, primarily for the agricultural market. WSI Corporation, the principal
subsidiary of TASC, Inc., provides real-time and historical weather information,
together with related software, primarily to customers in the media, aviation,
agriculture, utility and government markets. TASC U.K. provides weather
forecasting and programming services as well as customized weather information
systems to media clients, and customers in the broadcasting and cable television
industries in the U.K. and other European countries. Based on information
provided by Primark Corporation, approximately 88% of TASC's revenues for its
fiscal year ended December 31, 1997 were derived from sales to the U.S.
Government.
On March 31, 1998, in connection with the acquisition of TASC, the Company
borrowed $400 million under a newly established commercial paper program and
entered into a new revolving credit agreement totalling $400 million to be used,
initially, as a back-up facility for its commercial paper program.
S-3
<PAGE>
CAPITALIZATION
The following table sets forth as of January 31, 1998 the historical
capitalization of the Company, the pro forma capitalization of the Company
reflecting the TASC acquisition (without reflecting the issuance of the
Securities), and the pro forma capitalization of the Company as adjusted to
reflect the issuance of the Securities offered hereby and the application of the
gross proceeds therefrom before the payment of estimated offering expenses and
an assumed underwriting discount. See "Use of Proceeds".
<TABLE>
<CAPTION>
JANUARY 31, 1998
-----------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA(1) ADJUSTED(2)
--------- ------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C>
Short-Term Obligations:
Borrowings under the 1994 Credit Agreement.............................. $ 240 $ 240 $ --
Notes Payable to Banks.................................................. 33 33 33
Current Portion of Long-Term Obligations................................ 7 7 7
--------- ------ ------
Short-Term Obligations................................................ $ 280 $ 280 $ 40
--------- ------ ------
--------- ------ ------
Long-Term Obligations:
Pension Accruals........................................................ $ 61 $ 61 $ 61
Commercial Paper........................................................ -- 400 340
Notes due 2003.......................................................... -- -- 100
Debentures due 2018..................................................... -- -- 200
Debentures due 2026..................................................... 300 300 300
Debentures due 2036..................................................... 100 100 100
Other................................................................... 29 29 29
--------- ------ ------
Long-Term Obligations................................................. 490 890 1,130
--------- ------ ------
Shareholders' Investment:
Voting Preferred Stock--Series B........................................ 2 2 2
Common Stock--120 million authorized at $1.00 par value; 46,158,878
shares outstanding at January 31, 1998................................ 46 46 46
Additional Paid-in Capital.............................................. 309 309 309
Retained Earnings....................................................... 810 810 810
Cumulative Currency Translation Adjustment.............................. (43) (43) (43)
--------- ------ ------
Total Shareholders' Investment........................................ 1,124 1,124 1,124
--------- ------ ------
Total Capitalization................................................ $ 1,614 $ 2,014 $ 2,254
--------- ------ ------
--------- ------ ------
</TABLE>
- ------------------------
(1) Assumes that the purchase price for the TASC acquisition was funded with
$400 million of commercial paper and $32 million of available cash.
(2) The gross proceeds from the issuance of the Securities, before the payment
of estimated offering expenses and an assumed underwriting discount, will be
used to repay outstanding borrowings under the 1994 Credit Agreement and a
portion of the Company's commercial paper borrowings used to fund the TASC
acquisition.
S-4
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The Selected Historical Financial Data below should be read in conjuction
with the more detailed information appearing in the Company's Annual Report on
Form 10-K for the fiscal year ended July 31, 1997 and the other documents
incorporated by reference in this Prospectus Supplement and the accompanying
Prospectus. The Selected Historical Financial Data for each of the three years
ended July 31, 1997 have been derived from audited financial statements which
are incorporated by reference herein. The Selected Historical Financial Data for
the six-month periods ended January 31, 1998 and January 31, 1997 are derived
from unaudited financial statements and, in the opinion of management, include
all adjustments (consisting only of normal recurring accruals) necessary to
present fairly the data for such periods. Results for the six months ended
January 31, 1998 are not necessarily indicative of the results to be expected
for the full fiscal year ended July 31, 1998.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JANUARY 31,
FISCAL YEAR ENDED JULY 31,
---------------------------- ------------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Sales and Service Revenues...................... $ 2,012.9 $ 2,009.3 $ 4,175.5 $ 3,611.5 $3,319.7
Segment Operating Profit........................ 188.2 176.2 369.6 320.1 280.5
Earnings before Interest Expense and Taxes on
Income........................................ 164.9 152.6 322.6 279.9 239.9
Net Earnings.................................... 84.1 76.0 162.0 150.9 135.0
Sales to the U.S. Government as a Percent of
Total Sales................................... N/A N/A %67 %71 73%
FINANCIAL POSITION AT PERIOD END:
Total Assets.................................... $ 3,571.2 $ 3,380.4 $ 3,519.7 $ 3,431.4 $2,559.6
Shareholders' Investment........................ 1,123.6 980.2 1,039.0 917.3 758.1
Long-term Obligations........................... 490.0 495.5 507.3 514.5 103.6
Working Capital................................. 150.0 137.8 121.2 68.8 130.1
Current Ratio................................... 1.09 1.09 1.07 1.04 1.10
OTHER SELECTED FINANCIAL INFORMATION:
Ratio of Earnings to Fixed Charges (1).......... 5.4x 5.1x 5.2x 8.0x 12.2x
Capital Expenditures............................ $ 42.8 $ 44.7 $ 113.1 $ 91.0 $ 98.3
Depreciation and Amortization Expense........... 69.6 67.3 137.5 113.8 95.4
Research and Development
Expenditures.................................. 110.4 107.8 241.8 217.0 227.1
Backlog at Period End........................... 5,689.6(2) 5,921.5(2) 5,525.5(3) 5,666.9(3) 5,137.8
Number of Employees at Period End............... 32,100 31,300 31,500 33,500 29,100
</TABLE>
- ------------------------
(1) The ratio of earnings to fixed charges is computed by dividing the sum of
historical Earnings before Taxes on Income and fixed charges, as adjusted,
by fixed charges. Fixed charges represent interest (including capitalized
interest) and amortization of debt discount and expense and that portion of
rental expense which is deemed to be representative of interest.
(2) In addition, PRC had unfunded backlog with potential contract values
totaling approximately $1.8 billion and $1.5 billion for the six months
ended January 31, 1998 and the six months ended January 31, 1997,
respectively.
(3) In addition, PRC had unfunded backlog with potential contract values
totaling approximately $1.5 billion and $1.0 billion for fiscal years 1997
and 1996, respectively.
N/A Not available.
S-5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF HISTORICAL
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information set forth below should be read in conjunction with the
consolidated financial statements and other information incorporated by
reference in this Prospectus Supplement and the accompanying Prospectus.
Effective August 1, 1997, the Company's Information Systems businesses have
been reported as a separate segment. Accordingly, the segment information for
the prior periods as discussed herein has been restated to reflect this change.
SIX MONTHS ENDED JANUARY 31, 1998 AS COMPARED TO SIX MONTHS ENDED JANUARY 31,
1997
The Company reported sales and operating profit of $2.0 billion and $188.2
million for the six months ended January 31, 1998 compared with $2.0 billion and
$176.2 million for the six months ended January 31, 1997. Net earnings rose
10.6% to $84.1 million for the six months of the current fiscal year compared
with $76.0 million for the prior fiscal year.
The Advanced Electronics segment reported sales and operating profit of
$778.3 million and $52.1 million for six months of the current fiscal year
compared with $719.8 million and $43.8 million, respectively, for the six months
of fiscal year 1997. The improvements in the results partly reflected the
acquisition of Decca in February 1997. Decca provides electronic chart systems,
bridge monitoring systems and radar products. Increased volume and production
rates on programs in the integrated avionics systems and radar warning systems
businesses also contributed to the improved results. Backlog for this segment at
January 31, 1998 was $1.5 billion compared with $1.6 billion at July 31, 1997.
The Information Systems segment reported sales and operating profit of
$514.8 million and $32.5 million for the six months of the current fiscal year
compared with $513.0 million and $34.6 million for the six months of the prior
fiscal year. Contributions from the acquisition of SAIT in March 1997 were
largely offset by a slowdown in sales under PRC's Super-Minicomputer program,
which is an indefinite delivery / indefinite quantity contract with various U.S.
government agencies to provide computer systems integration and networking
solutions. Operating profit was also impacted by program technology investments
related to software used in mobile command and control systems and displays and
computer products. Going forward, these investments should allow the Company to
address new market opportunities. During the first six months of fiscal year
1998, PRC received contract awards to provide software and systems engineering,
hardware, telecommunication services and technical support for various U.S.
government agencies. Funded backlog for the Information Systems segment at
January 31, 1998 was $666.5 million compared with $518.1 million at July 31,
1997. In addition, PRC had unfunded backlog with potential contract values of
$1.8 billion at January 31, 1998 compared with $1.5 billion at July 31, 1997. As
discussed in "Recent Events", the Company recently completed the acquisition of
TASC. As a provider of information technology and services to both federal and
commercial customers, TASC will expand the Company's existing information
technology business base and allow the Company to address new markets.
The Marine Engineering and Production segment reported sales and operating
profit of $461.4 million and $59.3 million for the six months of fiscal year
1998 compared with $549.7 million and $65.4 million for the six months of fiscal
year 1997. The decline in sales reflected lower construction activities on
contracts nearing completion and contracts completed during fiscal year 1997
including two Aegis destroyers and one LHD class amphibious assault ship.
Shortly after the end of the current quarter, the Company completed and
delivered another Aegis destroyer to the U.S. Navy. This sales decline was
partially offset by other contracts moving into more advanced stages of
production, including a seventh LHD class amphibious assault ship and two Aegis
destroyers. Operating margins improved as a result of increased earnings rates
on programs maturing in the production process and continued cost reduction
efforts. Current construction activities include two LHD class amphibious
assault ships, five Aegis destroyers and multiple deepwater supply vessels for a
commercial customer. Backlog for this segment at
S-6
<PAGE>
January 31, 1998 was $3.3 billion compared with $3.2 billion at July 31, 1997.
Subsequent to the end of the second quarter ended January 31, 1998, the U.S.
Navy awarded the Company a contract to build six additional Aegis destroyers
with options for two more. This award has a potential contract value of over
$2.8 billion inclusive of the options if they are exercised.
The Electronic Components and Materials segment reported sales and operating
profit of $286.9 million and $45.8 million for the six months of the current
fiscal year compared with $254.9 million and $33.7 million for the six months of
the prior fiscal year. These improvements were attributable to strong demand for
this segment's commercial electronics products used in communication industries.
Process improvements and cost reduction efforts also contributed to the improved
results.
Information concerning the Company's business segments for fiscal years
1997, 1996, 1995 is set forth below.
<TABLE>
<CAPTION>
MARINE
ENGINEERING ELECTRONIC CORPORATE
YEAR ENDED ADVANCED INFORMATION AND COMPONENTS AND OTHER
JULY 31, ELECTRONICS SYSTEMS PRODUCTION AND MATERIALS AMOUNTS TOTAL
----------- ----------- ----------- ----------- ------------- ----------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales........................ 1997 $ 1,533 $ 1,085 $ 1,112 $ 508 $ (62) $ 4,176
1996 1,326 612 1,295 450 (71) 3,612
1995 1,190 406 1,396 405 (77) 3,320
Operating Profit (Loss)...... 1997 $ 96 $ 75 $ 135 $ 70 $ (106) $ 270
1996 87 45 143 51 (72) 254
1995 80 33 132 37 (55) 227
Operating Margins............ 1997 6.3% 6.9% 12.1% 13.7% -- 8.9%(1)
1996 6.6 7.3 11.0 11.4 -- 8.9(1)
1995 6.7 8.0 9.4 9.1 -- 8.4(1)
Capital Expenditures......... 1997 $ 30 $ 27 $ 29 $ 26 $ 1 $ 113
1996 37 13 19 20 2 91
1995 38 8 26 15 11 98
Depreciation and Amortization
Expense.................... 1997 $ 68 $ 33 $ 19 $ 16 $ 2 $ 138
1996 61 17 19 15 2 114
1995 53 7 18 15 2 95
Identifiable Assets at Year
End...................... . 1997 $ 1,443 $ 866 $ 327 $ 340 $ 544 $ 3,520
1996 1,383 776 361 338 573 3,431
1995 1,074 201 392 308 585 2,560
</TABLE>
- ------------------------
(1) Represents segment operating profit as a percentage of sales.
FISCAL YEAR 1997 COMPARED TO 1996
Total sales and operating profit for fiscal year 1997 were $4.2 billion and
$369.6 million, respectively, representing increases of 16% and 15%,
respectively, over the prior year's results. Despite an increase in interest
expense, net earnings increased 7% to $162.0 million for fiscal year 1997
compared with net earnings of $150.9 million for fiscal year 1996.
The increase in sales and operating profit for the Advanced Electronics
segment primarily reflected the acquisitions of Sperry Marine, a leading
supplier of marine electronic navigation and guidance systems, in May 1996 and
Decca in February 1997. The combined technologies and capabilities of Sperry
Marine
S-7
<PAGE>
and Decca have enabled the Company to provide system-wide solutions to the
marine markets for both defense and commercial applications. Backlog for the
Advanced Electronics segment was $1.6 billion at July 31, 1997 compared with
$1.7 billion at July 31, 1996.
Sales and operating profit for the Information Systems segment were
significantly higher primarily as a result of the acquisition of PRC in February
1996. PRC is a diversified information technology company that designs,
develops, integrates and supports computer-based information handling and
processing systems and reengineers business processes for the U.S. Government
and other customers. PRC generates a significant portion of its revenues from
providing systems integration and computer-based solutions to the non-defense
federal, state and local governmental markets. The Company also strengthened its
position in the electronic display market with the acquisition of SAIT in March
1997. SAIT provides customized and ruggedized mobile computing equipment and
systems for commercial and military operations worldwide. Backlog for the
Information Systems segment at July 31, 1997 amounted to $518.1 million compared
with $569.2 million at July 31, 1996. In addition, PRC had unfunded backlog with
potential contract values totaling approximately $1.5 billion at July 31, 1997
compared with $1.0 billion at July 31, 1996.
Sales for the Marine Engineering and Production segment for fiscal year 1997
decreased due to a lower level of construction activities as a result of
contracts being completed, including two Aegis destroyers during each of fiscal
years 1996 and 1997 and a fifth LHD class amphibious assault ship in fiscal year
1997. This decline was partially offset by other contracts moving into more
advanced stages of production and the startup of production on a seventh LHD
class amphibious assault ship. Operating margins improved as a result of
increased earnings rates on programs maturing in the production process and
continued cost reduction efforts. During fiscal year 1997, the U.S. Navy awarded
the Company a contract to begin advance procurement of materials to be used in
the construction of Aegis destroyers. As previously discussed, a contract to
build six additional Aegis destroyers, along with options for two more, was
awarded to the Company subsequent to the end of the second quarter of fiscal
year 1998. During fiscal year 1997, the Company also received two contract
awards to build 18 deepwater offshore supply vessels, with options for 13 more,
for a customer in the commercial ship chartering industry. Going forward, the
Company intends to pursue other commercial opportunities including offshore
drilling rigs and production platforms particularly in the petroleum industry.
Backlog for the Marine Engineering and Production segment at July 31, 1997 was
$3.2 billion compared with $3.3 billion at July 31, 1996.
The Electronic Components and Materials segment contributed with improved
sales and operating profit in fiscal year 1997. Sales and operating profit were
$508.3 million and $69.7 million, respectively, for fiscal year 1997, compared
with $449.6 million and $51.4 million, respectively, for fiscal year 1996. This
segment benefited from the growth in the markets which it serves, particularly
from the strong demand in the telecommunication-related markets for its
commercial electronic products. Cost reduction efforts and process improvements
have also contributed to the improved operating margins.
FISCAL YEAR 1996 COMPARED TO 1995
Effective July 31, 1996, certain businesses previously reported with the
Advanced Electronics segment have been grouped with the Electronic Components
and Materials segment (formerly known as the Interconnect Products segment).
Accordingly, the segment information for fiscal year 1995 as discussed below has
been restated to reflect these changes.
Total sales and operating profit increased by 9% and 14%, respectively,
compared with the prior year's results. Net earnings improved 12%, although
interest expense was higher in 1996 as a result of the debt incurred in
connection with the PRC and Sperry Marine acquisitions.
Sales and operating profit for the Advanced Electronics segment increased by
11% and 9%, respectively, when compared with the prior fiscal year. These
improvements reflected the contributions from the acquisitions completed during
fiscal years 1996 and 1995. These acquisitions included Sperry Marine, the
S-8
<PAGE>
Inertial Systems Business Unit of Hughes Electronics Corp.'s Delco Systems
Operations ("Delco") and Teldix GmbH ("Teldix"), a European defense electronics
firm. Delco designs and manufactures launch vehicle avionics systems and
spacecraft guidance systems and provides maintenance, repair and upgrade of
aircraft avionics systems for commercial and military customers worldwide.
Teldix provides avionics and navigation systems and supplies integrated
navigation and attitude and heading references systems. Teldix also develops and
produces momentum and reaction wheels for space satellites. At July 31, 1996,
backlog for this segment was $1.7 billion compared with $1.5 billion at July 31,
1995.
The Information Systems segment reported significant increases in sales and
operating profit over the prior year due to the acquisition of PRC in February
1996. However, the operating margin for fiscal year 1996 of 7.3% was lower than
the 8.0% for fiscal year 1995 as a result of PRC being a lower margin business
in comparison with that historically experienced by other businesses in this
segment. Backlog for this segment was $569.2 million at July 31, 1996 compared
with $180.5 million at July 31, 1995. In addition, PRC had unfunded backlog with
potential contract values totaling approximately $1.0 billion at July 31, 1996.
Sales for the Marine Engineering and Production segment were lower by 7%,
while operating profit improved by 8% compared with the prior year's results.
The decrease in sales was attributable to lower construction activity on
long-term contracts nearing completion, partially offset by activity on new
contracts and others moving into more advanced stages of production. Operating
margins improved as a result of cost reduction efforts and increased earnings
rates on long-term contracts as they matured in the production process and as
uncertainties diminished. During fiscal year 1996, the Company delivered three
Aegis destroyers to the U.S. Navy and received funding for the construction of a
fifteenth Aegis destroyer with a contract value in excess of $300 million and
options for two more destroyers (which were exercised during fiscal year 1997).
Also in fiscal year 1996, the Company received funding to construct a seventh
LHD class amphibious assault ship with a contract value of nearly $800 million.
Backlog for this segment at July 31, 1996 was $3.3 billion, not including the
aforementioned options for two more Aegis destroyers, compared with $3.3 billion
at July 31, 1995. Backlog at July 31, 1996 included seven Aegis destroyers, six
of which were under production, and three LHD class amphibious assault ships,
all of which were in production.
The Electronic Components and Materials segment also contributed with
improved results in fiscal year 1996 as a result of strong demand for its
electronics-related products by its customers in the telecommunication and
computer industries. On-going cost reduction efforts also helped to maintain the
solid performances by the businesses in the segment.
LIQUIDITY AND CAPITAL RESOURCES
The Company completed the first half of fiscal year 1998 with $24.3 million
in cash and marketable securities, comparable to the $19.9 million at July 31,
1997. During the second quarter of fiscal year 1998, the Company incurred
certain short-term borrowings under the 1994 Credit Agreement in connection with
a payment for prior years' taxes of approximately $127 million. Cash flow from
operations otherwise provided the funds to meet operating and capital needs.
Borrowings under the 1994 Credit Agreement amounted to $240 million at January
31, 1998 and will be repaid, along with a portion of the commercial paper issued
in connection with the TASC acquisition, with the proceeds from the issuance of
the Securities offered hereby. See "Capitalization". Available credit
commitments under the 1994 Credit Agreement were $160 million at January 31,
1998. Management believes that cash flow from operations and anticipated
borrowing capacity will be sufficient to meet operating needs for the
foreseeable future.
ENVIRONMENTAL MATTERS
As previously reported, the Company or certain of its divisions or
subsidiaries has been named as a potentially responsible party in respect to
various sites to which certain of its operations may have
S-9
<PAGE>
contributed wastes. Also, the Company and certain of its divisions and
subsidiaries have incurred costs, which have not had a material impact on the
Company's consolidated financial position in any one year, for cleaning up a
number of sites now or formerly owned or leased by the Company. At this time,
the Company believes that its ultimate liability for additional expenditures
associated with such owned or leased sites and other sites to which it may have
contributed wastes will not have a material adverse effect on its consolidated
financial position.
YEAR 2000
The Company is continuing its efforts to evaluate the extent of year 2000
issues through internal programs initiated to identify and resolve such issues.
Costs incurred to date have not been significant and the remaining costs to be
incurred are not expected to have a material impact on the Company's
consolidated financial position. The Company believes it will satisfactorily
resolve its year 2000 issues.
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<PAGE>
BUSINESS
The Company is a high-technology aerospace, defense and commercial
electronics company which provides advanced electronic, defense and information
systems to U.S. and world markets and is a primary builder of large multimission
surface combatant ships for the U.S. Navy. Litton is a leader in integrated
marine electronics and information technology-based systems and products. In
addition to being a primary builder of surface combatant ships, the Company
provides overhaul, repair, modernization, design and engineering services.
Litton is also an international supplier of connectors, multilayer circuit
boards, solder materials, laser crystals and other electronic components used
primarily in the telecommunications, industrial and computer markets. The
Company was founded in California in 1953 and has evolved into a major
international organization with approximately 32,100 employees in more than 26
divisions and seven countries as of January 31, 1998.
The Company's businesses are reported in four business segments: Advanced
Electronics, Information Systems, Marine Engineering and Production, and
Electronic Components and Materials. For financial information concerning the
company's business segments, see "Management's Discussion and Analysis of
Historical Financial Condition and Results of Operations".
The Company has completed a number of acquisitions in the last two years as
it continues an acquisition strategy intended to reduce the Company's
concentration on defense related businesses. The acquisition of PRC in fiscal
year 1996 established Litton in the rapidly growing information systems market.
PRC is a diversified information technology company that designs, develops,
integrates and supports computer-based information handling and processing
systems and reengineers business processes for its customers. PRC derives a
significant portion of its revenues from providing systems integration and
computer-based solutions to the non-defense federal, state and local
governments. Other acquisitions during fiscal years 1996 and 1997 included
Sperry Marine, Decca and SAIT. Sperry Marine is a provider of advanced
electronic navigation and guidance systems to commercial and military customers
for marine uses. Decca provides diverse marine electronic equipment, including
radars, electronic chart systems, chart video plotting systems and bridge
monitoring systems. SAIT manufactures customized and ruggedized mobile computing
equipment and systems for military and commercial applications worldwide.
ADVANCED ELECTRONICS
The Company is a leading designer, builder and supplier of electronic
systems and related services to military markets in the U.S. and abroad. The
businesses in this segment also provide navigation systems and marine
electronics to a variety of commercial customers. Principal activities include
development, manufacture and assembly of systems for inertial navigation,
guidance and control; marine electronics; electronic warfare; and command,
control and communications. In addition, the Company provides upgrade and
retrofit services and products for military and commercial customers worldwide.
Litton's navigation, guidance and control systems are found on military and
commercial aircraft, spacecraft, helicopters, ships, missiles, torpedoes and
land and launch vehicles. Products include inertial navigation components,
computers, displays, marine systems, IFF/RF (identification friend or foe/radio
frequency) systems and acoustic systems. The Company is also an integrator of
systems for aircraft, ships and land vehicles. Most tactical military aircraft
are equipped with Litton products. An installed base of more than 40,000 systems
generates a steady flow of retrofit opportunities. As a producer of marine
electronic navigation products and systems, Litton provides an extensive
portfolio of marine products and services including automated and integrated
bridge control systems for diverse applications.
In its electronic warfare systems businesses, the Company produces a wide
variety of laser range finders and target designators, threat warning and
electro-optical systems, electronic support measures, night vision systems and
radar warning systems for U.S. and allied military services. Litton designs and
manufactures microwave tubes and power supplies for ground-based, shipboard and
airborne radar, communications and electronic countermeasures. Litton also
provides command data-handling systems,
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space-borne communication systems, military air traffic control systems and
solid-state memory and telemetry systems.
Sales backlog for the Advanced Electronics segment was $1.5 billion and $1.6
billion at January 31, 1998, and July 31, 1997, respectively. Significant
revenues of this segment result from sales to the U.S. government (approximately
64% for fiscal year 1997).
INFORMATION SYSTEMS
A leader in systems integration, Litton is expanding its information systems
("IS") business rapidly. The Company has a strong IS presence in defense, as
well as in non-defense, government and commercial sectors. Litton systems for
the defense industry focus on such applications as C3, aerospace, logistics,
year-2000 ("Y2K") solutions and health care. Litton holds one of the largest
contracts for provision of client-server systems to agencies associated with the
U.S. Department of Defense.
Litton is participating in an effort led by a unit of Lucent Technologies
Inc. to provide telecommunications services involving the transmission of
information by voice, video and electronic data between networks and ships in
port. Under this contract PRC will provide infrastructure and engineering
services to U.S. Navy installations worldwide. Litton is delivering technical
and operational support to the communication and computer systems at 20 U.S. Air
Force Material Command locations under a multi-year contract. This effort will
help the U.S. Air Force adopt common interoperable architectures for management
information systems.
This segment also supplies tactical C3 systems involving integration of
sensors and weapons platforms with command facilities to U.S. and allied
military services. These systems automatically track hosts of friendly and
hostile targets, control air defense weapons and sensors, and provide close air
support, interdiction, in-flight refueling and air traffic control operations.
The Company has also increased the automation of fire support systems. This
technology selects the right weapons to fire against specific targets, the time
of firing and the type of ammunition and fusing. The U.S. Army employs Litton's
smart terminals to help digitize the battlefield from the soldier through higher
command levels.
Litton has launched a new company to expand the information technology
business still further. Litton Enterprise Solutions ("LES") serves growing
commercial markets for information systems and software. LES also offers
management consulting and outsourcing services and addresses rapidly growing
markets such as Y2K solutions.
Litton already serves the IS needs of about 200 commercial customers and has
strategic alliances with many hardware, software and information technology
service companies. Important partnerships are in place with well-known companies
in the information technology market.
Funded backlog for the Information Systems segment amounted to $666.5
million and $518.1 million at January 31, 1998, and July 31, 1997, respectively.
In addition, PRC had unfunded backlog of $1.8 billion in potential contract
values as of January 31, 1998, and $1.5 billion at July 31, 1997.
MARINE ENGINEERING AND PRODUCTION
Litton is a leader in the design and production of surface combatant ships.
Ingalls Shipbuilding, Inc. ("Ingalls"), a wholly-owned subsidiary of Litton, is
one of two facilities producing guided missile destroyers for the U.S. Navy.
These ships, of the Arleigh Burke (DDG 51) Aegis class, provide primary
antiaircraft protection for the U.S. fleet. Of the 23 Aegis destroyers ordered,
with options for two more, 11 have been delivered. Delivery dates are expected
to extend through 2006.
Ingalls is the sole manufacturer of the extremely sophisticated Wasp (LHD 1)
class of multi-purpose amphibious assault ships. Ingalls holds contracts to
build seven ships, of which five have been delivered.
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<PAGE>
Under a series of support contracts with the U.S. Navy, Ingalls provides
planning, engineering and production services for Aegis cruiser and destroyer
fleets, as well as the Spruance (DD 963) and Kidd (DDG 993) classes of
destoyers, which are also built by Ingalls.
Litton has announced participation in two joint shipbuilding efforts. The
Company and two other manufacturers are competing jointly for U.S. Navy
shipbuilding contracts in the DD 21/SC 21 program. The team includes Ingalls,
the Bath Iron Works subsidiary of General Dynamics Corporation and an electronic
systems unit of Lockheed Martin Corporation. The contracts will provide for the
construction and support work for more than 30 new destroyers and cruisers. The
U.S. Navy is expected to award contracts for trade studies and initial concepts
to as many as three teams in 1998.
Litton has also entered into a long-term agreement with Avondale Industries,
Inc., ("Avondale") to jointly compete for work on certain commercial and U.S.
Navy shipbuilding programs. Teams from the two organizations expect to bid on
contracts for tankers to transport crude oil from the North Slope of Alaska.
Ingalls and Avondale are also joining forces to develop a new fleet of U.S.
Coast Guard cutters and cargo ships for the U.S. Navy.
Ingalls is a participant in the international shipbuilding and ship overhaul
markets. The shipyard designed and built three 1,300-ton corvette-size vessels
for the navy of Israel. In addition, Ingalls holds a contract to overhaul and
modernize two frigates for the Venezuelan navy.
Ingalls has launched an expansion program to increase capacity for its
growing commercial activity while maintaining its military business. Ingalls is
positioning itself to build commercial vessels, offshore drilling rigs and
production platforms, chiefly in response to the interest of the petroleum
industry in deep-water exploration and production opportunities in the Gulf of
Mexico. Ingalls has initiated work under contracts to build as many as 31
deep-water supply vessels for a customer in the commercial ship chartering
industry.
Sales backlog for the Marine Engineering and Production segment was $3.3
billion and $3.2 billion at January 31, 1998, and July 31, 1997, respectively.
Substantially all of the revenues of the Marine Engineering and Production
segment are derived from sales to the U.S. Government (approximately 98% for
fiscal year 1997).
ELECTRONIC COMPONENTS AND MATERIALS
Competing primarily in worldwide commercial markets, the Electronic
Components and Materials segment designs and manufactures such varied products
as laser rods, solder materials, signal and power connectors, multilayer circuit
boards and other equipment used chiefly for telecommunication, industrial and
computer purposes. The segment is also one of the leading suppliers of gallium
arsenide substrates. The enterprises in this segment vie in high-growth markets
with strong profit margins and sharp demand for materials of premium quality.
Sales backlog for the Electronic Components and Materials segment was $251.0
million and $164.6 million at January 31, 1998 and July 31, 1997, respectively.
U.S. GOVERNMENT CONTRACTS
Contracts with the U.S. Government are, in many cases, performed over
extended periods of time and are subject to changes in design, scope, schedules,
costs and funding. In addition, contracts with the U.S. Government are subject
to certain laws and regulations with which noncompliance by the contractor may
result in various sanctions including monetary penalties and fines as well as
debarment or suspension from further U.S. Government contracts.
Substantially all of the Company's contracts for and with the U.S.
Government are terminable at the option of the U.S. Government whenever it
believes that such termination would be in its best interest.
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Under contracts so terminated, the Company is generally entitled to receive
payment for work completed and reasonable allowable costs incurred. Whether the
occurrence of any such termination would have an adverse effect on the Company
would depend upon the particular contract and the nature of the termination. At
the present time, management is not aware of any such circumstances which would
result in a material impact on its consolidated financial position.
Approximately 67% of the Company's consolidated revenues for fiscal year
1997 were derived from sales to the U.S. Government.
RESEARCH AND DEVELOPMENT
Worldwide expenditures on research and development activities amounted to
$110.4 million, $241.8 million, $217.0 million and $227.1 million, of which
approximately 29%, 29%, 30% and 28% were Company-sponsored in the six months
ended January 31, 1998 and the fiscal years ended July 31, 1997, 1996 and 1995,
respectively. The Advanced Electronics and Information Systems segments
accounted for substantially all of the total research and development
expenditures in such periods.
ENVIRONMENTAL PROTECTION
During the six months ended January 31, 1998 and the fiscal year ended July
31, 1997, the amounts incurred in compliance with federal, state and local
regulations pertaining to environmental standards did not have a material effect
upon the capital expenditures or earnings of the Company.
NUMBER OF EMPLOYEES
At January 31, 1998, the Company had approximately 32,100 full-time
employees. Employment by business segment was as follows:
<TABLE>
<S> <C>
Advanced Electronics................................................ 11,000
Information Systems................................................. 6,500
Marine Engineering and Production................................... 10,500
Electronic Components and Materials and Other....................... 4,100
---------
32,100
---------
---------
</TABLE>
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<PAGE>
DESCRIPTION OF THE SECURITIES
The 2003 Notes and the 2018 Debentures are each a series of the Securities
(referred to in the accompanying Prospectus as the "Debt Securities"). The
following description of the particular terms of the Securities offered hereby
supplements and, to the extent inconsistent therewith, replaces the description
of the general terms and provisions of the Debt Securities set forth in the
accompanying Prospectus, to which reference is hereby made.
GENERAL
The Securities will be issued under a senior debt indenture dated as of
April , 1998 (including the officers' certificates establishing the terms of
the Securities, the "Indenture") between the Company and The Bank of New York,
as Trustee. The 2003 Notes and the 2018 Debentures will be limited to
$100,000,000 and $200,000,000 aggregate principal amount, respectively, and will
mature on , 2003 and , 2018, respectively.
The Securities will bear interest at the respective rates set forth on the
cover page of this Prospectus Supplement from , 1998, or the most recent
interest payment date to which interest has been paid or provided for, payable
semiannually in arrears on and of each year, commencing ,
1998, to persons in whose names the Securities are registered at the close of
business on the next preceding and , respectively. Interest will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
The Securities will be unsecured senior obligations of the Company and, as
such, will rank PARI PASSU in right of payment with all other existing and
future senior indebtedness of the Company and senior in right of payment to all
existing and future subordinated indebtedness of the Company. As of January 31,
1998, on a pro forma basis after giving effect to the offering of the Securities
and the application of the estimated gross proceeds therefrom, the Company would
have had approximately $740 million in aggregate principal amount of
indebtedness outstanding which would have ranked PARI PASSU in right of payment
with the Securities. See "Capitalization".
RESTRICTIVE COVENANTS
The Company will not, and will not permit any subsidiary to, create, assume
or suffer to exist any lien on any Restricted Property (described below), to
secure any debt of the Company, any subsidiary or any other person, or permit
any subsidiary so to do, without securing the Securities equally and ratably
with such debt for so long as such debt shall be so secured, subject to certain
exceptions. Exceptions include: (a) existing liens or liens on facilities of
corporations at the time they become subsidiaries; (b) liens existing on
facilities when acquired, or incurred to finance the purchase price,
construction or improvement thereof; (c) certain liens required by contracts
with, and in favor of, governmental entities; and (d) liens otherwise prohibited
by such covenant, securing indebtedness which, together with the aggregate
amount of outstanding indebtedness secured by liens otherwise prohibited by such
covenant and the value of certain sale and leaseback transactions, does not
exceed 15% of the Company's consolidated net tangible assets (defined as total
assets less current liabilities and intangible assets).
In addition, the Company will not, and will not permit any subsidiary to,
enter into any sale and leaseback transaction covering any Restricted Property
unless (a) the Company would be entitled under the provisions described above to
incur debt equal to the value of such sale and leaseback transaction, secured by
liens on the facilities to be leased, without equally and ratably securing the
Securities, or (b) the Company, during the six months following the effective
date of such sale and leaseback transaction, applies an amount equal to the
value of such sale and leaseback transaction to the voluntary retirement of
long-term indebtedness or to the acquisition of Restricted Property.
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<PAGE>
"Restricted Property" is defined as (a) any manufacturing facility (or
portion thereof) owned or leased by the Company or any subsidiary and located
within the continental United States which, in the opinion of the Board of
Directors, is of material importance to the business of the Company and its
subsidiaries taken as a whole, but no such manufacturing facility (or portion
thereof) shall be deemed of material importance if its gross book value (before
deducting accumulated depreciation) is less than 2% of the Company's
consolidated net tangible assets, or (b) any shares of capital stock or
indebtedness of any subsidiary owning any such manufacturing facility.
There are no other restrictive covenants contained in the Indenture for the
benefit of holders of the Securities.
OPTIONAL REDEMPTION
The 2003 Notes are not redeemable prior to maturity. The 2018 Debentures are
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 the
2018 Debentures and (ii) as determined by an Independent Investment Banker (as
defined herein), the sum of the present values of the remaining scheduled
payments of principal and interest thereon discounted to the date of redemption
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate (as defined herein), 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 semiannual equivalent yield to maturity of the
Comparable Treasury Issue (as defined herein), assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price (as defined herein) for such redemption
date, plus 0.1875%.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the 2018 Debentures 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 the 2018 Debentures. "Independent Investment Banker" means one
of the Reference Treasury Dealers (as defined herein) appointed by the Trustee
after consultation with the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the
Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations. "Reference Treasury Dealer Quotations" means,
with respect to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, 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 Treasury Reference
Dealer at 5:00 p.m. on the third Business Day preceding such redemption date.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Credit Suisse First Boston Corporation, Goldman, Sachs &
Co., and J.P. Morgan Securities Inc. and their respective successors; provided,
however, that if any of 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.
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<PAGE>
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 2018 Debentures 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 2018 Debentures or
portions thereof called for redemption.
The Securities will not be entitled to the benefit of a sinking fund.
BOOK-ENTRY SYSTEM
The Securities will be represented by Global Securities that will be
deposited with, or on behalf of the Depositary and registered in the name of a
nominee of the Depositary.
The Depositary has advised the company and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. The Depositary was created to hold securities of its
participating organizations ("participants") and to facilitate the clearance and
settlement of securities transactions, such as transfers and pledges, among its
participants in such securities through electronic computerized book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. 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. Persons who are not participants may
beneficially own securities held by the Depositary only through participants.
Unless and until they are exchanged in whole or in part for certificated
Securities in definitive form, the Global Securities may not be transferred
except as a whole by the Depositary to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary.
The Securities represented by the Global Securities will not be exchangeable
for certificated Securities, provided that if the Depositary is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Securities in definitive form in exchange for the Global
Securities. In addition, the Company may at any time and in its sole discretion
determine not to have Global Securities, and, in such event, will issue
individual Securities in definitive form in exchange for the Global Securities
previously representing all such Securities. In either instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
of Securities in definitive form equal in principal amount to such beneficial
interest and to have such Securities registered in its name. Individual
Securities so issued in definitive form will be issued in denominations of
$1,000 and any larger amount that is an integral multiple of $1,000 and will be
issued in registered form only, without coupons.
Payments of principal of and interest on the Securities will be made by the
Company through the Trustee to the depositary or its nominee, as the case may
be, as the registered owner of the Global Securities. Neither the Company nor
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests. The Company expects
that the Depositary, upon receipt of any payment of principal or interest in
respect of the Global Securities, will credit the accounts of the related
participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interest in the Global Securities as shown on
the records of the Depositary. The Company also expects that payments by
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participants to owners of beneficial interests in the Global Securities will be
governed by standing customer 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.
A further description of the Depositary's procedures with respect to the
Securities is set forth in the accompanying Prospectus under the heading
"Description of the Securities".
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<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") between the Company and the Underwriters named
below (the "Underwriters"), the Company has agreed to sell to each of the
Underwriters, and each of the Underwriters has severally agreed to purchase, the
principal amount of the Securities set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF 2003 AMOUNT OF 2018
UNDERWRITER NOTES DEBENTURES
-------------- ---------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Credit Suisse First Boston Corporation......................
Goldman, Sachs & Co.........................................
J.P. Morgan Securities Inc..................................
-------------- ---------------
Total............................................. $ 100,000,000 $ 200,000,000
-------------- ---------------
-------------- ---------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Securities, if any are
taken.
The Underwriters propose to initially offer the 2003 Notes to the public at
the public offering price set forth on the cover page of this Prospectus
Supplement and to certain dealers at such price less a concession not in excess
of % of the principal amount of the 2003 Notes. The Underwriters may allow,
and such dealers may reallow, a discount not in excess of % of the principal
amount of the 2003 Notes to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
The Underwriters propose to initially offer the 2018 Debentures to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession not
in excess of % of the principal amount of the 2018 Debentures. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of % of the principal amount of the 2018 Debentures to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
The Securities are new issues of securities with no established trading
market. The Company has been advised by the Underwriters that they intend to
make a market in the Securities 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 Securities.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Until the distribution of the Securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Securities. As an
exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the Securities. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Securities.
If the Underwriters create a short position in the Securities in connection
with the offering of the Securities, i.e., if they sell more Securities than are
set forth on the cover page of this Prospectus Supplement, the Underwriters may
reduce that short position by purchasing Securities in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
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<PAGE>
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Securities. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
In the ordinary course of their respective businesses, certain of the
Underwriters and their affiliates engage and may in the future engage in
investment banking and commercial banking activities with the Company and its
subsidiaries. The gross proceeds to be received by the Company from the issue
and sale of the Securities offered hereby are expected to be used in part to
reduce outstanding borrowings under the 1994 Credit Agreement under which an
affiliate of J.P. Morgan Securities Inc. is a lender.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Company by John E. Preston, Esq., Senior Vice President and General Counsel of
the Company, and for the Underwriters by Skadden, Arps, Slate, Meagher & Flom
LLP, Los Angeles, California. As of March 27, 1998, Mr. Preston owned 14,801
shares of Common Stock of the Company and held options to acquire an additional
56,258 shares of Common Stock of the Company.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
Supplement by reference from the Company's Annual Report on Form 10-K for the
year ended July 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
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<PAGE>
PROSPECTUS
LITTON INDUSTRIES, INC.
SECURITIES
------------------
Litton Industries, Inc., a Delaware corporation (the "Company" or "Litton"),
may offer from time to time (i) debt securities (the "Debt Securities"), which
may be any of senior debt securities ("Senior Debt Securities"), senior
subordinated debt securities ("Senior Subordinated Debt Securities") or
subordinated debt securities ("Subordinated Debt Securities"), in each case
consisting of debentures, notes and/or other unsecured evidences of
indebtedness, (ii) shares of Preferred Stock, par value $5.00 per share (the
"Preferred Stock"), and (iii) warrants to purchase Debt Securities, Preferred
Stock or shares of Common Stock, par value $1.00 per share (the "Common Stock"),
as shall be designated by the Company at the time of the offering (the
"Warrants"). The Debt Securities, the Warrants and any shares of Common Stock
issuable upon conversion or exchange of the Debt Securities or Preferred Stock
or exercise of the Warrants are collectively referred to as the "Securities" and
will have an aggregate initial offering price of up to $400,000,000 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 a separate series, in
any case in amounts, at prices and on terms to be determined at the time of
sale; provided, that the shares of Common Stock may be issued solely upon
conversion or exchange of Debt Securities or Preferred Stock or upon exercise of
Warrants.
The form in which the Securities are to be issued, their specific
designation, aggregate principal amount or aggregate initial offering price,
maturity, if any, rate and times of payment of interest or dividends, if any,
redemption, conversion, exchange and sinking fund terms, if any, exercise price
and detachability, if any, and other specific terms will be set forth in a
Prospectus Supplement (including any related term 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 Securities may be offered and sold directly, through agents designated
from time to time by the Company or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any Securities in respect
of which this Prospectus is being delivered, the names of such agents or
underwriters and any applicable purchase price, fee, commissions or discounts
will be set forth, or will be calculable from the information set forth, in the
applicable Prospectus Supplement. See "Plan of Distribution." The net proceeds
to the Company from such sale also will be set forth in the applicable
Prospectus Supplement. No Securities may be sold without delivery of the
applicable Prospectus Supplement describing the method and terms of offering of
such Securities.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
APRIL 1, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES OFFERED
HEREBY OR BY ANY PROSPECTUS SUPPLEMENT OR OTHER SECURITIES OF THE COMPANY. SUCH
TRANSACTIONS MAY BE EFFECTED THROUGH THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION" INCLUDED
ELSEWHERE HEREIN AND IN THE ACCOMPANYING PROSPECTUS SUPPLEMENT.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W. Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York,
New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W. Washington, D.C. 20549. Such reports and other information concerning the
Company may also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005. The Commission also maintains a site on
the World Wide Web at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
The Company has filed with the Commission two registration statements on
Form S-3 (including all amendments thereto, the "Registration Statements") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Securities offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information set forth in
the Registration Statements and the exhibits and schedules thereto. Such
additional information is available for inspection and copying at the offices of
the Commission. Statements contained in this Prospectus, in any Prospectus
Supplement or in any document incorporated by reference herein or therein as to
the contents of any contract or other document referred to herein or therein are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to, or incorporated by
reference in, the Registration Statements, each such statement being qualified
in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company (File No. 1-3998)
with the Commission under the Exchange Act are incorporated herein by reference
and made a part hereof:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
July 31, 1997;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
October 31, 1997 and January 31, 1998; and
(c) the Company's Current Report on Form 8-K, dated August 17, 1994, and
the Company's Form 8-A, dated August 23, 1994, in connection with the
Company's Share Purchase Rights Plan.
All documents filed by the Company pursuant to Section 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 made hereby shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement
2
<PAGE>
contained herein (or in any other subsequently filed document that is or is
deemed to be incorporated by reference herein) modifies or supersedes such
previous statement. Any statement so modified or superseded shall not be deemed
to constitute a part hereof except as so modified or superseded.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference in this Prospectus other than exhibits to
such documents, unless such exhibits are also specifically incorporated by
reference herein. Requests for such copies should be directed to Litton
Industries, Inc., 21240 Burbank Boulevard, Woodland Hills, California
91367-6675, Attention: Investor Relations; telephone number (818) 598-5000.
------------------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars," "U.S.
dollars" or "U.S.$").
------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR
RESPECTIVE DATES.
3
<PAGE>
THE COMPANY
Litton is a high technology aerospace, defense and commercial electronics
corporation which provides advanced electronic, defense and information systems
and marine engineering and production to U.S. and world markets. The Company
also provides electronic components and materials to customers worldwide.
Approximately 67% of the Company's consolidated revenues for the fiscal year
ended July 31, 1997 were derived from sales to the U.S. Government.
The Company's businesses are reported in four business segments: Advanced
Electronics, Information Systems, Marine Engineering and Production, and
Electronic Components and Materials. The Advanced Electronics segment is a major
supplier of electronic systems and related services to the U.S. and
international military electronics markets and also provides navigation systems
and electronic components to a variety of commercial customers. The Information
Systems segment provides information technology and systems integration in
defense as well as non-defense government and commercial sectors. The Marine
Engineering and Production segment is a leading designer and builder of complex
surface combatant ships for the U.S. Navy and also provides modernization,
overhaul, repair and design and engineering work. The Electronic Components and
Materials segment is an international supplier of electronic connectors,
multilayer circuit boards and other interconnect products, primarily for the
telecommunications and computer industries.
Litton, a Delaware corporation organized in 1953, has its principal
executive offices at 21240 Burbank Boulevard, Woodland Hills, California
91367-6675, where its telephone number is (818) 598-5000.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes, including, without limitation, capital expenditures,
possible future acquisitions, repurchase of capital stock, refinancing of
outstanding indebtedness, working capital requirements and other corporate
purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges is computed by dividing the sum of
historical earnings before taxes on income and fixed charges, as adjusted, by
fixed charges. Fixed charges represent interest expense (including capitalized
interest) and amortization of debt discount and expense and that portion of
rental expense which is deemed to be representative of interest. The
calculations for fiscal years 1994 and 1993 exclude the results of Western Atlas
Inc. ("WAI") a former subsidiary which was distributed to holders of Litton
Common Stock in March 1994. Accordingly, the results of WAI were reported as
discontinued operations.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JANUARY
31, FISCAL YEAR ENDED JULY 31,
---------- -------------------------------
1998 1997 1997 1996 1995 1994(A) 1993
---- ---- ---- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...... 5.4 5.1 5.2 8.0 12.2 2.4 2.6
</TABLE>
- ------------------------
(A) Pre-tax earnings for fiscal year 1994 included a charge of $86.0 million
related to the settlement of a civil suit.
4
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the applicable Prospectus Supplement
relating to such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series,
and will constitute either Senior Debt Securities, Senior Subordinated Debt
Securities or Subordinated Debt Securities. Senior Debt Securities may be issued
from time to time under an Indenture (the "Senior Debt Securities Indenture") to
be entered into between the Company and a trustee to be named in the applicable
Prospectus Supplement (the "Senior Debt Securities Trustee"). Senior
Subordinated Debt Securities may be issued from time to time under an Indenture
(the "Senior Subordinated Debt Securities Indenture") to be entered into between
the Company and a trustee to be named in the applicable Prospectus Supplement
(the "Senior Subordinated Debt Securities Trustee"). Subordinated Debt
Securities may be issued from time to time under an Indenture (the "Subordinated
Debt Securities Indenture") to be entered into between the Company and a trustee
to be named in the applicable Prospectus Supplement (the "Subordinated Debt
Securities Trustee").
The Senior Debt Securities Indenture, the Senior Subordinated Debt
Securities Indenture, and the Subordinated Debt Securities Indenture are
referred to herein individually as an "Indenture" and collectively as the
"Indentures," and the Senior Debt Securities Trustee, the Senior Subordinated
Debt Securities Trustee and the Subordinated Debt Securities Trustee are
referred to herein individually as the "Trustee" and collectively as the
"Trustees." Forms of the Indentures are filed as exhibits to the Registration
Statement. The Indentures will be subject to and governed by the Trust Indenture
Act of 1939, as amended (the "TIA"). Capitalized terms used in this section
which are not otherwise defined in this Prospectus shall have the meanings set
forth in the Indentures to which they relate. The following summaries of certain
provisions of the Debt Securities and the Indentures do not purport to be
complete and are subject to, and are qualified in their entirety by express
reference to, all the provisions of the Indentures, including the definitions
therein of certain terms. As used in this section of the Prospectus, the
"Company" refers to Litton Industries, Inc. and does not include its
subsidiaries.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company.
The Indentures do not limit the aggregate principal amount of Debt Securities
that may be issued thereunder and provide that Debt Securities may be issued
thereunder from time to time in one or more series. Under the Indentures, the
Company will have the ability to issue Debt Securities with terms different from
those of Debt Securities previously issued, without the consent of the holders
of previously issued series of Debt Securities, in an aggregate principal amount
determined from time to time by the Company.
The applicable Prospectus Supplement or Prospectus Supplements relating to
any Senior Subordinated Debt Securities or Subordinated Debt Securities will set
forth the aggregate amount of outstanding indebtedness, as of the most recent
practicable date, that by the terms of such Debt Securities would be senior to
such Debt Securities and any limitation on the issuance of additional senior
indebtedness.
Securities may be issued as Discount Securities, which may be sold at a
discount below their principal amount. Even if Securities are not issued at a
discount below their principal amount, such Securities may, for United States
Federal income tax purposes, be deemed to have been issued with "original issue
discount" ("OID") because of certain interest payment characteristics. Special
United States Federal income tax considerations applicable to Securities issued
with original issue discount, including Discount Securities, will be described
in more detail in any applicable Prospectus Supplement. In addition, special
United States Federal tax considerations or other restrictions or terms
applicable to any Debt Securities
5
<PAGE>
which are issuable in bearer form, offered exclusively to United States Aliens
or denominated in a currency other than United States dollars will be set forth
in the Prospectus Supplement relating thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Debt Securities offered
thereby (the "Offered Debt Securities"): (i) the title of the Offered Debt
Securities; (ii) any limit on the aggregate principal amount of the Offered Debt
Securities; (iii) whether the Offered Debt Securities are to be issuable as
registered securities or bearer securities or both and whether the Offered Debt
Securities may be represented initially by a Debt Security in temporary or
permanent global form, and if so, the initial Depositary with respect to such
temporary or permanent global Debt Security and whether, and the circumstances
under which, beneficial owners of interests in any such temporary or permanent
global Debt Security may exchange such interests for Debt Securities of such
series and of like tenor of any authorized form and denomination; (iv) the price
or prices at which the Offered Debt Securities will be issued; (v) the date or
dates on which the principal of the Offered Debt Securities is payable or the
method of determination thereof; (vi) the place or places where and the manner
in which the principal of and premium, if any, and interest, if any, on such
Offered Debt Securities will be payable and the place or places where such
Offered Debt Securities may be presented for transfer and, if applicable,
conversion or exchange; (vii) the rate or rates at which the Offered Debt
Securities will bear interest, or the method of calculating such rate or rates,
if any, and the date or dates from which such interest, if any, will accrue;
(viii) the Stated Maturities (as defined below) of installments of interest (the
"Interest Payment Dates"), if any, on which any interest on the Offered Debt
Securities will be payable, and the Regular Record Date for any interest payable
on any Offered Debt Securities which are registered securities; (ix) the right
or obligation, if any, of the Company to redeem or purchase Debt Securities of
the series pursuant to any sinking fund or analogous provisions or at the option
of a holder thereof, the conditions, if any, giving rise to such right or
obligation, and the period or periods within which, and the price or prices at
which and the terms and conditions upon which Debt Securities of the series
shall be redeemed or purchased, in whole or part, and any provisions for the
remarketing of such Debt Securities; (x) whether such Offered Debt Securities
are convertible or exchangeable into other debt or equity securities, and, if
so, the terms and conditions upon which such conversion or exchange will be
effected, including the initial conversion or exchange price or rate and any
adjustments thereto, the conversion or exchange period and other conversion or
exchange provisions; (xi) the currency or currencies, including composite
currencies or currency units, of payment of principal of and interest, if any,
on the Offered Debt Securities, if other than U.S. dollars, and, if other than
U.S. dollars, whether the Offered Debt Securities may be satisfied and
discharged other than as provided in the Indenture and whether the Company or
the holders of any such Offered Debt Securities may elect to receive payments in
respect of such Offered Debt Securities in a currency or currency units other
than that in which such Offered Debt Securities are stated to be payable; (xii)
any terms applicable to such Offered Debt Securities issued at an issue price
below their stated principal amount, including the issue price thereof and the
rate or rates at which such original issue discount will accrue; (xiii) if the
amount of payments of principal of and interest, if any, on the Offered Debt
Securities is to be determined by reference to an index or formula, or based on
a coin or currency or currency unit other than that in which the Offered Debt
Securities are stated to be payable, the manner in which such amounts are to be
determined and the calculation agent, if any, with respect thereto; (xiv) if
other than the principal amount thereof, the portion of the principal amount of
the Offered Debt Securities which will be payable upon declaration or
acceleration of the maturity thereof pursuant to an Event of Default; (xv) any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company with respect to such Offered Debt Securities, whether
or not such Events of Default or covenants are consistent with the Events of
Default or covenants set forth herein; (xvi) any special United States Federal
income tax considerations applicable to the Offered Debt Securities; and (xvii)
any other terms of the Offered Debt Securities not inconsistent with the
provisions of the applicable Indenture. The applicable Prospectus Supplement
will also describe the following terms of any series of Subordinated or Senior
Subordinated Debt Securities offered hereby in respect of which this Prospectus
is being delivered: (a) the rights, if any, to defer payments of interest on the
Subordinated or
6
<PAGE>
Senior Subordinated Debt Securities of such series by extending the interest
payment period, and the duration of such extensions, and (b) the subordination
terms of the Subordinated or Senior Subordinated Debt Securities of such series.
The foregoing is not intended to be an exclusive list of the terms that may be
applicable to any Offered Debt Securities and shall not limit in any respect the
ability of the Company to issue Debt Securities with terms different from or in
addition to those described above or elsewhere in this Prospectus provided that
such terms are not inconsistent with the applicable Indenture. Any such
Prospectus Supplement will also describe any special provisions for the payment
of additional amounts with respect to the Offered Debt Securities.
The operations of the Company are currently conducted almost entirely
through subsidiaries. Accordingly, the Company's cash flow and its consequent
ability to service debt, including the Debt Securities, are dependent, in large
part, upon the earnings of its subsidiaries and the distribution of those
earnings to the Company, whether by dividends, loans or otherwise. The payment
of dividends and the making of loans and advances to the Company by its
subsidiaries may be subject to statutory or contractual restrictions, are
contingent upon the earnings of those subsidiaries and are subject to various
business considerations. Any right of the Company to receive assets of any of
its subsidiaries upon their liquidation or reorganization (and the consequent
right of the holders of the Debt Securities to participate in those assets) will
be effectively subordinated to the claims of that subsidiary's creditors
(including trade creditors), except to the extent that the Company is itself
recognized as a creditor of such subsidiary, in which case the claims of the
Company would still be subordinate to any security interests in the assets of
such subsidiary and any indebtedness of such subsidiary senior to that held by
the Company.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Indentures do not include covenants limiting the amount of indebtedness that may
be incurred or otherwise restricting the Company's ability to enter into a
highly leveraged transaction, including a reorganization, restructuring, merger
or similar transaction involving the Company, that may adversely affect the
holders of the Debt Securities, if such transaction is a permissible
consolidation, merger or similar transaction. In addition, unless otherwise
specified in an applicable Prospectus Supplement, the Indentures do not afford
the holders of the Debt Securities the right to require the Company to
repurchase or redeem the Debt Securities in the event of a highly leveraged
transaction. See "Mergers and Sale of Assets."
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities of a series may be issued solely as registered
securities, solely as bearer securities (with or without coupons attached) or as
both registered securities and bearer securities. Debt Securities of a series
may be issuable in whole or in part in the form of one or more global Debt
Securities, as described below under "Global Debt Securities." Unless otherwise
indicated in an applicable Prospectus Supplement, registered securities will be
issuable in denominations of $1,000 and integral multiples thereof, and bearer
securities will be issuable in denominations of $5,000 and $100,000.
Registered securities of any series will be exchangeable for other
registered securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Debt Securities of
any series are issuable as both registered securities and as bearer securities,
at the option of the holder, subject to the terms of the applicable Indenture,
bearer securities (accompanied by all unmatured coupons, except as provided
below, and all matured coupons in default) of such series will be exchangeable
for registered securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any bearer security surrendered in exchange
for a registered security between a Regular Record Date or a Special Record Date
and the relevant date for payment of interest will be surrendered without the
coupon relating to such date for payment of interest and interest will not be
payable in respect of the registered security issued in exchange for such bearer
security, but will be payable only to the holder of such coupon when due in
accordance with the terms of the applicable Indenture. Bearer securities may not
be issued in exchange for registered securities.
7
<PAGE>
Debt Securities may be presented for exchange as provided above, and unless
otherwise indicated in an applicable Prospectus Supplement, registered
securities may be presented for registration of transfer, at the office or
agency of the Company designated as registrar or co-registrar with respect to
any series of Debt Securities, without service charge and upon payment of any
taxes, assessments or other governmental charges as described in the applicable
Indenture. Such transfer or exchange will be effected on the books of the
registrar or any other transfer agent appointed by the Company upon such
registrar or transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
intends to initially appoint the Trustee as registrar and the name of any
different or additional registrar designated by the Company with respect to the
Offered Debt Securities will be included in the Prospectus Supplement relating
thereto. If a Prospectus Supplement refers to any transfer agents (in addition
to the registrar) designated by the Company with respect to any series of Debt
Securities, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, except that, if Debt Securities of a series are issuable
only as registered securities, the Company will be required to maintain a
transfer agent in each Place of Payment for such series and, if Debt Securities
of a series are issuable as bearer securities, the Company will be required to
maintain (in addition to the registrar) a transfer agent in a Place of Payment
for such series located outside the United States. The Company may at any time
designate additional transfer agents with respect to any series of Debt
Securities.
In the event of any partial redemption of Debt Securities of any series, the
Company will not be required to (i) issue, register the transfer of or exchange
Debt Securities of that series during a period beginning at the opening of
business 15 days before any selection of Debt Securities of that series to be
redeemed and ending at the close of business on (a) if Debt Securities of the
series are issuable only as registered securities, the day of mailing of the
relevant notice of redemption, and (b) if Debt Securities of the series are
issuable as bearer securities, the day of the first publication of the relevant
notice of redemption or, if Debt Securities of the series are also issuable as
registered securities and there is no publication, the mailing of the relevant
notice of redemption; (ii) register the transfer of or exchange any registered
security, or portion thereof, called for redemption, except the unredeemed
portion of any registered security being redeemed in part; or (iii) exchange any
bearer security called for redemption, except to exchange such bearer security
for a registered security of that series and of like tenor and principal amount
that is immediately surrendered for redemption.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on registered securities will be made at
the office of such paying agent or paying agents as the Company may designate
from time to time, except that at the option of the Company payment of principal
or interest may be made by check or by wire transfer to an account maintained by
the payee. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on registered securities will be made to
the person in whose name such registered security is registered at the close of
business on the Regular Record Date for such payment of interest.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on bearer securities will be payable,
subject to any applicable laws and regulations, at the offices of such paying
agents outside the United States as the Company may designate from time to time,
or by check or transfer to an account maintained by the payee outside the United
States. Unless otherwise indicated in an applicable Prospectus Supplement, any
payment of interest on any bearer securities will be made only against surrender
of the coupon relating to such interest installment.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee will be designated as the Company's sole paying agent for payments with
respect to Debt Securities which are issuable solely as registered securities
and as the Company's paying agent in the Borough of Manhattan, The City of New
York, for payments with respect to Debt Securities (subject to any limitations
described in any applicable
8
<PAGE>
Prospectus Supplement) which are issuable as bearer securities. Any paying
agents outside the United States and any other paying agents in the United
States initially designated by the Company for the Offered Debt Securities will
be named in an applicable Prospectus Supplement. The Company may at any time
designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts,
except that, if Debt Securities of a series are issuable only as registered
securities, the Company will be required to maintain a paying agent in each
Place of Payment for such series and, if Debt Securities of a series are
issuable as bearer securities, the Company will be required to maintain (i) a
paying agent in the Borough of Manhattan, The City of New York for payments with
respect to any registered securities of the series (and for payments with
respect to bearer securities of the series in the circumstances described in the
Indenture, but not otherwise), and (ii) a paying agent in a Place of Payment
located outside the United States where Debt Securities of such series and any
related coupons may be presented and surrendered for payment.
All moneys paid by the Company to a paying agent for the payment of
principal of or interest, if any, on any Debt Security which remains unclaimed
at the end of two years after such principal or interest shall have become due
and payable will be repaid to the Company, and the holder of such Debt Security
or any coupon will thereafter look only to the Company for payment thereof.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole to the Depositary for such Debt Security or to a
nominee or successor of such Depositary. If any Debt Securities of a series are
issuable in global form, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of interests in any such
global Debt Security may exchange such interests for definitive Debt Securities
of such series and of like tenor and principal amount in any authorized form and
denomination, the manner of payment of principal of and interest, if any, on any
such global Debt Security and the specific terms of the depositary arrangement
with respect to any such global Debt Security.
MERGERS AND SALES OF ASSETS
The Company, in a single transaction or series of related transactions, may
not consolidate with or merge into any other person or convey, transfer or lease
all or substantially all of its properties and assets to another person or group
of affiliated persons, unless, among other things, (i) the resulting, surviving
or transferee person (if other than the Company) is organized and existing under
the laws of the United States, any state thereof or the District of Columbia and
such person expressly assumes all obligations of the Company under the Debt
Securities and the Indenture, and (ii) immediately after giving effect to such
transaction, no event which is, or after notice or passage of time or both would
be, an Event of Default (any such event, a "Default") or Event of Default shall
have occurred or be continuing under the Indenture. Upon the assumption of the
Company's obligations by a person to whom such properties or assets are
conveyed, transferred or leased, subject to certain exceptions, the Company
shall be discharged from all obligations under the Debt Securities and the
Indenture.
EVENTS OF DEFAULT
Each Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, with respect to each series of the Debt
Securities outstanding thereunder individually, the Trustee or the holders of
not less than 25% in aggregate principal amount of the outstanding Debt
Securities of such series may declare the principal amount (or, if any of the
Debt Securities of such series are Discount Securities, such portion of the
principal amount of such Debt Securities as may be specified
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by the terms thereof) of the Debt Securities of such series to be immediately
due and payable. Under certain circumstances, the holders of a majority in
aggregate principal amount of the outstanding Debt Securities of such series may
rescind any such declaration.
Under each Indenture, an Event of Default is defined as, with respect to
each series of Securities outstanding thereunder individually, any of the
following: (i) default in payment of the principal of any Debt Security of such
series; (ii) default in payment of any interest on any Debt Security of such
series when due, continuing for 30 days (or such other period as shall be set
forth in the applicable Prospectus Supplement); (iii) failure by the Company to
comply with its other agreements in the Debt Securities of such series or such
Indenture for the benefit of the holders of Debt Securities of such series upon
the receipt by the Company of notice of such Default by the Trustee or the
holders of at least 25% in aggregate principal amount of the outstanding Debt
Securities of such series and the Company's failure to cure such Default within
60 days (or such other period as shall be set forth in the applicable Prospectus
Supplement) after receipt by the Company of such notice; (iv) certain events of
bankruptcy or insolvency; and (v) any other Event of Default set forth in the
applicable Prospectus Supplement.
The Trustee shall give notice to holders of the Debt Securities of any
continuing Default known to the Trustee within 90 days after the occurrence
thereof; provided, that the Trustee may withhold such notice, as to any Default
other than a payment Default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding 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 with respect to the Debt Securities of such
series; provided that such direction shall not be in conflict with any law or
the Indenture and subject to certain other limitations. Before proceeding to
exercise any right or power under the Indenture at the direction of such
holders, the Trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with any such direction.
With respect to each series of Debt Securities, no holder will have any right to
pursue any remedy with respect to the Indenture or the Debt Securities, unless
(i) such holder shall have previously given the Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of such series;
(ii) the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of such series shall have made a written request to
the Trustee to pursue such remedy; (iii) such holder or holders have offered to
the Trustee reasonable indemnity satisfactory to the Trustee; (iv) the holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of such series have not given the Trustee a direction inconsistent with such
request within 60 days after receipt of such request; and (v) the Trustee shall
have failed to comply with the request within such 60-day period.
Notwithstanding the foregoing, the right of any holder of any Debt Security
or coupon to receive payment of the principal of and interest in respect of such
Debt Security or payment of such coupon on the date specified in such Debt
Security or coupon representing such installment of interest as the fixed date
on which an amount equal to the principal of such Debt Security or an
installment of principal thereof or interest thereon is due and payable (the
"Stated Maturity" or "Stated Maturities") or to institute suit for the
enforcement of any such payments shall not be impaired or adversely affected
without such holder's consent. The holders of at least a majority in aggregate
principal amount of the outstanding Debt Securities of any series may waive an
existing Default with respect to such series and its consequences, other than
(i) any Default in any payment of the principal of, or interest on, any Debt
Security of such series or (ii) any Default in respect of certain covenants or
provisions in the Indenture which may not be modified without the consent of the
holder of each outstanding Debt Security of such series affected as described in
"Modification and Waiver," below.
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Each Indenture provides that the Company shall deliver to the Trustee within
120 days after the end of each fiscal year of the Company (beginning with the
first fiscal year ending after the execution of the relevant Indenture) an
officers' certificate stating whether or not the signers know of any Default
that occurred during such period.
MODIFICATION AND WAIVER
The Company and the Trustee may execute a supplemental indenture without the
consent of the holders of the Debt Securities or any related coupons (i) to add
to the covenants, agreements and obligations of the Company for the benefit of
the holders of all the Debt Securities of any series or to surrender any right
or power conferred in the Indenture upon the Company; (ii) to evidence the
succession of another corporation to the Company and the assumption by it of the
obligations of the Company under the Indenture and the Debt Securities; (iii) to
provide that bearer securities may be registrable as to principal, to change or
eliminate any restrictions (including restrictions relating to payment in the
United States) on the payment of principal of or interest, if any, on bearer
securities, to permit bearer securities to be issued in exchange for registered
securities, to permit bearer securities to be issued in exchange for bearer
securities of other authorized denominations or to permit the issuance of Debt
Securities in uncertificated form; (iv) to establish the form or terms of Debt
Securities of any series and any related coupons as permitted by the Indenture;
(v) to provide for the acceptance of appointment under the Indenture of a
successor Trustee with respect to the Debt Securities of one or more series and
to add to or change any provisions of the Indenture as shall be necessary to
provide for or facilitate the administration of the trusts by more than one
Trustee; (vi) to cure any ambiguity, defect or inconsistency; (vii) to add to,
change or eliminate any provisions (which addition, change or elimination may
apply to one or more series of Debt Securities), provided that any such
addition, change or elimination neither (a) applies to any Debt Security of any
series created prior to the execution of such supplemental indenture and is
entitled to the benefit of such provision nor (b) modifies the rights of the
holder of any such Debt Security with respect to such provision; (viii) to
secure the Debt Securities; or (ix) to make any other change that does not
adversely affect the rights of any Securityholder.
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt Securities
of the series affected by such supplemental indenture, the Company and the
Trustee may also execute a supplemental indenture to add provisions to, or
change in any manner or eliminate any provisions of, the Indenture with respect
to such series of Debt Securities or modify in any manner the rights of the
holders of the Debt Securities of such series and any related coupons under such
Indenture; provided that no such supplemental indenture will, without the
consent of the holder of each such outstanding Debt Security affected thereby
(i) change the stated maturity of the principal of, or any installment of
principal or interest on, any such Debt Security or any premium payable upon
redemption thereof, or reduce the amount of principal of any Debt Security that
is a Discount Security and that would be due and payable upon declaration of
acceleration of maturity thereof, (ii) reduce the principal amount of, or the
rate of interest on, any such Debt Security; (iii) change the place or currency
of payment of principal or interest, if any, on any such Debt Security; (iv)
impair the right to institute suit for the enforcement of any payment on or with
respect to any such Debt Security; (v) reduce the above-stated percentage of
holders of Debt Securities of any series necessary to modify or amend such
Indenture; (vi) modify the foregoing requirements or reduce the percentage in
principal amount of outstanding Debt Securities of any series necessary to waive
any covenant or past default; or (vii) in the case of Senior Subordinated or
Subordinated Debt Securities, amend or modify any of the provisions of such
Indenture relating to subordination of the Debt Securities in any manner adverse
to the holders of such Debt Securities. Holders of not less than a majority in
principal amount of the outstanding Debt Securities of any series may waive
certain past Defaults and may waive compliance by the Company with certain of
the restrictive covenants described above with respect to the Debt Securities of
such series.
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DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, each
Indenture provides that the Company may satisfy and discharge obligations
thereunder with respect to the Debt Securities of any series by delivering to
the Trustee for cancellation all outstanding Debt Securities of such series or
depositing with the Trustee, after such outstanding Debt Securities have become
due and payable, cash sufficient to pay at Stated Maturity all of the
outstanding Debt Securities of such series and paying all other sums payable
under the Indenture with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each Indenture provides that the Company (a) shall be discharged
from its obligations in respect of the Debt Securities of such series
("defeasance and discharge"), or (b) may cease to comply with certain
restrictive covenants ("covenant defeasance") including those described under
"Mergers and Sales of Assets" and any such omission shall not be an Event of
Default with respect to the Debt Securities of such series, in each case at any
time prior to the Stated Maturity or redemption thereof, when the Company has
irrevocably deposited with the Trustee, in trust, (i) sufficient funds in the
currency or currency unit in which the Debt Securities are denominated to pay
the principal of (and premium, if any) and interest to Stated Maturity (or
redemption) on, the Debt Securities of such series, or (ii) such amount of
direct obligations of, or obligations the principal of (and premium, if any) and
interest on which are fully guaranteed by, the government which issued the
currency in which the Debt Securities are denominated, and which are not subject
to prepayment, redemption or call, as will, together with the predetermined and
certain income to accrue thereon without consideration of any reinvestment
thereof, be sufficient to pay when due the principal of (and premium, if any)
and interest to Stated Maturity (or redemption) on, the Debt Securities of such
series. Such defeasance and discharge and covenant defeasance are conditioned
upon, among other things, the Company's delivery of an opinion of counsel that
the holders of the Debt Securities of such series will not recognize income,
gain or loss for United States Federal income tax purposes as a result of such
defeasance, and will be subject to tax in the same manner as if no defeasance
and discharge or covenant defeasance, as the case may be, had occurred. Upon
such defeasance and discharge, the holders of the Debt Securities of such series
shall no longer be entitled to the benefits of the Indenture, except for the
purposes of registration of transfer and exchange of the Debt Securities of such
series and replacement of lost, stolen or mutilated Debt Securities and shall
look only to such deposited funds or obligations for payment.
THE TRUSTEES
Each Trustee will be permitted to engage in other transactions with the
Company and its subsidiaries; however, if any Trustee acquires any conflicting
interest, it must eliminate such conflict or resign.
DESCRIPTION OF PREFERRED STOCK
The Company may issue, from time to time, shares of one or more series or
classes of Preferred Stock. The following description 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 and the
extent, if any, to which such general provisions may apply to the series of
Preferred Stock so offered will be described in the Prospectus Supplement
relating to such Preferred Stock. The following summary of certain provisions of
the Preferred Stock do 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 Certificate of Incorporation (the "Certificate of Incorporation") and
the Certificate of Designation relating to a specific series of the Preferred
Stock (the "Certificate of Designation"), which will be in the form filed as an
exhibit to, or incorporated by reference in, the Registration Statement of which
this Prospectus is a part at or prior to the time of issuance of such series of
Preferred Stock.
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Under the Certificate of Incorporation, the Company has the authority to
issue up to 22 million shares of Preferred Stock. The Board of Directors of the
Company is authorized to issue shares of Preferred Stock, in one or more series
or classes, and to fix for each such series voting powers and such preferences
and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions as are permitted by the Delaware
General Corporation Law.
The Board of Directors of the Company shall be authorized to determine for
each series of Preferred Stock, and the Prospectus Supplement shall set forth
with respect to such series: (i) the designation of such shares and the number
of shares that constitute such series, (ii) the dividend rate (or the method of
calculation thereof), if any, on the shares of such series and the priority as
to payment of dividends with respect to other classes or series of capital stock
of the Company, (iii) the dividend periods (or the method of calculation
thereof), (iv) the voting rights of the shares, (v) the liquidation preference
and the priority as to payment of such liquidation preference with respect to
other classes or series of capital stock of the Company and any other rights of
the shares of such series upon any liquidation or winding-up of the Company,
(vi) whether or not and on what terms the shares of such series will be subject
to redemption or repurchase at the option of the Company, (vii) whether and on
what terms the shares of such series will be convertible into or exchangeable
for other debt or equity securities, (viii) whether depositary shares
representing shares of such series of Preferred Stock will be offered and, if
so, the fraction of a share of such series of Preferred Stock represented by
each depositary share (see "Description of Depositary Shares" below), (ix)
whether the shares of such series of Preferred Stock will be listed on a
securities exchange, (x) any special United States Federal income tax
considerations applicable to such series, and (xi) the other rights and
privileges and any qualifications, limitations or restrictions of such rights or
privileges of such series.
DIVIDENDS
Holders of shares of Preferred Stock shall 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, an annual cash dividend payable at such dates and at
such rates, if any, per share per annum as set forth in the applicable
Prospectus Supplement.
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 as to dividends and upon liquidation) shall be declared or
paid or set aside for payment, nor shall 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 as to dividends, nor shall any
common stock or any other capital stock of the Company ranking junior to or on a
parity with the Preferred Stock as to dividends be redeemed, purchased or
otherwise acquired for any consideration (or any moneys 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 as to dividends) unless (i) if
such series of Preferred Stock has a cumulative dividend, full cumulative
dividends on the Preferred Stock 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 and (ii) if such
series of Preferred Stock does not have a cumulative dividend, full dividends on
the Preferred Stock have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
the then current dividend period; provided, however; that any monies theretofore
deposited in any sinking fund with respect to any preferred stock 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 shall have been paid or declared and set apart for
payment;
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and provided, further; that any such junior or parity preferred stock or common
stock may be converted into or exchanged for stock of the Company ranking junior
to the Preferred Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall 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, which will set forth the terms and conditions upon which such
conversion or exchange may be effected, including the initial conversion or
exchange rate and any adjustments thereto, the conversion or exchange period and
any other conversion or exchange provisions.
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, which
will set forth the terms and conditions thereof, including the dates and
redemption prices of any such redemption, any conditions thereto, and any other
redemption or sinking fund provisions.
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 ranking junior to such series of Preferred Stock as to rights upon
liquidation, dissolution or winding up; and (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 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 shall have been paid (or a
sum set aside therefor sufficient to provide for payment) in full. If upon any
liquidation, dissolution or winding up of the Company, the amounts payable with
respect to the Preferred Stock, and any other Preferred Stock ranking as to any
such distribution on a parity with the Preferred Stock are not paid in full, the
holders of the preferred stock and such other parity preferred stock will share
ratably in any such distribution of assets in proportion to the full respective
preferential amount 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 shall be
considered a liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Holders of Preferred Stock will be entitled to one vote for each share of
preferred stock and vote together with the holders of Common Stock and
preference stock, if any, on all matters, PROVIDED, that during any period when
the holders of Preferred Stock, voting as a class, are entitled to elect two
directors, as described below, holders of Preferred Stock shall not be entitled
to participate with the holders of the Common Stock and the preference stock, if
any, in the election of any other directors. Whenever dividends
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on any applicable series of Preferred Stock or any other class or series of
stock ranking on a parity with the applicable series of Preferred Stock with
respect to the payment of dividends shall not have been paid in an amount
equivalent to six quarterly dividends or three semi-annual dividends, the
holders of shares of such series of Preferred Stock (voting separately as a
class with all other series of Preferred Stock then entitled to such voting
rights) will be entitled to vote for the election of two directors of the
Company until all dividends in default on such series of Preferred Stock shall
have been fully paid or set apart for payment. The term of office of all
directors elected by the holders of such Preferred Stock shall terminate
immediately upon the termination of the right of the holders of such Preferred
Stock to vote for directors.
So long as any shares of any series of Preferred Stock remain outstanding,
the Company shall not, without the consent of holders of at least two thirds of
the shares of such series of Preferred Stock outstanding at the time, voting
separately as a class with all other series of Preferred Stock of the Company
upon which like voting rights are exercisable, (i) authorize any class of stock
ranking prior to the outstanding Preferred Stock as to dividends or upon
liquidation; (ii) alter or change the preferred, special rights or powers of the
Preferred Stock so as to adversely affect such class of stock, PROVIDED,
HOWEVER, that no such class vote shall be required in connection with any
increase in the total number of the authorized common stock or authorized
preferred stock or any increase or decrease in the number of shares of any
series of preferred stock ranking on a parity with the Preferred Stock as to
dividends and upon liquidation, dissolution or winding or fixing of any of the
terms of any shares of Preferred Stock; or (iii) purchase or redeem less than
all of the Preferred Stock unless the full dividends to which all shares of
Preferred Stock of all series shall have been paid or declared and a sum
sufficient for such payment set apart.
Unless otherwise set forth in the applicable Prospectus Supplement, holders
of shares of Preferred Stock will not have any other voting rights except as
otherwise required from time to time by applicable 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. Shares of Preferred Stock redeemed or otherwise
reacquired by the Company shall resume the status of authorized and unissued
shares of Preferred Stock undesignated as to series, and shall be available for
subsequent issuance. There are no restrictions on repurchase or redemption of
the Preferred Stock while there is 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 and other transactions entered into by the Company. The accompanying
Prospectus Supplement will describe any material contractual restrictions on
dividend payments.
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
Certificate 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.
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DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may, at its option, elect to offer fractional interests in
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 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 ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of the
related series of Preferred Stock.
The following description 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 to which any Prospectus Supplement may
relate and the extent, if any, to which such general provisions may apply to the
Depositary Shares so offered will be described in the applicable Prospectus
Supplement. The forms of Deposit Agreement and Depositary Receipt will be filed
as exhibits to the Registration Statement. The following summary of certain
provisions of the Depositary Shares and Deposit Agreement 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.
Immediately following the issuance of 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.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the related series of Preferred Stock
to the record holders of Depositary Shares relating to such series of Preferred
Stock 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,
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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 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 equal to the
applicable fraction of the redemption price per share payable with respect to
such series of the Preferred Stock. 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
moneys 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. Any funds deposited by the Company with the
Preferred Stock Depositary for any Depositary Shares that the holders thereof
fail to redeem will be returned to the Company after a period of two years from
the date such funds are so deposited.
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 Stock to the extent it does not receive specific instructions from the
holders of Depositary Shares representing such Preferred Stock.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary and upon 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 is 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
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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 holder 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 his or her 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 at least 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
shall 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 shall
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 the related series of Preferred Stock
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.
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
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<PAGE>
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 ("Debt Warrants"), (ii)
Preferred Stock (the "Preferred Stock Warrants") or (iii) Common Stock ("Common
Stock Warrants"). The Preferred Stock Warrants and the Common Stock Warrants are
collectively referred to as the "Stock Warrants" and the Stock Warrants and the
Debt Warrants are collectively referred to as 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 any or all Warrants in respect of which this Prospectus
is being delivered. Copies of the form of agreement for each Warrant (each a
"Debt Securities Warrant Agreement" or "Stock Warrant Agreement," as the case
may be, or collectively the "Warrant Agreements"), including the forms of
certificates representing the Warrants ("Debt Warrant Certificates" or "Stock
Warrant Certificates," 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 are, or will be, filed as exhibits to the Registration Statement of
which this Prospectus forms a part.
The following description sets forth certain general terms and provisions of
the Warrants to which any Prospectus Supplement may relate. The particular terms
of the Warrants to which any Prospectus Supplement may relate and the extent, if
any, to which such general provisions may apply to the Warrants so offered will
be described in the applicable Prospectus Supplement. The following summary of
certain provisions of the Warrants, Warrant Agreements and Warrant Certificates
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 Warrant Agreements
and Warrant Certificates, including the definitions therein of certain terms.
DEBT WARRANTS
GENERAL. Reference is made to the applicable Prospectus Supplement for the
terms of Debt Warrants in respect of which this Prospectus is being delivered,
the Debt Securities Warrant Agreement relating to such Debt Warrants and the
Debt Warrant Certificates 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
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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 shall commence
and the date on which such right shall expire; (vi) a discussion of the material
United States Federal income tax considerations applicable to the ownership or
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 shall 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 5:00 p.m., New York
City time, on the expiration date set forth in the applicable Prospectus
Supplement. After 5:00 p.m., New York City time, on the expiration date,
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.
STOCK WARRANTS
GENERAL. Reference is made to the applicable Prospectus Supplement for the
terms of Stock Warrants in respect of which this Prospectus is being delivered,
the Stock Warrant Agreement relating to such Stock Warrants and the Stock
Warrant Certificates representing such Stock Warrants, including the following:
(i) the type and number of shares of Preferred Stock or Common Stock purchasable
upon exercise of such Stock Warrants and the procedures and conditions relating
to the exercise of such Stock Warrants; (ii) the date, if any, on and after
which such Stock Warrants and the related shares of Preferred Stock or Common
Stock will be separately tradeable; (iii) the offering price of such Stock
Warrants, if any; (iv) the initial price at which such shares may be purchased
upon exercise of Stock Warrants and any provision with respect to the adjustment
thereof; (v) the date on which the right to exercise such Stock Warrants shall
commence and the date on which such right shall expire; (vi) a discussion of the
material United States Federal income tax considerations applicable to the
ownership or exercise of Stock Warrants; (vii) call provisions of such Stock
Warrants, if any; (viii) any other terms of the Stock Warrants and; (ix) in the
case of Preferred Stock Warrants, information relating to the Preferred Stock
purchasable upon exercise of such Preferred Stock Warrants.
Stock Warrant Certificates will be exchangeable for new Stock Warrant
Certificates of different denominations and 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 Stock
Warrants, holders of Stock Warrants will not have any of the rights of holders
of shares of capital stock
20
<PAGE>
purchasable upon such exercise, and will not be entitled to any dividend
payments on such capital stock purchasable upon such exercise.
EXERCISE OF STOCK WARRANTS. Each Stock Warrant will entitle the holder to
purchase for cash such number of shares of Preferred Stock or Common Stock, as
the case may be, at such exercise price as shall in each case be set forth in,
or be determinable as set forth in, the applicable Prospectus Supplement
relating to the Stock Warrants offered thereby. Unless otherwise specified in
the applicable Prospectus Supplement, Stock Warrants may be exercised at any
time up to 5:00 p.m., New York City time, on the expiration date set forth in
the applicable Prospectus Supplement. After 5:00 p.m., New York City time, on
the expiration date, unexercised Stock Warrants will become void.
Stock Warrants may be exercised as set forth in the applicable Prospectus
Supplement relating thereto. Upon receipt of payment and the Stock Warrant
Certificates 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 capital stock purchasable upon such
exercise. If less than all of the Stock Warrants represented by such Stock
Warrant Certificate are exercised, a new Stock Warrant Certificate will be
issued for the remaining amount of Stock Warrants.
PLAN OF DISTRIBUTION
The Company may sell Securities to one or more underwriters for public
offering and sale by them or may sell Securities to investors directly or
through agents or dealers. Any such underwriter, agent or dealer involved in the
offer and sale of the Securities will be named in an applicable Prospectus
Supplement. Securities offered pursuant to a particular Prospectus Supplement
are referred to herein as "Offered Securities."
Underwriters may offer and sell the Offered Securities 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 Company also may, from time to time, authorize
underwriters acting as its agents to offer and sell the Offered Securities upon
the terms and conditions set forth in any Prospectus Supplement. In connection
with the sale of Offered Securities, underwriters may be deemed to have received
compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Offered
Securities for whom they may act as agent. Underwriters may sell Offered
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions (which may be changed from time to time) from the purchasers for
whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters under the Securities Act, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements with the Company, to indemnification against and contribution
toward certain civil liabilities, including liabilities under the Securities
Act, and to reimbursement by the Company for certain expenses.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to such
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale.
If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as its agents to solicit offers by certain institutions
to purchase Offered Securities from the Company at the
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<PAGE>
public offering price set forth in such Prospectus Supplement pursuant to
Delayed Delivery Contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than, and the aggregate principal amount of Offered
Securities sold pursuant to Contracts shall not be less nor more than, the
respective amounts stated in such Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of the Company. The terms and conditions of any Contracts will
be set forth in the applicable Prospectus Supplement relating thereto. Agents
and underwriters will have no responsibility in respect of the delivery or
performance of Contracts.
Until the distribution of the Securities offered pursuant to any Prospectus
Supplement is completed, the Commission's rules may limit the ability of any
underwriter participating in such distribution to bid for and purchase the
Securities offered thereby and other securities of the Company. As an exception
to these rules, the underwriters are permitted to engage in certain transactions
that stabilize or maintain the price of such securities. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of such securities. If any such underwriter creates a short position
in such securities in connection with the offering, such underwriter may reduce
such short position by purchasing securities.
In general, bids for or purchases of a security for the purpose of
stabilization or to reduce a short position could cause the price of the
security to be higher than it might otherwise be in the absence of such bids or
purchases.
Neither the Company nor any underwriter participating in any distribution
makes any representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the
offered Securities or other securities of the Company. In addition, neither the
Company nor any such underwriter makes any representation that such underwriter
will engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.
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.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Securities being
offered hereby will be passed upon for the Company by John E. Preston, Esq.,
Senior Vice President and General Counsel of the Company. As of March 27, 1998,
Mr. Preston owned 14,801 shares of Common Stock and held options to acquire an
additional 56,258 shares of Common Stock. Certain legal matters will be passed
upon for any underwriters acting on behalf of the Company by Skadden, Arps,
Slate, Meagher & Flom LLP, Los Angeles, California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
Supplement by reference from the Company's Annual Report on Form 10-K for the
year ended July 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
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NO DEALER, SALESPERSON, OR ANY PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE
OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY LITTON OR BY ANY UNDERWRITER, DEALER OR AGENT.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS NOT AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
The Company........................................ S-2
Use of Proceeds.................................... S-2
Recent Events...................................... S-3
Capitalization..................................... S-4
Selected Historical Financial Data................. S-5
Management's Discussion and Analysis of Historical
Financial Condition and Results Of Operations.... S-6
Business........................................... S-11
Description of the Securities...................... S-15
Underwriting....................................... S-19
Validity of Securities............................. S-20
Experts............................................ S-20
PROSPECTUS
Available Information.............................. 2
Incorporation of Certain Documents by Reference.... 2
The Company........................................ 4
Use of Proceeds.................................... 4
Ratio of Earnings to Fixed Charges................. 4
Description of the Debt Securities................. 5
Description of Preferred Stock..................... 12
Description of Depositary Shares................... 16
Description of Warrants............................ 19
Plan of Distribution............................... 21
Legal Matters...................................... 22
Experts............................................ 22
</TABLE>
$300,000,000
LITTON INDUSTRIES, INC.
[LOGO]
$100,000,000
% SENIOR NOTES
DUE 2003
$200,000,000
% SENIOR DEBENTURES
DUE 2018
-------------------
PROSPECTUS SUPPLEMENT
-------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
APRIL , 1998
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