<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 20, 1996)
$200,000,000
The May Department Stores Company
a New York corporation
(the "Company")
----------------------
7.875% DEBENTURES DUE 2036
Payment of principal and interest unconditionally guaranteed by
The May Department Stores Company
a Delaware corporation
(the "Guarantor")
------------------------
Interest payable February 15 and August 15
------------------------
------------------------
THE DEBENTURES WILL BE REDEEMABLE ON 30 DAYS' NOTICE AT THE OPTION OF THE
COMPANY, AS A WHOLE OR IN PART, AT ANY TIME ON OR AFTER AUGUST 15, 2016, AT
100%, TOGETHER WITH ACCRUED INTEREST.
THE DEBENTURES WILL BE REPRESENTED BY ONE OR MORE BOOK-ENTRY SECURITIES
REGISTERED IN THE NAME OF THE NOMINEE OF THE DEPOSITORY TRUST COMPANY, WHICH
WILL ACT AS THE DEPOSITARY. INTERESTS IN THE DEBENTURES REPRESENTED BY THE
BOOK-ENTRY SECURITIES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE
EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY THE DEPOSITARY AND ITS DIRECT
AND INDIRECT PARTICIPANTS. EXCEPT AS DESCRIBED HEREIN, DEBENTURES IN
DEFINITIVE FORM WILL NOT BE ISSUED. SETTLEMENT FOR THE DEBENTURES
WILL BE MADE IN IMMEDIATELY AVAILABLE FUNDS. THE DEBENTURES WILL
TRADE IN THE DEPOSITARY'S SAME-DAY FUNDS SETTLEMENT SYSTEM UNTIL
MATURITY, AND SECONDARY MARKET TRADING ACTIVITY IN THE DEBENTURES
WILL SETTLE IN IMMEDIATELY AVAILABLE FUNDS. ALL PAYMENTS OF
PRINCIPAL AND INTEREST WILL BE MADE BY THE COMPANY IN
IMMEDIATELY AVAILABLE FUNDS. SEE "DESCRIPTION OF SECURITIES
-- SAME-DAY SETTLEMENT AND PAYMENT."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PRICE 98.751% AND ACCRUED INTEREST
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
--------------- --------------- ---------------
<S> <C> <C> <C>
Per Debenture............................ 98.751% .875% 97.876%
Total.................................... $197,502,000 $1,750,000 $195,752,000
</TABLE>
- ------------
(1) Plus accrued interest from August 15, 1996.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933.
(3) Before deducting expenses payable by the Company estimated at $125,000.
------------------------
The Debentures are offered, subject to prior sale, when, as and if accepted
by the Underwriters named herein, and subject to approval of certain legal
matters by Davis Polk & Wardwell, counsel for the Underwriters. It is expected
that delivery of the Debentures will be made on or about August 22, 1996,
through the book-entry facilities of The Depository Trust Company, against
payment therefor in immediately available funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
MERRILL LYNCH & CO.
CITICORP SECURITIES, INC.
August 19, 1996
<PAGE> 2
NO DEALER, SALESMAN, OR ANY OTHER 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 THE COMPANY OR BY ANY UNDERWRITER. 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.
------------------------
USE OF PROCEEDS
The Company presently intends to use the net proceeds from the sale of the
Debentures primarily for stock repurchases; however, it may use the proceeds for
capital expenditures, working capital needs and other general corporate
purposes, including investments and acquisitions.
RECENT DEVELOPMENTS
The Guarantor reported sales of $676.9 million for the four-week period
ended August 3, 1996, a 6.7% increase over $634.3 million in the similar fiscal
period last year. Sales for the first six months of fiscal 1996 were $4.84
billion, up 10.8% from sales of $4.37 billion during the same period a year ago.
Sales were as follows:
<TABLE>
<CAPTION>
JULY AND YEAR-TO-DATE SALES (MILLIONS)
-------------------------------------------------------
FISCAL FISCAL PERCENT STORE-FOR-STORE*
1996 1995 INCREASE INCREASE/(DECREASE)
-------- -------- -------- -------------------
<S> <C> <C> <C> <C>
July............................................ $ 676.9 $ 634.3 6.7% (0.4)%
-------- -------- ---- ---
Year-to-date.................................... $4,835.8 $4,366.3 10.8% 4.4%
-------- -------- ---- ---
</TABLE>
- ------------
* Store-for-store sales represent sales of those stores open during both years.
Sales have been restated to exclude the sales of stores that have been
closed and not replaced. Year-to-date revenues, including sales of nonreplaced
closed stores and finance charge revenue, were $5.04 billion in 1996 and $4.54
billion in 1995.
S-2
<PAGE> 3
DESCRIPTION OF SECURITIES
The Debentures are to be issued under an Indenture (the "Indenture"), dated
as of June 17, 1996, among the Company, the Guarantor and The First National
Bank of Chicago (the "Trustee"). This description supplements the description of
the general terms and provisions of the Debentures and the Indenture set out in
the accompanying Prospectus under the heading "Description of Debt Securities."
The following summaries of certain provisions of the Indenture do not purport to
be complete and are subject to, and are qualified in their entirety by reference
to, all provisions of the Indenture, including the definitions therein of
certain terms. Wherever particular sections or defined terms of the Indenture
are referred to, it is intended that such sections or defined terms shall be
incorporated herein by reference.
GENERAL
The Debentures will be limited to $200,000,000 aggregate principal amount
and will mature on August 15, 2036.
The Debentures will bear interest at the rate per annum shown on the cover
page of this Prospectus Supplement from August 15, 1996, or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semi-annually on February 15 and August 15 of each year to the persons in whose
names the Debentures are registered at the close of business on the first day of
February or August, as the case may be, next preceding such Interest Payment
Date.
Ownership of beneficial interests in the Debentures will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depositary for the Debentures. Payment with respect to the Debentures
represented by a Book-Entry Security will be made to the Depositary as the
registered owner of the Debenture.
OPTIONAL REDEMPTION
The Debentures will be subject to redemption, at the option of the Company,
upon at least 30 and not more than 60 days' notice, at any time on or after
August 15, 2016 and prior to maturity, as a whole, or from time to time in part,
at 100%, together with interest accrued to the date fixed for redemption
(subject to the right of Holders of record on relevant Record Dates to receive
interest due on an Interest Payment Date).
APPLICATION OF DEFEASANCE PROVISIONS
The Debentures are subject to defeasance and covenant defeasance as
described under "Description of Debt Securities -- Defeasance and Covenant
Defeasance" in the accompanying Prospectus.
To elect defeasance or covenant defeasance the Company is required to
deliver to the Trustee an opinion of counsel to the effect that the deposit of
money and/or U.S. Government Obligations (as defined) in the trust created when
the Company elects defeasance or covenant defeasance will not cause the Holders
of the Debentures to recognize income, gain or loss for Federal income tax
purposes.
BOOK-ENTRY SYSTEM
The Debentures initially will be represented by one or more book-entry
securities (the "Book-Entry Securities") deposited with The Depository Trust
Company ("DTC") and registered in the name of a nominee of DTC. The term
"Depositary" refers to DTC or any successor depositary. Except as set forth
below, the Debentures will be available for purchase in denominations of $1,000
and integral multiples thereof in book-entry form only. Except in the limited
circumstances as described under "Description of the Debt Securities -- Global
Securities" in the Prospectus, owners of beneficial interests in the Book-Entry
Securities will not be entitled to have Debentures represented by such
Book-Entry Securities registered in their names, will not receive or be entitled
to receive physical delivery of such Debentures in definitive form, and will not
be considered the owners or holders thereof under the Indenture.
S-3
<PAGE> 4
DTC has advised the Company that it is a limited-purpose trust company
created to hold securities for its participating organizations (the
"Participants") and to facilitate the clearance and settlement of securities
transactions in such securities between Participants through electronic
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, that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly ("Indirect Participants"). Persons who are not Participants may
beneficially own securities held by the Depositary only through Participants or
Indirect Participants.
The Depositary advises that its established procedures provide that (i)
upon issuance of the Debentures by the Company, the Depositary will credit the
accounts of Participants designated by the Underwriters with the principal
amounts of the Debentures purchased by the Underwriters, and (ii) ownership of
interests in each Book-Entry Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary,
the Participants and the Indirect Participants. The laws of some states require
that certain persons take physical delivery in definitive form of securities
which they own. Consequently, the ability to transfer beneficial interests in
each Book-Entry Security is limited to such extent.
So long as a nominee of the Depositary is the registered owner of each
Book-Entry Security, such nominee for all purposes will be considered the sole
owner or holder of the Debentures under the Indenture. Except as provided below,
owners of beneficial interests in the Book-Entry Securities will not be entitled
to have Debentures registered in their names, will not receive or be entitled to
receive physical delivery of Debentures in definitive form, and will not be
considered the owners or holders thereof under the Indenture.
None of the Company, the Trustee, any paying agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Book-Entry Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
For additional information regarding the Book-Entry System, see
"Description of the Debt Securities -- Global Securities" in the Prospectus.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Debentures will be made by the Underwriters in
immediately available funds. All payments of principal and interest will be made
by the Company in immediately available funds or the equivalent. The Debentures
will trade in the Depositary's Same-Day Funds Settlement System until maturity,
and secondary market trading activity in the Debentures will therefore be
required by the Depositary to settle in immediately available funds.
S-4
<PAGE> 5
UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated August 19, 1996, the Underwriters named below have severally
agreed to purchase, and the Company has agreed to sell to them, severally, the
respective principal amounts of Debentures set forth below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
NAME DEBENTURES
- ------------------------------------------------------------------------------ ------------
<S> <C>
Morgan Stanley & Co. Incorporated............................................. $ 68,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................................... 66,000,000
Citicorp Securities, Inc. .................................................... 66,000,000
------------
Total.................................................................... $200,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Debentures are subject to,
among other things, the approval of certain legal matters by counsel and to
certain other conditions.
The Underwriters initially propose to offer part of the Debentures directly
to the public at the public offering price set forth on the cover page hereof
and part to certain dealers at a price which represents a concession, not in
excess of .50% of the principal amount of the Debentures. Any Underwriter may
allow, and such dealers may reallow, a concession, not in excess of .25% of the
principal amount of the Debentures. After the initial offering of the
Debentures, the offering price and other selling terms may from time to time be
varied by the Underwriters.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Company has agreed not to offer, sell, contract to sell or otherwise
dispose of any of its debt securities substantially similar to the Debentures
during the period beginning on the date of this Prospectus Supplement and
continuing to and including the date the Debentures are delivered to the
Underwriters, without the prior written consent of Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Citicorp
Securities, Inc.
The Company does not intend to apply for listing of the Debentures on a
national securities exchange, but has been advised by the several Underwriters
that such firms presently intend to make a market in the Debentures as permitted
by applicable laws and regulations. The Underwriters are not obligated, however,
to make a market in the Debentures, and any such market making may be
discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Debentures.
EXPERTS
The consolidated financial statements and schedules of the Company included
or incorporated by reference in its Annual Report on Form 10-K for the fiscal
year ended February 3, 1996, incorporated herein by reference, have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto. The reports referred to above have been included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
LEGAL MATTERS
The validity of the Debentures offered hereby will be passed upon for the
Company by Skadden, Arps, Slate, Meagher & Flom and for the Underwriters by
Davis Polk & Wardwell. A member of Skadden, Arps, Slate, Meagher & Flom
beneficially owns 4,000 shares of the Guarantor's common stock, $.50 par value
per share, with the associated rights attached thereto. Helene Kaplan, of
counsel to Skadden, Arps, Slate, Meagher & Flom, is a member of the Guarantor's
board of directors and owns 8,910 shares of the Guarantor's common stock, with
the associated rights attached thereto.
S-5
<PAGE> 6
PROSPECTUS
$800,000,000
The May Department Stores Company
DEBT SECURITIES
The May Department Stores Company, a New York corporation (the "Company"),
from time to time may offer its senior debt securities (the "Debt Securities")
in a principal amount sufficient to result in proceeds to the Company of up to
$800,000,000 (or the equivalent in foreign denominated currencies or composite
currencies, based upon the applicable exchange rate at the time of sale). The
Debt Securities will be unconditionally guaranteed (the "Guarantee") by The May
Department Stores Company, a Delaware corporation and the sole shareowner of the
Company (the "Guarantor"). The Debt Securities may be offered as separate series
under one or more Indentures in amounts, at prices and on terms to be set forth
in supplements to this Prospectus. The Company may sell Debt Securities directly
or through agents designated from time to time or to or through one or more
underwriters who will be named in a Prospectus Supplement (the "Prospectus
Supplement"), or an underwriting syndicate including and represented by such
firms. See "Plan of Distribution."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, denominations, maturity, premium, if
any, interest rate (which may be fixed or variable) and time of payment of
interest, if any, terms for redemption at the option of the Company or the
holder, terms for sinking fund payments, if any, the name of the trustee under
the indenture relating to the Debt Securities, the initial public offering
price, the names of any underwriters or agents, the applicable compensation of
such underwriters or agents and the other terms in connection with the offering
and sale of the Debt Securities in respect of which this Prospectus is being
delivered, will be set forth in an accompanying Prospectus Supplement.
As used herein, Debt Securities shall include securities denominated in
United States dollars or, at the option of the Company if so specified in the
applicable Prospectus Supplement, in any other currency or in composite
currencies or in amounts determined by reference to an index.
------------------------
June 20, 1996
<PAGE> 7
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE DEBT SECURITIES OFFERED
BY THIS PROSPECTUS IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR THE GUARANTOR SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
------------------------
AVAILABLE INFORMATION
The Company and the Guarantor are subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the following regional offices: Suite
1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and
Suite 1300, 7 World Trade Center, New York, New York 10048; and copies of such
material can be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549 at prescribed rates. In addition, certain of the
Guarantor's securities are listed on the New York Stock Exchange and reports,
proxy statements and other information concerning the Company or the Guarantor
may be inspected at the office of such Exchange.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are, as of
their respective dates, incorporated into this Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
February 3, 1996.
(b) The Company's Quarterly Report on Form 10-Q for the period ended May
4, 1996.
(c) The Company's Current Report on Form 8-K (date of report, April 24,
1996).
(d) The Company's Current Report on Form 8-K (date of report, May 24,
1996).
All documents filed by the Company or the Guarantor, as the case may be,
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the offering of the
Debt Securities shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
This Prospectus does not contain all information set forth in the registration
statement of which this Prospectus forms a part or Registration Statement Nos.
33-55255 and 33-62075 and the exhibits thereto, which the Company has filed with
the Commission and to which reference is hereby made.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO: THE
MAY DEPARTMENT STORES COMPANY, 611 OLIVE STREET, ST. LOUIS, MISSOURI 63101-1799,
ATTENTION: CORPORATE COMMUNICATIONS DEPARTMENT, OR BY TELEPHONE TO THE CORPORATE
COMMUNICATIONS DEPARTMENT AT 314-342-6300.
2
<PAGE> 8
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE DEBT
SECURITIES OFFERED HEREBY OR OTHER DEBT SECURITIES OF THE COMPANY AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
The May Department Stores Company (the "Company") is one of the nation's
largest retailing companies. The Company's eight department store divisions
operate 346 department stores in 30 states and the District of Columbia under
the following trade names and are headquartered in the following cities: Lord &
Taylor, New York City; Hecht's, Washington, D.C.; Foley's, Houston;
Robinsons-May, Los Angeles; Kaufmann's, Pittsburgh; Filene's, Boston;
Famous-Barr and L.S. Ayres, St. Louis; and Meier & Frank, Portland, Oregon.
On April 4, 1996, the Company announced that it signed a definitive
agreement to acquire 13 Strawbridge & Clothier department stores in the greater
Philadelphia area in a transaction expected to close in July 1996, subject to
customary conditions, including approval by Strawbridge & Clothier
("Strawbridge") shareowners. As required by the purchase agreement with
Strawbridge, the Company will deliver, at the July closing, subject to later
adjustment, 4.2 million shares of Guarantor common stock and will assume
approximately $264 million of debt and certain other liabilities in exchange for
the Strawbridge department store assets. The Company has also agreed to issue
additional Guarantor common stock in exchange for any cash proceeds from
Strawbridge's divestiture of its other assets including its Clover discount
division, remaining after satisfaction of all Strawbridge liabilities and
obligations. The acquisition will be accounted for as a purchase.
On May 4, 1996, the Company distributed to its shareowners all of the
outstanding common stock of its then wholly-owned subsidiary, Payless
ShoeSource, Inc.
The Company was organized under the laws of the State of New York on June
4, 1910. As of May 4, 1996, the Company employed approximately 106,000 people in
30 states, the District of Columbia and eight offices overseas. The Company's
principal office is at 611 Olive Street, St. Louis, Missouri 63101-1799, and the
Company's telephone number is 314-342-6300.
THE GUARANTOR
The Guarantor was incorporated under the laws of the State of Delaware. The
Guarantor became the sole shareowner of the Company pursuant to a share exchange
implemented on May 24, 1996, which resulted in changing the state of
incorporation of the publicly traded company from New York to Delaware. The
Guarantor's principal office is at 611 Olive Street, St. Louis, Missouri
63101-1799, and the Guarantor's telephone number is 314-342-6300.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be added to the
general funds of the Company and will be available to retire a portion of its
outstanding commercial paper and other short-term indebtedness, to finance its
operations, and for general corporate purposes, including investments and
acquisitions. Any specific allocation of the net proceeds of an offering of Debt
Securities to a specific purpose will be described in the applicable Prospectus
Supplement.
3
<PAGE> 9
SUMMARY FINANCIAL INFORMATION--HISTORICAL
The following summary financial information presents the historical
operating results of the Company for the 13 week periods ended May 4, 1996 and
April 29, 1995 and for each of the five fiscal years in the period ended
February 3, 1996 and the historical balance sheet data as of May 4, 1996,
February 3, 1996 and January 28, 1995. The following financial information
should be read in conjunction with the consolidated financial statements and
related notes contained in the Company's Annual Report on Form 10-K for the
fiscal year ended February 3, 1996 and the Company's Quarterly Report on Form
10-Q for the period ended May 4, 1996, which are incorporated herein by
reference. Operating results of periods which exclude the Christmas season may
not be indicative of the operating results that may be expected for the full
fiscal year.
SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
13 WEEKS ENDED
------------------ FISCAL YEAR(1)
(DOLLARS IN MILLIONS, EXCEPT PER MAY 4, APRIL 29, ---------------------------------------------
SHARE) 1996 1995 1995 1994 1993 1992 1991
------ --------- ------- ------- ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................. $2,511 $ 2,218 $10,952 $10,107 $9,562 $9,362 $9,068
Cost and Expenses:
Cost of sales................... 1,755 1,543 7,461 6,879 6,537 6,459 6,275
Selling, general and
administrative expenses....... 528 470 2,081 1,916 1,824 1,859 1,861
Interest expense, net........... 64 58 250 233 244 279 315
------ ------ ------- ------- ------ ------ ------
Total Cost and Expenses....... 2,347 2,071 9,792 9,028 8,605 8,597 8,451
------ ------ ------- ------- ------ ------ ------
Earnings From Continuing Operations
Before Income Taxes................ 164 147 1,160 1,079 957 579(2) 617
Provision for Income Taxes........... 66 60 460 429 379 107(2) 213
------ ------ ------- ------- ------ ------ ------
Net Earnings From Continuing
Operations......................... 98 87 700 650 578 472 404
Net Earnings From Discontinued
Operation.......................... 11 27 55 132 133 131 111
------ ------ ------- ------- ------ ------ ------
Net Earnings Before Extraordinary
Loss............................... 109 114 755 782 711 603 515
Extraordinary Loss Related to Early
Extinguishment of Debt, Net of
Income Taxes....................... -- -- (3) -- -- -- --
------ ------ ------- ------- ------ ------ ------
Net Earnings......................... $ 109 $ 114 $ 752 $ 782 $ 711 $ 603 $ 515
====== ====== ======= ======= ====== ====== ======
Primary Earnings per Share:
Continuing Operations.............. $ 0.37 $ 0.33 $ 2.73 $ 2.53 $ 2.24 $ 1.82 $ 1.56
Discontinued Operation............. 0.05 0.11 0.22 0.53 0.53 0.53 0.45
------ ------ ------- ------- ------ ------ ------
Net Earnings Before Extraordinary
Loss............................ 0.42 0.44 2.95 3.06 2.77 2.35 2.01
Extraordinary Loss................. -- -- (0.01) -- -- -- --
------ ------ ------- ------- ------ ------ ------
Primary Earnings per Share........... $ 0.42 $ 0.44 $ 2.94 $ 3.06 $ 2.77 $ 2.35 $ 2.01
====== ====== ======= ======= ====== ====== ======
Fully Diluted Earnings per Share:
Continuing Operations.............. $ 0.36 $ 0.32 $ 2.61 $ 2.43 $ 2.15 $ 1.76 $ 1.52
Discontinued Operation............. 0.05 0.10 0.21 0.49 0.50 0.50 0.41
------ ------ ------- ------- ------ ------ ------
Net Earnings Before Extraordinary
Loss............................ 0.41 0.42 2.82 2.92 2.65 2.26 1.93
Extraordinary Loss................. -- -- (0.01) -- -- -- --
------ ------ ------- ------- ------ ------ ------
Fully Diluted Earnings per Share..... $ 0.41 $ 0.42 $ 2.81 $ 2.92 $ 2.65 $ 2.26 $ 1.93
====== ====== ======= ======= ====== ====== ======
Ratio of Earnings to Fixed
Charges(3)......................... 2.9 2.8 4.3 4.4 3.9 2.5 2.4
====== ====== ======= ======= ====== ====== ======
</TABLE>
- ------------
(1) Fiscal years 1995, 1994, 1993, 1992 and 1991 ended on February 3, 1996,
January 28, 1995, January 29, 1994, January 30, 1993 and February 1, 1992,
respectively. Fiscal year 1995 included 53 weeks.
(2) Pretax earnings include a net charge of $187 million from special and
nonrecurring items, and income taxes include a tax benefit of $187 million from
special and nonrecurring items.
(3) For purposes of computing the ratios of earnings to fixed charges for the
Company and its subsidiaries, earnings have been calculated by adding to pretax
earnings (a) fixed charges (excluding capitalized interest
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<PAGE> 10
and the pretax equivalent of preferred stock dividend requirements) and (b) the
total of adjustments to recognize only distributed earnings for less than 50%
owned persons accounted for under the equity method and amortization of
previously capitalized interest and then subtracting dividends on ESOP
Preference Shares. Fixed charges have been calculated by adding gross interest
expense (including interest on long-term, short-term and ESOP debt, and
amortization of debt discount and debt issue expense), that portion of rent
expense deemed representative of the interest factor in such rent expense,
preferred stock dividend requirements (pretax equivalent) and the Company's
proportionate share of interest of unconsolidated 50% owned persons and the
Company's proportionate share of interest of a less than 50% owned person for
which a subsidiary of the Company has guaranteed the debt.
CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF AS OF
(IN MILLIONS) FEBRUARY 3, 1996 JANUARY 28, 1995
AS OF ---------------- ----------------
MAY 4, 1996
-----------
(UNAUDITED)
<S> <C> <C> <C>
Net Current Assets of Discontinued Operation.......... $ -- $ 232 $ 243
Total Current Assets.................................. 4,888 5,097 4,718
Total Current Liabilities............................. 1,652 1,602 1,689
Working Capital....................................... 3,236 3,495 3,029
Net Noncurrent Assets of Discontinued Operation....... -- 521 551
Total Assets.......................................... 9,440 10,122 9,237
Long-Term Debt........................................ 3,313 3,333 2,864
Deferred Income Taxes................................. 389 378 340
Other Liabilities..................................... 190 204 192
ESOP Preference Shares................................ 356 366 374
Unearned Compensation................................. (331) (346) (357)
Shareowners' Equity................................... 3,871 4,585 4,135
</TABLE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under one or more indentures, the
terms of which will be substantially identical other than as described herein,
with one or more trustees. The indentures may include an Indenture dated as of
June 17, 1996 (the "Indenture") with The First National Bank of Chicago, as
trustee (the "Trustee"), which provides that the amount of Debt Securities
issuable thereunder is unlimited.
The following description of the terms of the Debt Securities 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 (the "Offered Debt Securities"), the
trustee with respect to the Offered Debt Securities and the extent, if any, to
which such general provisions may apply to the Offered Debt Securities will be
described in the Prospectus Supplement relating to such Offered Debt Securities.
The Indenture contains, among other things, the following provisions. Except as
otherwise specified, all of the provisions described below appear in the
Indenture. The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Indenture, including the definitions
therein of certain terms. Wherever particular sections or defined terms of the
Indenture are referred to it is intended that such sections or defined terms
shall be incorporated herein by reference.
GENERAL
The Indenture provides for the issuance of Debt Securities from time to
time, in one or more series. Reference is made to the Prospectus Supplement
which will describe the following terms of the Offered Debt Securities: (a) the
designation of the Offered Debt Securities; (b) any limit on the aggregate
principal amount of the Offered Debt Securities; (c) the date or dates on which
the Offered Debt Securities will mature; (d) the rate or rates (which may be
fixed or variable) per annum at which the Offered Debt
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<PAGE> 11
Securities will bear interest, if any, and the date from which such interest
will accrue; (e) the dates on which such interest, if any, will be payable and
the Regular Record Dates for such Interest Payment Dates; (f) any mandatory or
optional sinking fund or purchase fund or analogous provisions; (g) if
applicable, the date after which and the price or prices at which the Offered
Debt Securities may, pursuant to any optional or mandatory redemption
provisions, be redeemed at the option of the Company or the Holder thereof and
the other detailed terms and provisions of such optional or mandatory
redemption; (h) the place or places of payment of principal of (and premium, if
any) and interest on the Offered Debt Securities; (i) whether the Offered Debt
Securities are issuable as Bearer Securities and, if so, whether Registered
Securities are issuable; (j) special provisions relating to the issuance of any
Bearer Securities of any series; (k) the currency in Dollars, Foreign Currency
or any composite currency of any series; (l) any deletions from, changes in or
additions to Events of Default or covenants of the Company in the Indenture; (m)
the form of Debt Securities, Guarantee and Coupons, if any; and (n) any other
terms of the Offered Debt Securities. (Section 301)
The Debt Securities will be issuable as Registered Securities, as Bearer
Securities or both. Debt Securities of a series may be issuable in global form,
as described below under "Global Securities." Unless the Prospectus Supplement
relating thereto specifies otherwise, Registered Securities denominated in U.S.
dollars will be issued only in denominations of $1,000 or any integral multiple
thereof, and Bearer Securities denominated in U.S. dollars will be issued only
in denominations of $5,000. The Prospectus Supplement relating to a series of
Debt Securities denominated in a foreign or composite currency will specify the
denomination thereof. (Section 302)
At the option of the Holder and subject to the terms of the Indenture,
Bearer Securities (with all unmatured coupons, except as provided below) of any
series will be exchangeable into an equal aggregate principal amount of
Registered Securities or Bearer Securities of the same series (with the same
interest rate and maturity date) and Registered Securities of any series will be
exchangeable into an equal aggregate principal amount of Registered Securities
of the same series (with the same interest rate and maturity date) of different
authorized denominations. If a Holder surrenders Bearer Securities in exchange
for Registered Securities between a Regular Record Date or, in certain
circumstances, a Special Record Date, and the relevant interest payment date,
such Holder will not be required to surrender the coupon relating to such
interest payment date. Registered Securities may not be exchanged for Bearer
Securities. (Section 305)
Debt Securities may be presented for exchange, and Registered Securities
(other than a Book-Entry Security) may be presented for registration of transfer
(with the form of transfer endorsed thereon duly executed), at the office of any
transfer agent or at the office of the Security Registrar, without service
charge and upon payment of any taxes and other governmental charges as described
in the Indenture. Such registration of transfer or exchange will be effected
upon the transfer agent or the Security Registrar, as the case may be, being
satisfied with the documents of title and identity of the person making the
request. Bearer Securities will be transferable by delivery. (Section 305)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount from the
principal amount thereof. If the Offered Debt Securities are Original Issue
Discount Securities, the special Federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus Supplement
relating thereto. "Original Issue Discount Security" means any security which
provides for an amount less than the principal amount thereof to be due and
payable upon the declaration of acceleration of the maturity thereof upon the
occurrence of an Event of Default and the continuation thereof. (Section 502)
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the Indenture and the Debt Securities would not necessarily afford
Holders of the Debt Securities protection in the event of a highly leveraged or
other transaction involving the Company that may adversely affect Holders.
GUARANTEE
The Debt Securities will be unconditionally guaranteed by the Guarantor as
to the payment of the principal of, sinking fund payment, if any, premium, if
any, interest and any Redemption Price with respect to
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<PAGE> 12
the Debt Securities when and as the same shall become due and payable, whether
at maturity, upon acceleration or redemption or otherwise, pursuant to the terms
of the Debt Securities and of the Indenture. Such a Guarantee will be endorsed
on each Debt Security. (Section 1201) The Company, the Guarantor and the Trustee
may, without the consent of any Holders, enter into a supplemental indenture to,
among other things, add any additional Guarantor with respect to all or any
series of Debt Securities. (Section 801)
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of (and premium, if any) and interest, if any, on Registered
Securities will be made in the designated currency 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 any interest may be made (i) by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register or (ii) by wire transfer to an account
maintained by the Person entitled thereto as specified in the Security Register.
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 interest. (Sections 307 and 902)
Payment of principal of and premium, if any, and interest on Bearer
Securities will be payable in the currency and in the manner designated in the
Prospectus Supplement, subject to any applicable laws and regulations, at such
paying agencies outside the United States as the Company may appoint from time
to time. The paying agents outside the United States initially appointed by the
Company for a series of Debt Securities will be named in the Prospectus
Supplement. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agents, except that, if Securities of a
series are issuable as Registered Securities, the Company will be required to
maintain at least one paying agent in each Place of Payment for such series and,
if Securities of a series are issuable as Bearer Securities, the Company will be
required to maintain a Paying Agent in a Place of Payment outside the United
States where Debt Securities of such series and any coupons appertaining thereto
may be presented and surrendered for payment; provided that if the Securities of
such series are listed on The International Stock Exchange of the United Kingdom
and the Republic of Ireland Limited or the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company will maintain a Paying Agent in London or
Luxembourg or any other required city located outside the United States, as the
case may be, for the Securities of such series. (Section 902)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form ("Global Securities") that will be deposited with, or on behalf of, a
Depositary identified in the applicable Prospectus Supplement relating to such
series. Global Securities, if any, issued in the United States are expected to
be deposited with The Depository Trust Company, as Depositary. Global Securities
may be issued in fully registered form and may be issued in either temporary or
permanent form. Unless and until a Global Security is exchanged in whole or in
part for the individual Debt Securities represented thereby, it may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such Depositary
or another nominee of such Depositary or by such Depositary or any nominee of
such Depositary to a successor Depositary or any nominee of such successor.
(Section 203)
The specific terms of the depositary arrangement with respect to particular
Debt Securities will be described in the Prospectus Supplement relating to such
Debt Securities. The Company expects that unless otherwise indicated in the
applicable Prospectus Supplement, the following provisions will apply to
depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depositary ("Participants"). Such accounts will be designated
by the underwriters, dealers or agents with
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<PAGE> 13
respect to such Debt Securities or by the Company if such Debt Securities are
offered directly by the Company. Ownership of beneficial interests in such
Global Security will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such Global
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the Depositary for such Global Security or
its nominee (with respect to beneficial interests of Participants) and records
of Participants (with respect to beneficial interests of persons who hold
through Participants). The laws of some states require that certain purchasers
of securities take physical delivery of such securities in definitive form. Such
limits and laws may impair the ability to own, pledge or transfer beneficial
interests in a Global Security.
So long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes. Except as
described below or in the applicable Prospectus Supplement, owners of beneficial
interests in a Global Security will not be entitled to have any of the
individual Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of any
such Debt Securities in definitive form and will not be considered the Owners or
Holders thereof.
Payment with respect to Debt Securities represented by a Global Security
registered in the name of a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Security. None of the Company, the Guarantor, any Trustee, any Paying
Agent, the Security Registrar or any transfer agent for Debt Securities
represented by a Global Security will have any responsibility or liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Security for such Debt Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
OPTIONAL REDEMPTION
Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities for any optional redemption provisions relating to such
Offered Debt Securities.
SINKING FUND
Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities for any sinking fund provisions relating to such Offered
Debt Securities.
RESTRICTED AND UNRESTRICTED SUBSIDIARIES; CERTAIN DEFINITIONS
The restrictive provisions of the Indenture applicable to the Company, the
Guarantor and the Restricted Subsidiaries do not apply to Unrestricted
Subsidiaries. The assets and indebtedness of Unrestricted Subsidiaries are not
consolidated with those of the Company and its Restricted Subsidiaries in
calculating Consolidated Net Tangible Assets, Funded Debt or Secured
Indebtedness under the Indenture. Investments by the Company or by its
Restricted Subsidiaries in Unrestricted Subsidiaries are excluded in computing
Consolidated Net Tangible Assets.
"Subsidiary" means a corporation more than 50% of the outstanding Voting
Stock of which is owned, directly or indirectly, by the Company, by one or more
other Subsidiaries or by the Company and one or more other Subsidiaries.
"Unrestricted Subsidiaries" are those Subsidiaries defined as such by the
Indenture, i.e., certain finance Subsidiaries acquired or formed subsequent to
the date of the Indenture, certain foreign Subsidiaries, certain real estate
Subsidiaries and those Subsidiaries which are designated as Unrestricted
Subsidiaries by the Board of Directors from time to time pursuant to the
Indenture (in each case, unless and until designated as Restricted Subsidiaries
by the Board of Directors pursuant to the Indenture). "Restricted Subsidiaries"
are all Subsidiaries other than Unrestricted Subsidiaries. A "Wholly-owned
Restricted Subsidiary" is a Restricted Subsidiary all of the outstanding Funded
Debt and capital stock of which (except directors' qualifying shares) is owned
by the Company and its other Wholly-owned Restricted Subsidiaries. (Section 101)
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<PAGE> 14
"Consolidated Net Tangible Assets" means the total amount of assets of the
Company and its Restricted Subsidiaries (less applicable reserves and other
properly deductible items and after excluding Investments made in Unrestricted
Subsidiaries or in corporations while they are Unrestricted Subsidiaries but
which are not Subsidiaries at the time of computation) after deducting (i) all
liabilities and liability items (including amounts in respect of capitalized
leases), except Funded Debt, capital stock and surplus, surplus reserves,
deferred income taxes and deferred investment tax credits, and (ii) goodwill,
trade names, trademarks, patents, unamortized debt discount and expense and
other like intangibles. (Section 101)
"Funded Debt" includes indebtedness maturing more than 12 months after the
time of computation of the amount thereof or which is extendible or renewable at
the option of the obligor on such indebtedness to a time more than 12 months
after the time of the computation of the amount thereof, guarantees of such
indebtedness or of such obligations of others or of dividends (except guarantees
in connection with the sale or discount of accounts receivable, trade
acceptances and other paper arising in the ordinary course of business and
except guarantees of such indebtedness or such obligations which are otherwise
included in the definition of Funded Debt), and in the case of any Subsidiary
all Preferred Stock of such Subsidiary. Funded Debt does not include any
obligations in respect of lease rentals whether or not such obligations would be
included as liabilities on a consolidated balance sheet of the Company and its
Restricted Subsidiaries. The Company or any Restricted Subsidiary shall be
deemed to have assumed Funded Debt secured by any Mortgage upon any of its
properties or assets whether or not it has actually done so. (Section 101)
"Secured Indebtedness" means any Indebtedness which is secured by a
Mortgage upon any assets of the Company or a Restricted Subsidiary, including in
such assets, without limitation, shares of stock or indebtedness of any
Subsidiary owned by the Company or a Restricted Subsidiary, provided that
Indebtedness secured by a Mortgage incurred or assumed in connection with an
issuance of revenue bonds the interest on which is exempt from Federal income
tax pursuant to Section 103 of the Internal Revenue Code of 1986, as amended,
shall not be deemed Secured Indebtedness. (Section 101)
LIMITATION ON LIENS
Unless the aggregate principal amount of all outstanding Secured
Indebtedness of the Company and its Restricted Subsidiaries, the unsecured
Funded Debt of the Restricted Subsidiaries (exclusive of any unsecured Funded
Debt or Secured Indebtedness owed to the Company or a Wholly-owned Restricted
Subsidiary), and the Indebtedness to be secured does not exceed 15% of
Consolidated Net Tangible Assets, the Company may not, and may not permit any
Restricted Subsidiary to, mortgage, pledge or create (by merger or otherwise)
any lien, security interest, conditional sale or other title retention agreement
or other similar encumbrance on any of the assets of the Company or any of its
Restricted Subsidiaries (except to secure Indebtedness to the Company or any of
its Wholly-owned Restricted Subsidiaries) without making effective provision to
secure the Debt Securities at least equally and ratably with such Indebtedness,
so long as such Indebtedness is so secured. The foregoing provision, however,
does not prevent certain purchase money mortgage liens or the refunding or
extension thereof, certain non-recourse liens on real property to reimburse the
Company or any of its Restricted Subsidiaries for the cost or acquisition of or
improvements to such real property, existing Mortgages, tax liens and other
liens incurred in the ordinary course of business which do not materially limit
the use of the property subject thereto in the operation of the business of the
Company or of any Restricted Subsidiary or impair the value of such property for
the purposes of such business, Mortgages on assets of a Restricted Subsidiary
existing on the date it became a Subsidiary, or any refundings or extensions
thereof not exceeding the principal amount of the Indebtedness so refunded, or
extended, and applying only to the same property or assets. (Section 905)
RESTRICTIONS ON MERGERS
Neither the Company nor the Guarantor may consolidate or merge with or into
any other corporation or sell, lease or transfer all or substantially all of its
properties and assets to another corporation, unless (i) the successor
corporation is a corporation organized and existing under the laws of the United
States of America or a state thereof or the District of Columbia and assumes
payment of the principal of (and premium, if any) and interest, if any, on the
Debt Securities and the performance and observance of the Indenture and (ii)
such
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<PAGE> 15
successor corporation shall not, immediately after such merger or consolidation,
or such sale or conveyance, be in default in the performance of any covenant or
condition of the Indenture. (Section 701)
WAIVER, MODIFICATION AND AMENDMENT
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any particular series may waive certain past defaults. (Section
511) The Holders of a majority in aggregate principal amount of the Outstanding
Debt Securities (voting as a class and not by individual series) or, in case
less than all of the several series of Outstanding Debt Securities are affected,
the Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of each series affected, may waive the Company's and the Guarantor's
compliance with certain restrictive provisions. (Section 911) In order to
determine the aggregate principal amount of any Outstanding Debt Securities not
payable in U.S. dollars, the principal amount of the Debt Securities shall be
deemed to be that amount of Dollars that could be obtained for such principal
amount on the basis of the spot rate of exchange for such Foreign Currency or
such currency unit as determined by the Company or by an authorized exchange
rate agent. (Section 101)
Modification and amendment of the Indenture may be made by the Company, the
Guarantor and the Trustee with the consent (i) of the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities (voting as a class
and not by individual series), or (ii) in case less than all of the several
series of Debt Securities then Outstanding are affected by the modification or
amendment, of the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of each series so affected, provided that no such
modification or amendment may, without the consent of the Holder of each Debt
Security affected thereby, (a) change the Stated Maturity of the principal of,
or any installment of principal of or interest on, any Debt Security; (b) reduce
the principal amount of, or the rate of interest, if any, on, or any premium
payable upon the redemption of any Debt Security, or reduce the amount of the
principal of a Discounted Debt Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof; (c) change the place or
currency of payment of principal or premium or interest on any Debt Security;
(d) impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security; or (e) reduce the percentages of Holders of
Debt Securities or of Holders of Debt Securities of any particular series
specified in this or the preceding paragraph. Any modification or amendment
which changes or eliminates any covenant or other provision of the Indenture
which has expressly been included solely for the benefit of one or more
particular series of Debt Securities, or which modifies the rights of the
Holders of Debt Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under the Indenture of the
Holders of Debt Securities of any other series. (Section 802)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to any
particular series of Debt Securities: (a) failure to pay the principal of (or
premium, if any, on) any Debt Security of that series, or to make any sinking
fund payment on any Debt Security of that series, when due; (b) failure to pay
any interest installment on any Debt Security of that series when due, continued
for 30 days; (c) failure to perform any other covenant of the Company or the
Guarantor (in each case other than a covenant included in the Indenture solely
for the benefit of series of Debt Securities other than that series), continued
for 60 days after written notice; (d) certain events of bankruptcy, insolvency,
or reorganization; and (e) any other defaults provided with respect to Debt
Securities of that series. (Section 501)
If an Event of Default with respect to Debt Securities of any series at the
time Outstanding shall occur and be continuing, then and in every such case
(unless the principal of all the Debt Securities of that series shall have
already become due and payable) the Trustee or the Holders of at least 25% in
principal amount of the Outstanding Debt Securities of that series may declare
to be due and payable immediately by a notice in writing to the Company (and to
the Trustee if given by Holders) the entire principal amount, or, in the case of
Original Issue Discount Securities, such portion of the principal amount as may
be provided for in such Debt Securities, of all the Debt Securities of that
series. At any time after such declaration of acceleration has been made, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the Holders of a majority in principal amount of the Outstanding
Debt Securities of that series, by written notice
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<PAGE> 16
to the Company and the Trustee, may, in certain circumstances, rescind and annul
such declaration. (Section 502)
No Holder of any Debt Securities of any particular series shall have any
right to institute any proceeding with respect to the Indenture or for any
remedy thereunder, unless such Holder previously shall have given to the Trustee
written notice of a default with respect to that series and unless also the
Holders of at least 25% of the principal amount of Outstanding Debt Securities
of that series shall have made written request upon the Trustee, and have
offered reasonable indemnity, to institute such proceeding as trustee, and the
Trustee shall not have received direction inconsistent with such request in
writing by the Holders of a majority in principal amount of Outstanding Debt
Securities of that series and shall have neglected or refused to institute such
proceeding within 60 days. However, the right of any Holder of any Debt Security
to enforce the payment of principal and interest due on such Debt Security on or
after the dates expressed in such Debt Security, may not be impaired or
affected. (Sections 506 and 509)
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides, if such provision is made applicable to the Debt
Securities of any series pursuant to Section 301 of the Indenture, that the
Company may elect either (A) to defease and be discharged from any and all
obligations with respect to such Debt Securities (except as otherwise provided
in the applicable Indenture) ("Defeasance") or (B) to be released from its
obligations with respect to such Securities described above under "Limitations
on Liens," and "Restrictions on Mergers" ("Covenant Defeasance"), upon the
irrevocable deposit with the Trustee, in trust for such purpose, of money,
and/or U.S. Government Obligations or Foreign Government Securities (each as
defined) which through the payment of principal and interest in accordance with
their terms will provide money, in an amount sufficient to pay the principal of
(and premium, if any) and interest on such Debt Securities, and any mandatory
sinking fund or analogous payments thereon, on the scheduled due dates therefor.
The Prospectus Supplement may further describe the provisions, if any,
permitting such Defeasance or Covenant Defeasance with respect to the Debt
Securities of a particular series and the effect of such Defeasance or Covenant
Defeasance under Federal tax law. (Section 403)
REGARDING THE TRUSTEE
The Company engages in banking transactions in the ordinary course of
business with The First National Bank of Chicago.
PLAN OF DISTRIBUTION
General. The Company may sell Debt Securities directly or to or through one
or more underwriters, agents or dealers who will be named in the Prospectus
Supplement or an underwriting syndicate, represented by one or more managing
underwriters, that will be named in the Prospectus Supplement relating to an
issue of Offered Debt Securities.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities to underwriters,
underwriters may receive compensation in the form of discounts, concessions or
commissions from the Company or from purchasers of Debt Securities for whom they
may act as agents. Underwriters and dealers that participate in the distribution
of Debt Securities may be deemed to be underwriters, and any discounts or
commissions received by them and any profit on the resale of Debt Securities by
them may be deemed to be underwriting discounts and commissions, under the
Securities Act of 1933, as amended (the "Act"). Any such underwriter will be
identified, and any such compensation will be described, in the Prospectus
Supplement.
Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Debt Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in
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the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
As one of the means of direct issuance of the Debt Securities, the Company
may utilize the services of CapitaLink Bond Auctions, Inc. to conduct an
electronic "dutch auction" of the Debt Securities among potential purchasers who
are eligible to participate in the auction of such Debt Securities, if so
described in the Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters,
agents and dealers who participate in the distribution of Debt Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Act.
The Debt Securities are a new issue of securities with no established
trading market. In the event that Debt Securities of a series offered hereunder
are not listed on a national securities exchange, certain broker-dealers may
make a market in the Debt Securities, but will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given that any broker-dealer will make a market in the Debt Securities of any
series or as to the liquidity of the trading market for the Debt Securities.
EXPERTS
The consolidated financial statements and schedules of the Company included
or incorporated by reference in its Annual Report on Form 10-K for the fiscal
year ended February 3, 1996, incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
VALIDITY OF THE OFFERED DEBT SECURITIES
The validity of the Offered Debt Securities and the Guarantee will be
passed upon for the Company and the Guarantor, respectively, by Skadden, Arps,
Slate, Meagher & Flom, New York, New York, and for the underwriters or agents by
counsel to be identified in the Prospectus Supplement. A member of Skadden,
Arps, Slate, Meagher & Flom beneficially owns 4,000 shares of the Guarantor's
common stock, $.50 par value per share (together with the associated preferred
stock purchase rights, the "Common Stock"). Mrs. Helene Kaplan, Esq., of counsel
to Skadden, Arps, Slate, Meagher & Flom, is a member of the Company's and the
Guarantor's boards of directors and owns 8,910 shares of Common Stock.
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