<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST , 1996
REGISTRATION STATEMENT NO. 33-
POST-EFFECTIVE AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT REFERRED TO BELOW.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
AND
POST-EFFECTIVE AMENDMENT NO. 1
UNDER
THE SECURITIES ACT OF 1933
---------------
MCDONNELL DOUGLAS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 43-0400674
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
P.O. BOX 516
ST. LOUIS, MISSOURI 63166-0516
(314) 232-0232
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
F. MARK KUHLMANN, ESQ.
MCDONNELL DOUGLAS CORPORATION
P.O. BOX 516
MAILCODE 1001240
ST. LOUIS, MISSOURI 63166-0516
(314) 233-2910
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
NORMAN D. SLONAKER, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time as determined by market conditions, after the effective date of this
Registration Statement.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-offective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number if the earlier effective registration statement
for the same offerings. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[X]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES BEING TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
Senior Debt Securities
and warrants to
purchase Senior
Debt Securities....... $1,000,000,000(2) 100% $1,000,000,000 $344,828
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Any offering of Debt Securities denominated other than in U.S. dollars
will be treated as the equivalent in U.S. dollars based on the exchange rate
applicable to the purchase of such Debt Securities from the Registrant. The
amount registered shall be increased if any Debt Securities are issued at an
original issue discount by an amount such that the net proceeds to be received
by the Registrant shall be equal to the above amount to be registered.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
INCLUDED IN THE REGISTRATION STATEMENT IS A COMBINED PROSPECTUS AND ALSO
RELATES TO REGISTRATION STATEMENT NO. 33-36180 PREVIOUSLY FILED BY THE
REGISTRANT ON FORM S-3 AND DECLARED EFFECTIVE ON MARCH 17, 1992. THIS
REGISTRATION STATEMENT, WHICH IS A NEW REGISTRATION STATEMENT, ALSO
CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 33-
36180, AND SUCH POST-EFFECTIVE AMENDMENT NO. 1 SHALL HEREAFTER BECOME
EFFECTIVE CONCURRENTLY WITH THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT
AND IN ACCORDANCE WITH SECTION 8(c) OF THE SECURITIES ACT OF 1933. THIS
REGISTRATION STATEMENT AND THE REGISTRATION STATEMENT AMENDED HEREBY ARE
COLLECTIVELY REFERRED TO HEREIN AS THE "REGISTRATION STATEMENT."
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS 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 STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUPPLEMENT
SUBJECT TO COMPLETION
(TO PROSPECTUS DATED AUGUST , 1996) DATED AUGUST , 1996
MCDONNELL DOUGLAS CORPORATION
MEDIUM-TERM NOTES
DUE FROM AND EXCEEDING NINE MONTHS FROM DATE OF ISSUE
----------
McDonnell Douglas Corporation (the "Company") may offer from time to time up
to $ aggregate initial offering price, or the equivalent thereof in one
or more foreign or composite currencies, of its Medium-Term Notes (the
"Notes"). Each Note will mature on a Business Day from and exceeding nine
months from the date of issue, as selected by the purchaser and agreed to by
the Company, and may be subject to redemption by the Company or repayment at
the option of the Holder thereof, in each case, in whole or in part, prior to
its Stated Maturity, as set forth therein and specified in a pricing supplement
hereto (each, a "Pricing Supplement"). As of the date of this Prospectus
Supplement, $ of the Notes are outstanding.
The interest rate, if any, or the formula for the determination of any such
interest rate, applicable to each Note and other variable terms of the Notes as
described herein will be established by the Company at the date of issue of
such Note and will be set forth therein and specified in a Pricing Supplement.
Interest rates, interest rate formulae and such other variable terms are
subject to change by the Company, but no change will affect any Note already
issued or as to which an offer to purchase has been accepted by the Company.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), as set forth in the applicable
Pricing Supplement, in denominations of $1,000 and integral multiples thereof,
unless otherwise specified in the applicable Pricing Supplement. Each Book-
Entry Note will be represented by a global security deposited with or on behalf
of The Depository Trust Company (or such other depository as is identified in
an applicable Pricing Supplement) (the "Depository") and registered in the name
of the Depository's nominee. Interests in Book-Entry Notes will be shown on,
and transfers thereof will be effected only through, records maintained by the
Depository (with respect to its participants) and the Depository's participants
(with respect to beneficial owners).
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will bear interest at fixed rates (the "Fixed Rate Notes") or at floating rates
(the "Floating Rate Notes"). The applicable Pricing Supplement will specify
whether a Floating Rate Note is a Regular Floating Rate Note, a Floating
Rate/Fixed Rate Note or Inverse Floating Rate Note or whether its rate of
interest is determined by reference to one or more of the CD Rate, the
Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate or the
Treasury Rate (each, an "Interest Rate Basis"), or any other interest rate
formula, as adjusted by any Spread and/or Spread Multiplier and will specify
such other terms applicable to such Note. See "Description of Notes." Interest
on Fixed Rate Notes will accrue from their date of issue and, unless otherwise
specified in the applicable Pricing Supplement, will be payable semiannually in
arrears on January 15 and July 15 of each year and at Maturity. The rate of
interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually, as set forth therein and specified in the
applicable Pricing Supplement, and interest on each Floating Rate Note will
accrue from its date of issue and will be payable in arrears monthly,
quarterly, semiannually or annually, as specified in the applicable Pricing
Supplement, and at Maturity. Notes may also be issued with original issue
discount, and such Notes may or may not currently pay interest. Notes may also
be issued with the principal amount payable at Maturity and/or interest to be
paid thereon to be determined with reference to the price or prices of
specified commodities or stocks, the exchange rate of one or more specified
currencies (including a composite currency such as the European Currency Unit)
relative to an indexed currency, or such other price or exchange rate as may be
specified in such Note ("Indexed Notes"), as set forth in an Indexed Note
Supplement.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PRO-
SPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
AGENTS' DISCOUNTS
PRICE TO AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2)(3) THE COMPANY(2)(4)
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<S> <C> <C> <C>
Per Note......... 100% .125%-.75% 99.875%-99.25%
- ------------------------------------------------------------------------------
Total............ $ $ -$ $ -$
</TABLE>
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(1) Unless otherwise specified in an applicable Pricing Supplement, the Notes
will be issued at 100% of their principal amount.
(2) The Company will pay a commission ranging from .125% to .75% (or, with
respect to Notes for which the Stated Maturity is in excess of 30 years,
such commission as shall be agreed upon by the Company and the related
Agent at the time of sale) of the principal amount of a Note, depending
upon its Stated Maturity, to Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Chase Securities Inc., J.P. Morgan Securities
Inc. or Salomon Brothers Inc (each, an "Agent" and collectively, the
"Agents") and may sell Notes to one or more Agents, as principal, for
resale to investors and other purchasers at varying prices related to
prevailing market prices at the time of resale, as determined by such Agent
or, if so agreed, at a fixed public offering price. Unless otherwise
specified in the applicable Pricing Supplement, any Note sold to an Agent
as principal will be purchased by such Agent at a price equal to 100% of
the principal amount thereof less a percentage equal to the commission
applicable to an agency sale of a Note of identical maturity.
(3) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution."
(4) Before deducting expenses payable by the Company.
----------
The Notes are being offered on a continuing basis by the Company through the
Agents, who have agreed to use their reasonable efforts to solicit offers to
purchase the Notes. The Company may also sell Notes to an Agent, as principal,
for resale to investors and other purchasers and has reserved the right to sell
Notes directly to investors on its own behalf. Unless otherwise specified in an
applicable Pricing Supplement, the Notes will not be listed on any securities
exchange and there can be no assurance that the Notes offered by this
Prospectus Supplement will be sold or that there will be a secondary market for
the Notes. The Company reserves the right to cancel or modify the offer made
hereby without notice. The Company or an Agent, if it solicits an offer, may
reject any offer to purchase Notes in whole or in part. See "Plan of
Distribution."
----------
MERRILL LYNCH & CO.
CHASE SECURITIES, INC.
J.P. MORGAN & CO.
SALOMON BROTHERS INC
----------
The date of this Prospectus Supplement is August , 1996.
<PAGE>
DESCRIPTION OF NOTES
The Notes will be issued as a series of debt securities under an Indenture
dated as of September 1, 1985, as amended (the "Indenture"), between the
Company and The Bank of New York, as trustee (the "Trustee"), more fully
described in the attached Prospectus. The following summary of certain
provisions of the Notes and of the Indenture does not purport to be complete
and is qualified in its entirety by reference to the Indenture, a copy of which
has been filed as an exhibit to the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus are a part. Capitalized
terms used but not defined herein have the meanings given to them in the
Indenture or the Notes, as the case may be. The term "Debt Securities", as used
under this caption, refers to all securities issued and issuable from time to
time under the Indenture and includes the Notes as a separate series of such
Debt Securities.
THE FOLLOWING DESCRIPTION OF NOTES WILL APPLY UNLESS OTHERWISE SPECIFIED IN
AN APPLICABLE PRICING SUPPLEMENT.
GENERAL
All Debt Securities, including the Notes, issued and to be issued under the
Indenture will be unsecured obligations of the Company and will rank on a
parity with all other unsecured and unsubordinated indebtedness of the Company
from time to time outstanding. The Indenture does not limit the aggregate
principal amount of Debt Securities which may be issued thereunder or of any
particular series of such Debt Securities and Debt Securities may be issued
thereunder from time to time as a single series or in two or more separate
series up to the aggregate principal amount from time to time authorized by the
Company for each series. The Company may, from time to time, without the
consent of the Holders of the Notes, provide for the issuance of Notes or other
Debt Securities under the Indenture in addition to the $ aggregate
initial offering price of Notes authorized as of the date of this Prospectus
Supplement.
The Notes are currently limited to $ aggregate initial offering
price. The Notes will be offered on a continuing basis and will mature on a
Business Day (as defined herein) from and exceeding nine months from the date
of issue, as selected by the purchaser and agreed to by the Company. Unless
otherwise specified in an applicable Pricing Supplement, interest-bearing Notes
will either be Fixed Rate Notes or Floating Rate Notes as specified in the
applicable Pricing Supplement. Notes may be issued at significant discounts
from their principal amount payable at Stated Maturity (or on any prior date on
which the principal or an installment of principal of a Note becomes due and
payable, whether by the declaration of acceleration, call for redemption at the
option of the Company, repayment at the option of the Holder or otherwise)(each
such date, a "Maturity"), and some Notes may not bear stated interest.
Unless otherwise indicated in a Note or in a foreign currency supplement
hereto (a "Multiple-Currency Supplement") or Indexed Note (as defined below)
supplement hereto (an "Indexed Note Supplement"), the Notes will be denominated
in United States dollars and payments of principal of, and premium, if any, and
interest on, the Notes will be made in United States dollars. If any of the
Notes are to be denominated other than in United States dollars or if the
principal of, and interest on, the Notes, and any premium provided for in any
Note is to be payable in or by reference to a currency (or in composite
currency units or in amounts determined by reference to one or more currencies)
other than in which such Note is denominated, provisions with respect thereto
will be set forth in such Note and in the applicable Multi-Currency Supplement
or Indexed Note Supplement.
Interest rates, interest rate formulae and other variable terms of the Notes
are subject to change by the Company from time to time, but no such change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Company.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or definitive form (a "Definitive Note"), in denominations of $1,000 and
integral multiples thereof, unless otherwise specified in the applicable
Pricing Supplement. Book-Entry Notes may be transferred or exchanged only
through a participating member of The Depository Trust Company (or such other
depository as is identified in an applicable Pricing Supplement) (the
"Depository"). See "Book-Entry Notes". Registration of transfer of
S-2
<PAGE>
Definitive Notes will be made at the office of the Trustee at 101 Barclay
Street, New York, New York 10286 (the "Corporate Trust Office"). No service
charge will be made by the Company, the Trustee or the Security Registrar for
any such registration of transfer or exchange of Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (other than exchanges pursuant to the
Indenture, not involving any transfer).
Payments of principal of, and premium and interest, if any, on Book-Entry
Notes will be made by the Company through the Trustee to the Depository. See
"Book-Entry Notes". In the case of Definitive Notes, payment of principal or
premium, if any, at the Maturity of each Definitive Note will be made in
immediately available funds upon presentation of the Definitive Note at the
Corporate Trust Office of the Trustee, or at such other place as the Company
may designate. Payment of interest due at Maturity will be made to the person
to whom payment of the principal of the Definitive Note shall be made. Payment
of interest due on Definitive Notes other than at Maturity will be made at the
Corporate Trust Office of the Trustee or, at the option of the Company, may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register. Notwithstanding the foregoing, a
Holder of $10,000,000 or more in aggregate principal amount of Definitive Notes
having the same Interest Payment Dates will, at the option of the Company, be
entitled to receive interest payments (other than at Maturity) by wire transfer
of immediately available funds if appropriate wire transfer instructions have
been received in writing by the Trustee not less than 15 days prior to the
applicable Interest Payment Date.
REDEMPTION AT THE OPTION OF THE COMPANY
The Notes will not have a sinking fund but will be redeemable at the option
of the Company prior to their stated maturity only if an Initial Redemption
Date is specified therein and in the applicable Pricing Supplement. If so
indicated in the applicable Pricing Supplement, Notes will be subject to
redemption at the option of the Company on any date on and after the applicable
Initial Redemption Date specified in such Pricing Supplement. On and after the
Initial Redemption Date, if any, the related Note may be redeemed at any time
in whole or from time to time in part in increments of $1,000 at the option of
the Company at the applicable Redemption Price (as defined below) together with
interest thereon payable to the Redemption Date, on notice given not more than
60 nor less than 30 days prior to the Redemption Date. "Redemption Price" with
respect to a Note will initially mean a percentage, the Initial Redemption
Percentage, of the principal amount of such Note to be redeemed specified in
the applicable Pricing Supplement and shall decline at each anniversary of the
Initial Redemption Date by a percentage, the Annual Redemption Percentage
Reduction, if any, specified in the applicable Pricing Supplement, of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
REPAYMENT AT THE OPTION OF THE HOLDER
If so indicated in an applicable Pricing Supplement, Notes will be repayable
by the Company in whole or in part at the option of the Holders thereof on
their respective Optional Repayment Dates specified in such Pricing Supplement.
If no Optional Repayment Date is indicated with respect to a Note, such Note
will not be repayable at the option of the Holder prior to Maturity. Any
repayment in part will be in increments of $1,000 provided that any remaining
principal amount of such Note will be an authorized denomination of such Note.
The repurchase price for any Note so repurchased will be 100% of the principal
amount to be repaid, together with interest thereon payable to the date of
repayment.
While the Notes are represented by Global Securities held by or on behalf of
the Depository, and registered in the name of the Depository's nominee, the
option for repayment may be exercised by the applicable Participant (as defined
below under "Description of Notes--Book-Entry Notes") on behalf of the
beneficial owners of such Notes by delivering a written notice to the Trustee
at the Corporate Trust Office, not more than 60 nor less than 30 days prior to
the Optional Repayment Date. Notices of elections from Participants on behalf
of beneficial owners of the Notes to exercise their option to have the Notes
repaid
S-3
<PAGE>
must be received by the Trustee by 5:00 p.m., New York City time, on the last
day for giving such notice. In order to ensure that a notice is received by the
Trustee on a particular day, the beneficial owner of Notes must so direct the
applicable Participant before such Participant's cut-off time for accepting
instructions for that day. Different firms may have different cut-off times for
accepting instructions from their customers. Accordingly, beneficial owners of
Notes should consult the Participants through which they own their interest in
the Notes for the cut-off times for such Participants. All notices shall be
executed by a duly authorized officer of such Participant (with signature
guaranteed) and shall be irrevocable. In addition, such beneficial owners of
Notes shall effect delivery of such Notes at the time such notices of election
are given to the Depository by causing the Participant to transfer such
beneficial owner's interest in the Notes, on the Depository's records, to the
Trustee. Conveyance of notices and other communications by the Depository to
Participants, by Participants to indirect Participants and by Participants and
indirect Participants to beneficial owners of the Notes will be governed by
agreements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
INTEREST
General
Unless otherwise specified in an applicable Pricing Supplement, each Note
will bear interest from the date of issue at the rate per annum or, in the case
of a Floating Rate Note, pursuant to the interest rate formula stated therein
and in the applicable Pricing Supplement, until the principal thereof is paid
or made available for payment. Interest will be payable in arrears on each date
specified in the applicable Pricing Supplement on which an installment of
interest is due and payable (an "Interest Payment Date") and at Maturity.
Unless otherwise specified in an applicable Pricing Supplement, the first
payment of interest on any Note originally issued between a Regular Record Date
and the related Interest Payment Date will be made on the Interest Payment Date
immediately following the next succeeding Regular Record Date to the registered
Holder on such next succeeding Regular Record Date. Unless otherwise specified
in an applicable Pricing Supplement, a "Regular Record Date" for Floating Rate
Notes shall be the fifteenth day (whether or not a Business Day, as defined
below) immediately preceding the related Interest Payment Date and for Fixed
Rate Notes the January 1 or July 1 next preceding the Interest Payment Date.
Fixed Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, each Fixed
Rate Note will bear interest from, and including, the date of issue, or the
most recent date to which interest has been paid or duly provided for, to, but
excluding, the Interest Payment Date or Maturity, as the case may be, at the
rate per annum stated on the face thereof until the principal amount thereof is
paid or made available for payment. Unless otherwise specified in an applicable
Pricing Supplement, interest on Fixed Rate Notes will be computed on the basis
of a 360-day year of twelve 30-day months.
Interest on Fixed Rate Notes will be payable semiannually on January 15 and
July 15 of each year, unless otherwise specified in an applicable Pricing
Supplement, and at Maturity. If any Interest Payment Date or the Maturity of a
Fixed Rate Note falls on a day that is not a Business Day, the related payment
of principal, premium, if any, or interest will be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or Maturity, as the case may be.
Floating Rate Notes
Unless otherwise specified in an applicable Pricing Supplement, Floating Rate
Notes will be issued as described below. Each applicable Pricing Supplement
will specify certain terms with respect to which such Floating Rate Note is
being delivered, including: whether such Floating Rate Note is a "Regular
Floating Rate Note" (as defined below), an "Inverse Floating Rate Note" (as
defined below) or a "Floating Rate/Fixed Rate Note" (as defined below); the
Interest Rate Basis or Bases, Initial Interest Rate, Interest Reset Dates,
S-4
<PAGE>
Interest Reset Period, Regular Record Dates, Interest Payment Dates, Index
Maturity, maximum interest rate and minimum interest rate, if any, and the
"Spread" and/or "Spread Multiplier" (both as defined below), if any, as
described below.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a Floating Rate/Fixed
Rate Note, an Inverse Floating Rate Note or as having an Addendum attached,
such Floating Rate Note will be designated a "Regular Floating Rate Note"
and, except as described below or in an applicable Pricing Supplement, will
bear interest at the rate determined by reference to the applicable
Interest Rate Basis (i) plus or minus the applicable Spread, if any, and/or
(ii) multiplied by the applicable Spread Multiplier, if any. Commencing on
the initial Interest Reset Date, the rate at which interest on such Regular
Floating Rate Note shall be payable shall be reset as of each Interest
Reset Date; provided, however, that the interest rate in effect for the
period from the Original Issue Date to the initial Interest Reset Date will
be the Initial Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis (i) plus or
minus the applicable Spread, if any, and/or (ii) multiplied by the
applicable Spread Multiplier, if any. Commencing on the initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (i) the interest rate in effect for the period from
the Original Issue Date to the initial Interest Reset Date will be the
Initial Interest Rate; and (ii) the interest rate in effect commencing on,
and including, the Fixed Rate Commencement Date to Maturity shall be the
Fixed Interest Rate, if such rate is specified in the applicable Pricing
Supplement, or if no such Fixed Interest Rate is so specified, the interest
rate in effect thereon on the day immediately preceding the Fixed Rate
Commencement Date.
(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in an applicable Pricing
Supplement, such Floating Rate Note will bear interest equal to the Fixed
Interest Rate specified in the related Pricing Supplement minus the rate
determined by reference to the Interest Rate Basis (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
Multiplier, if any; provided, however, that the interest rate thereon will
not be less than zero. Commencing on the initial Interest Reset Date, the
rate at which interest on such Inverse Floating Rate Note is payable shall
be reset as of each Interest Reset Date; provided, however, that the
interest rate in effect for the period from the Original Issue Date to the
initial Interest Reset Date will be the Initial Interest Rate.
Notwithstanding the foregoing, if such Floating Rate Note is designated as
having an Addendum attached as specified on the face thereof, such Floating
Rate Note shall bear interest in accordance with the terms described in such
Addendum and the applicable Pricing Supplement.
Unless otherwise provided in the applicable Pricing Supplement, each Interest
Rate Basis shall be the rate determined in accordance with the applicable
provisions below. Except as set forth above or in an applicable Pricing
Supplement, the interest rate in effect on each day shall be (a) if such day is
an Interest Reset Date, the interest rate determined on the Interest
Determination Date (as defined below) immediately preceding such Interest Reset
Date or (b) if such day is not an Interest Reset Date, the interest rate
determined on the Interest Determination Date immediately preceding the
immediately preceding Interest Reset Date; provided, however, that the interest
rate in effect for the period from the Original Issue Date to the initial
Interest Reset Date will be the Initial Interest Rate.
Interest on Floating Rate Notes will be determined by reference to an
"Interest Rate Basis," which may be one or more of (i) the "CD Rate", (ii) the
"Commercial Paper Rate", (iii) the "Federal Funds Rate", (iv) "LIBOR", (v) the
"Prime Rate", (vi) the "Treasury Rate", or (vii) such other interest rate
formula as may be set forth in the applicable Pricing Supplement; provided,
however, that with respect to a Floating
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Rate/Fixed Rate Note, the interest rate commencing on the Fixed Rate
Commencement Date and continuing, unless otherwise specified in the applicable
Pricing Supplement, until Maturity shall be the Fixed Interest Rate, if such
rate is specified in the applicable Pricing Supplement, or if no such Fixed
Interest Rate is so specified, the interest rate in effect thereon on the day
immediately preceding the Fixed Rate Commencement Date. In addition, a Floating
Rate Note may bear interest in respect of the lowest of two or more Interest
Rate Bases.
The "Spread" is the number of basis points to be added to or subtracted from
the related Interest Rate Basis or Bases applicable to such Floating Rate Note.
The "Spread Multiplier" is the percentage of the related Interest Rate Basis or
Bases applicable to such Floating Rate Note by which such Interest Rate Basis
or Bases will be multiplied to determine the applicable interest rate on such
Floating Rate Note. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the Interest Rate Basis or Bases
will be calculated. The Spread, Spread Multiplier, Index Maturity and other
variable terms of the Floating Rate Notes are subject to change by the Company
from time to time, but no such change will affect any Floating Rate Note
previously issued or as to which an offer has been accepted by the Company.
Each applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually, annually or such other specified period (each, an
"Interest Reset Period") and the dates on which such Interest Rate will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Date will be, in the case of
Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the
Wednesday of each week (with the exception of weekly reset Treasury Rate Notes
which will reset the Tuesday of each week, except as specified below); (iii)
monthly, the third Wednesday of each month; (iv) quarterly, the third Wednesday
of March, June, September and December of each year; (v) semiannually, the
third Wednesday of the two months specified in the applicable Pricing
Supplement; and (vi) annually, the third Wednesday of the month specified in
the applicable Pricing Supplement; provided, however, that, with respect to
Floating Rate/Fixed Rate Notes, the fixed rate of interest in effect for the
period from the Fixed Rate Commencement Date until Maturity shall be the Fixed
Interest Rate or the interest rate in effect on the day immediately preceding
the Fixed Rate Commencement Date, as specified in the applicable Pricing
Supplement. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date will be
postponed to the next succeeding day that is a Business Day, except that in the
case of a Floating Rate Note as to which LIBOR is the applicable Interest Rate
Basis, if such Business Day falls in the next succeeding calendar month, such
Interest Reset Date will be the immediately preceding Business Day. As used
herein, "Business Day" means, unless otherwise specified in the applicable
Pricing Supplement, each Monday, Tuesday, Wednesday, Thursday or Friday which
is not a day on which banking institutions in The City of New York are
authorized or obligated by law to close; provided, however, that with respect
to Notes as to which LIBOR is an applicable Interest Rate Basis, such day is
also a London Business Day. As used herein, "London Business Day" means any day
on which dealings in deposits in United States dollars are transacted in the
London interbank market.
A Floating Rate Note may also have either or both of the following: (i) a
maximum numerical limitation, or ceiling (a "Maximum Interest Rate"), on the
rate at which interest may accrue during any interest period and (ii) a minimum
numerical limitation, or floor (a "Minimum Interest Rate"), on the rate at
which interest may accrue during any interest period. In addition to any
Maximum Interest Rate that may be applicable to any Floating Rate Note pursuant
to the above provisions, the interest rate on Floating Rate Notes will in no
event be higher than the maximum rate permitted by New York law, as the same
may be modified by United States law of general application.
Each Floating Rate Note will bear interest from the date of issue at the
rates specified herein until the principal thereof is paid or otherwise made
available for payment. Except as provided below or in an applicable Pricing
Supplement, interest will be payable in the case of Floating Rate Notes which
reset; (i) daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year as
specified in the applicable Pricing Supplement; (ii) quarterly, on
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the third Wednesday of March, June, September and December of each year; (iii)
semiannually, on the third Wednesday of the two months of each year specified
in the applicable Pricing Supplement; and (iv) annually, on the third Wednesday
of the month of each year specified in the applicable Pricing Supplement (each,
an "Interest Payment Date") and, in each case, at Maturity. If any Interest
Payment Date (other than at Maturity) for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Payment Date will
be the next succeeding day that is a Business Day except that in the case of a
Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis, if
such Business Day falls in the next succeeding calendar month, such Interest
Payment Date will be the immediately preceding Business Day. If the Maturity of
a Floating Rate Note falls on a day that is not a Business Day, the payment of
principal, premium, if any, and interest will be made on the next succeeding
Business Day, and no interest on such payment shall accrue for the period from
and after such Maturity.
All percentages resulting from any calculation on Floating Rate Notes will be
rounded upwards, if necessary, to the next highest one hundred-thousandth of a
percentage point (e.g., 9.876545% (or .09876545) would be rounded to 9.87655%
(or .0987655)), and all dollar amounts used in or resulting from such
calculation on Floating Rate Notes will be rounded to the nearest cent (with
one-half cent being rounded upward).
Unless otherwise specified in the applicable Pricing Supplement, interest
payments on Floating Rate Notes will equal the amount of interest accrued from
and including the next preceding Interest Payment Date in respect of which
interest has been paid (or from and including the date of issue, if no interest
has been paid with respect to such Floating Rate Notes), to but excluding the
related Interest Payment Date.
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its face amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day from the date of issue, or from the last day to which interest has been
paid or duly provided for, to the date for which accrued interest is being
calculated. Unless otherwise specified in the applicable Pricing Supplement,
the interest factor for each such day will be computed by dividing the interest
rate applicable to such day by 360, in the case of Notes for which the Interest
Rate Basis is the CD Rate, the Commercial Paper Rate, the Federal Funds Rate,
LIBOR or the Prime Rate, or by the actual number of days in the year in the
case of Notes for which the Interest Rate Basis is the Treasury Rate. Unless
otherwise specified in an applicable Pricing Supplement, the interest factor
for Notes for which the interest rate is calculated with reference to two or
more Interest Rate Bases will be calculated in each period in the same manner
as if only one of the applicable Interest Rate Bases applied.
The interest rate applicable to each Interest Reset Period commencing on the
Interest Reset Date with respect to such Interest Reset Period will be the rate
determined on the applicable "Interest Determination Date". Unless otherwise
specified in the applicable Pricing Supplement, the Interest Determination Date
with respect to the CD Rate, the Commercial Paper Rate, the Federal Funds Rate
and the Prime Rate will be the second Business Day preceding each Interest
Reset Date for the related Note; the Interest Determination Date with respect
to LIBOR will be the second London Business Day preceding each Interest Rate
Date. With respect to the Treasury Rate, unless otherwise specified in an
applicable Pricing Supplement, the Interest Determination Date will be the day
in the week in which the related Interest Reset Date falls on which day
Treasury Bills (as defined below) are normally auctioned (Treasury Bills are
normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday); provided,
however, that if an auction is held on the Friday of the week preceding the
week in which the related Interest Reset Date falls, the related Interest
Determination Date will be such preceding Friday; and provided, further, that
if an auction falls on any Interest Reset Date, then the related Interest Reset
Date will instead be the first Business Day following such auction. Unless
otherwise specified in the applicable Pricing Supplement, the Interest
Determination Date pertaining to a Floating Rate Note the interest rate of
which is determined with reference to two or more Interest Rate Bases will be
the latest Business Day which is at least two Business Days prior to such
Interest Reset Date for such Floating Rate Note on which each Interest
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Rate Basis is determinable. Each Interest Rate Basis will be determined and
compared on such date, and the applicable interest rate will take effect on the
related Interest Reset Date.
Unless otherwise provided in the applicable Pricing Supplement, The Bank of
New York will be the "Calculation Agent". Upon request of the Holder of any
Floating Rate Note, the Trustee will provide the interest rate then in effect
and, if determined, the interest rate that will become effective as a result of
a determination made for the next Interest Reset Date with respect to such
Floating Rate Note. Unless otherwise specified in the applicable Pricing
Supplement, the "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day, or (ii) the Business Day prior to the Interest Payment
Date on which such accrued interest will be payable.
CD Rate. CD Rate Notes will bear interest at the rates (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in such CD Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date relating to a CD Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the CD Rate (a "CD Rate Interest Determination Date"), the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published in "Statistical
Release H.15(519), Selected Interest Rates" or any successor publication
("H.15(519)") under the heading "CDs (Secondary Market)," or, if not published
by 3:00 P.M., New York City time, on the related Calculation Date, the rate on
such CD Rate Interest Determination Date for negotiable certificates of deposit
of the Index Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any
successor publication ("Composite Quotations") under the heading "Certificates
of Deposit". If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related Calculation Date,
then the CD Rate on such CD Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary
market offered rates as of 10:00 A.M., New York City time, on such CD Rate
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York selected
by the Calculation Agent (after consultation with and agreement by the Company)
for negotiable certificates of deposit of major United States money center
banks of the highest credit standing for negotiable certificates of deposit
with a remaining maturity closest to the Index Maturity designated in the
applicable Pricing Supplement in denominations of $5,000,000; provided,
however, that if any of the dealers so selected by the Calculation Agent are
not quoting as set forth above, the CD Rate with respect to such CD Rate
Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
Commercial Paper Rate. Commercial Paper Rate Notes will bear interest at the
rates (calculated with reference to the Commercial Paper Rate and the Spread
and/or Spread Multiplier, if any) specified in such Commercial Paper Rate Notes
and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Interest Determination Date relating to
a Commercial Paper Rate Note or any Floating Rate Note for which the interest
rate is determined with reference to the Commercial Paper Rate (a "Commercial
Paper Rate Interest Determination Date"), the Money Market Yield (as defined
below) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published by the Board of
Governors of the Federal Reserve System in H.15(519) under the heading
"Commercial Paper". In the event that such rate is not published by 3:00 P.M.,
New York City time, on the related Calculation Date, then the Commercial Paper
Rate will be the Money Market Yield on such Commercial Paper Rate Interest
Determination Date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in Composite
Quotations under the
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heading "Commercial Paper" (with an Index Maturity of one month or three months
being deemed to be equivalent to an Index Maturity of 30 days or 90 days,
respectively). If by 3:00 P.M., New York City time, on the related Calculation
Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate for such Commercial Paper Rate
Interest Determination Date will be calculated by the Calculation Agent and
will be the Money Market Yield of the arithmetic mean of the offered rates at
approximately 11:00 A.M., New York City time, on such Commercial Paper Rate
Interest Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for commercial paper having
the Index Maturity designated in the applicable Pricing Supplement placed for
an industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized securities rating agency; provided, however, that if any
of the dealers so selected by the Calculation Agent (after consultation with
and agreement by the Company) are not quoting as mentioned in this sentence,
the Commercial Paper Rate determined on such Commercial Paper Rate Interest
Determination Date will be the rate in effect on such Commercial Paper Rate
Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage rounded to the
nearest one ten-thousandth of a percent, with five one hundred-thousandths of a
percent rounded upward) calculated in accordance with the following formula:
D X 360
Money Market Yield = --------------X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Federal Funds Rate. Federal Funds Rate Notes will bear interest at the rates
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in such Federal Funds Rate Notes and in
any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date relating to
a Federal Funds Rate Note or any Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for Federal Funds as
published in H.15(519) under the heading "Federal Funds (Effective)" or, if not
published by 3:00 P.M., New York City time, on the related Calculation Date,
the rate on such Federal Funds Rate Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate". If such
rate is not published in either H.15(519) or Composite Quotations by 3:00 P.M.,
New York City time, on the related Calculation Date, the Federal Funds Rate for
such Federal Funds Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged by three
leading brokers of federal funds transactions in The City of New York selected
by the Calculation Agent (after consultation with and agreement by the Company)
as of 11:00 A.M., New York City time on such Federal Funds Rate Interest
Determination Date; provided, however, that if any of the brokers so selected
by the Calculation Agent are not quoting as mentioned in this sentence, the
Federal Funds Rate with respect to such Federal Funds Rate Interest
Determination Date will be the Federal Funds Rate in effect on such Federal
Funds Rate Interest Determination Date.
LIBOR. LIBOR Notes will bear interest at the rates (calculated with reference
to LIBOR and the Spread and/or Spread Multiplier, if any) specified in such
LIBOR Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means the rate determined by the Calculation Agent in accordance with the
following provisions:
(i) With respect to an Interest Determination Date relating to a LIBOR
Note or any Floating Rate Note for which the interest rate is determined
with reference to LIBOR (a "LIBOR Interest
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Determination Date"), LIBOR will be the rate for deposits in United States
dollars for the period of any Index Maturity specified in the applicable
Pricing Supplement, commencing on the second London Business Day
immediately following the related LIBOR Interest Determination Date, which
appear on the Designated LIBOR Page (as defined below) at approximately
11:00 A.M., London time, on such LIBOR Interest Determination Date. If no
such rate appears, LIBOR in respect of the related LIBOR Interest
Determination Date will be determined as if the parties had specified the
rate described in clause (ii) below. "Designated LIBOR Page" means the
display on the Dow Jones Telerate Service (or any successor service) on the
page specified on the applicable Pricing Supplement (or any other page as
may replace such page) for the purpose of displaying the London interbank
rates of major banks for deposits in United States dollars.
(ii) With respect to a LIBOR Interest Determination Date on which no rate
appears on the applicable Designated LIBOR Page as specified in clause (i)
above, the Calculation Agent will request the principal London offices of
each of four major banks in the London interbank market, as selected by the
Calculation Agent (after consultation with and agreement by the Company),
to provide the Calculation Agent with its offered quotation for deposits in
United States dollars for the period of the Index Maturity designated in
the applicable Pricing Supplement, commencing on the second London Business
Day immediately following such LIBOR Interest Determination Date, to prime
banks in the London interbank market at approximately 11:00 A.M., London
time, on such LIBOR Interest Determination Date and in a principal amount
that is representative for a single transaction in such market at such
time. The Calculation Agent will request the principal London office of
each of such banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR determined on such LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR determined on such LIBOR Interest
Determination Date will be the arithmetic mean of the offered rates quoted
at approximately 11:00 A.M., New York City time, on such LIBOR Interest
Determination Date by three major banks in The City of New York selected by
the Calculation Agent (after consultation with and agreement by the
Company) for loans in United States dollars to leading European banks,
having the Index Maturity designated in the applicable Pricing Supplement
and in a principal amount that is representative for a single transaction
in such market at such time; provided, however, that if any of the banks so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR determined on such LIBOR Interest Determination Date will
be LIBOR in effect on such LIBOR Interest Determination Date.
Prime Rate. Prime Rate Notes will bear interest at the rates (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified in such Prime Rate Notes and in any applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Interest Determination Date relating to a Prime Rate
Note or any Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Determination Date") the rate on
that day set forth in H.15(519) opposite the caption "Bank Prime Loan". If such
rate is not yet published in H.15(519) by 3:00 P.M., New York City time, on the
Calculation Date, the Prime Rate will be the arithmetic mean of the rates of
interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 Page (as defined below) as such bank's prime rate or base lending rate
as in effect for such Prime Rate Determination Date. If fewer than four such
rates appear on such Reuters Screen USPRIME1 Page for such Prime Rate
Determination Date, the Prime Rate will be determined by the Calculation Agent
and will be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Determination Date by three, or two if only two
such rates are quoted, major money center banks in New York City selected by
the Calculation Agent (after consultation with and agreement by the Company).
If fewer than two such rates are quoted as aforesaid, the Prime Rate will be
determined by the Calculation Agent on the basis of the prime rates quoted in
New York City by three, or two if only two are available, substitute banks or
trust companies organized and doing business under the laws of the United
States, or any State thereof, having total equity capital of at least $500
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million and being subject to supervision or examination by a Federal or State
authority, selected by the Calculation Agent (after consultation with and
agreement by the Company) to provide such rates; provided, however, that if
fewer than two of such substitute banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate will be the Prime Rate then in effect on such Prime
Rate Determination Date. "Reuters Screen USPRIME1 Page" means the display
designated as page "USPRIME1" on the Reuters Monitor Money Rates Service (or
such other page as may replace the USPRIME1 page on that service for the
purpose of displaying prime rates or base lending rates of major United States
banks).
Treasury Rate. Treasury Rate Notes will bear interest at the rates
(calculated with reference to the Treasury Rate and the Spread and/or Spread
Multiplier, if any) specified in such Treasury Rate Notes and in any applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date relating to a
Treasury Rate Note or any Floating Rate Note for which the interest rate is
determined by reference to the Treasury Rate (a "Treasury Rate Interest
Determination Date"), the rate applicable to the most recent auction of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
specified in the applicable Pricing Supplement, as such rate is published in
H.15(519) under the heading "U.S. Government Securities/Treasury Bills-auction
average (investment)" or, if not published by 3:00 P.M., New York City time, on
the related Calculation Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of Treasury. In the event that the results of the auction of
Treasury Bills having the Index Maturity designated in the applicable Pricing
Supplement are not reported as provided by 3:00 P.M., New York City time, on
such Calculation Date, or if no such auction is held in a particular week, then
the Treasury Rate will be calculated by the Calculation Agent and will be a
yield to maturity (expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 P.M., New York
City time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers (which may include one or
more of the Agents) selected by the Calculation Agent (after consultation with
and agreement by the Company), for the issue of Treasury Bills with a remaining
maturity closest to the Index Maturity designated in the applicable Pricing
Supplement; provided, however, that if any of the dealers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Treasury
Rate with respect to such Treasury Rate Interest Determination Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.
OTHER PROVISIONS; ADDENDA
Any provisions with respect to the determination of an Interest Rate Basis,
the specification of Interest Rate Basis, calculation of the interest rate
applicable to a Fixed or Floating Rate Note, its Interest Payment Dates or any
other matter relating thereto may be modified by the terms as specified under
"Other Provisions" on the face thereof or in an Addendum relating thereto, if
so specified on the face thereof and in the applicable Pricing Supplement.
ORIGINAL ISSUE DISCOUNT NOTES
Notes may be issued at a price less than their redemption price at Maturity,
resulting in such Notes being treated as issued with original issue discount
for United States federal income tax purposes ("Original Issue Discount
Notes"). Such Original Issue Discount Notes may currently pay no interest or
interest at a rate which at the time of issuance is below market rates. Certain
additional considerations relating to any Original Issue Discount Notes may be
described in the Pricing Supplement relating thereto.
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INDEXED NOTES
Notes also may be issued with the principal amount payable at Maturity and/or
interest to be paid thereon to be determined with reference to the price or
prices of specified commodities or stocks, the exchange rate of one or more
specified currencies (including a composite currency such as the European
Currency Unit) relative to an indexed currency, or such other price or exchange
rate as may be specified in such Note ("Indexed Notes"), as set forth in an
Indexed Note Supplement. Holders of such Notes may receive a principal amount
at Maturity that is greater than or less than the face amount of the Notes
depending upon the relative value at Maturity of the specified indexed item.
Information as to the method for determining the principal amount payable at
Maturity, certain historical information with respect to the specified indexed
item and tax considerations associated with investment in Indexed Notes will be
set forth in the applicable Indexed Note Supplement.
BOOK-ENTRY NOTES
Upon issuance, all Book-Entry Notes having the same Original Issue Date,
Stated Maturity and otherwise having identical terms and provisions will be
represented by one or more global securities (each, a "Global Security"). Each
Global Security representing Book-Entry Notes will be deposited with, or on
behalf of, the Depository, registered in the name of the Depository or a
nominee thereof. Except as set forth below, a Global Security may not be
transferred except as a whole by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any nominee to a successor of the Depository
or a nominee of such successor.
The Depository Trust Company, New York, New York, will be the initial
Depository with respect to the Notes. The Depository has advised the Company
and the Agents that it is a limited-purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository was created to hold
securities of its participants ("Participants") and to facilitate the clearance
and settlement of securities transactions among its Participants in such
securities through electronic book-entry changes in accounts of the
Participants, thereby eliminating the need for physical movement of securities
certificates. The Depository's Participants include securities brokers and
dealers (including the Agents), banks, trust companies, clearing corporations
and certain other organizations. The Depository is owned by a number of
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the Depository's 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
Depository only through Participants.
Upon the issuance of the Notes represented by a Global Security, the
Depository will credit, on its book-entry registration and transfer system, the
principal amounts of the Notes represented by such Global Security to the
accounts of Participants. The accounts to be credited will be designated by the
relevant Agent. Ownership of beneficial interests in the Global Security will
be limited to Participants or persons that hold interests through Participants.
Ownership of beneficial interest in the Notes will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
the Depository (with respect to interests of Participants in the Depository),
or by Participants in the Depository or persons that may hold interest through
such Participants (with respect to persons other than Participants in the
Depository). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limitations and such laws may impair the ability of beneficial owners of the
Notes to transfer beneficial interests in a Global Security.
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SO LONG AS THE DEPOSITORY FOR A GLOBAL SECURITY, OR ITS NOMINEE, IS THE
REGISTERED OWNER OF SUCH GLOBAL SECURITY, THE DEPOSITORY OR ITS NOMINEE, AS THE
CASE MAY BE, WILL BE CONSIDERED THE SOLE OWNER OR HOLDER OF THE NOTES
REPRESENTED BY SUCH GLOBAL SECURITY FOR ALL PURPOSES UNDER THE INDENTURE.
EXCEPT AS PROVIDED BELOW, OWNERS OF BENEFICIAL INTERESTS IN THE NOTES
REPRESENTED BY A GLOBAL SECURITY WILL NOT BE ENTITLED TO HAVE THE NOTES
REPRESENTED BY SUCH GLOBAL SECURITY REGISTERED IN THEIR NAMES, WILL NOT RECEIVE
OR BE ENTITLED TO RECEIVE PHYSICAL DELIVERY OF THE NOTES IN DEFINITIVE FORM AND
WILL NOT BE CONSIDERED THE OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE.
Accordingly, each Person owning a beneficial interest in a Global Security must
rely on the procedures of the Depository and, if such Person is not a
Participant, on the procedures of the Participant through which such Person
owns its interest, to exercise any rights of a Holder under the Indenture. The
Company understands that under existing industry practices, in the event that
the Company requests any action of Holders or that an owner of a beneficial
interest in such a Global Security desires to give or take any action which a
Holder is entitled to give or take under the Indenture, the Depository would
authorize the Participants holding the relevant beneficial interests to give or
take such action, and such Participants would authorize beneficial owners
owning through such Participants to give or take such action or would otherwise
act upon the instructions of beneficial owners through them. Conveyance of
notices and other communications by the Depository to Participants, by
Participants to indirect Participants, and by Participants and indirect
Participants to beneficial owners of interests in the Global Security will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Payments of principal of and interest on the Notes will be made by the
Company through the Trustee to the Depository or its nominee, as the case may
be, as the registered owner of a Global Security. 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 a
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests. The Company expects that the
Depository, upon receipt of any payment of principal or interest in respect of
a Global Security, will credit the accounts of the related Participants with
payment in amounts proportionate to their respective holdings in principal
amount of beneficial interest in such Global Security as shown on the records
of the Depository. The Company also expects that payments by Participants to
owners of beneficial interests in a Global Security 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.
If (x) the Depository is at any time unwilling or unable to continue as
Depository and a successor Depository is not appointed by the Company within 60
days, (y) the Company executes and delivers to the Trustee a Company Order to
the effect that the Global Securities shall be exchangeable or (z) an Event of
Default has occurred and is continuing with respect to the Notes, the Global
Securities will be exchangeable for Notes in definitive form of like tenor and
of an equal aggregate principal amount, in denominations of $1,000 and integral
multiples thereof. Such definitive Notes shall be registered in such name or
names as the Depository shall instruct the Trustee. It is expected that such
instructions may be based upon directions received by the Depository from
Participants with respect to ownership of beneficial interests in such Global
Securities.
S-13
<PAGE>
PLAN OF DISTRIBUTION
Subject to the terms and conditions of the Distribution Agreement, the Notes
are being offered on a continuing basis for sale by the Company through one or
more of the Agents, who have agreed to use their reasonable efforts to solicit
offers to purchase the Notes and the Company may also sell Notes to an Agent,
as principal, for resale to investors and other purchasers at varying prices
related to prevailing market prices at the time of resale to be determined by
such Agent or, if so agreed, at a fixed public offering price. The Company also
reserves the right to sell Notes directly on its own behalf or through
additional agents, acting either as agent or principal, on substantially
identical terms as those applicable to the Agents. The Company reserves the
right to withdraw, cancel or modify the offer made hereby without notice and
may reject orders in whole or in part whether placed directly with the Company
or through one of the Agents. The Agents will have the right, in their
discretion reasonably exercised, to reject in whole or in part any offer to
purchase Notes received by them. The Company will pay the related Agent, in the
form of a discount or otherwise, a commission, ranging from .125% to .75%,
depending on the Stated Maturity of the Note (or, with respect to Notes for
which the Stated Maturity is in excess of 30 years, such commission as shall be
agreed upon by the Company and the related Agent at the time of sale), of the
principal amount of any Note sold through such Agent.
In addition, with the Company's consent, the Agents may offer the Notes they
have purchased as principal to other dealers. The Agents may sell Notes to any
dealer at a discount and, unless otherwise specified in the applicable Pricing
Supplement, such discount allowed to any dealer will not be in excess of the
discount to be received by such Agent from the Company. Unless otherwise
indicated in the applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of the
principal amount thereof less a percentage equal to the commission applicable
to any agency sale of a Note of identical maturity, and may be resold by the
Agent to investors and other purchasers from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale or may be resold to
certain dealers as described above. After the initial public offering of Notes
to be resold to investors and other purchasers on a fixed public offering price
basis, the public offering price, concession and discount may be changed.
Unless otherwise specified in an applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in New York City on the date of settlement.
No Note will have an established trading market when issued. The Notes will
not be listed on any securities exchange. Each of the Agents may from time to
time purchase and sell Notes in the secondary market, but no Agent is obligated
to do so, and there can be no assurance that there will be a secondary market
for the Notes or liquidity in the secondary market if one develops. From time
to time, each of the Agents may make a market in the Notes.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agents against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the Agents
may be required to make in respect thereof. The Company has agreed to reimburse
each of the Agents for certain expenses.
In the ordinary course of their respective business, certain of the Agents
and/or their affiliates engage and may in the future engage in commercial
banking and investment banking transactions with the Company and affiliates of
the Company.
S-14
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS 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 STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
DATED AUGUST , 1996
PROSPECTUS
$1,198,000,000
MCDONNELL DOUGLAS CORPORATION
DEBT SECURITIES AND DEBT WARRANTS
McDonnell Douglas Corporation (the "Company") from time to time may offer and
sell up to $1,198,000,000 aggregate principal amount (or net proceeds in the
case of securities issued at an original issue discount), or its equivalent,
based on the applicable exchange rate at the time of offering, in such foreign
currencies, units or composites of two or more thereof as shall be designated
by the Company at the time of offering, of its debt securities (the "Debt
Securities") and of warrants to purchase Debt Securities (the "Debt Warrants").
The Debt Securities and Debt Warrants, which are collectively referred to
herein as the "Securities," may be offered in one or more separate series in
amounts, at prices and on terms to be determined at the time of sale. The
Company may sell Securities to or through dealers, acting as principals for
their own account or as agents, and also may sell Securities directly to other
purchasers. See "Plan of Distribution."
The Debt Securities will be unsecured obligations of the Company and will
rank equally with all other unsecured and unsubordinated indebtedness of the
Company. See "Description of Debt Securities" and "Description of Debt
Warrants."
The terms of the Securities, including, where applicable, the specific
designation, aggregate principal amount, authorized denominations, maturity,
interest rate (which may be fixed or variable) and time of payment of interest,
if any, terms for any extension, redemption or repayment at the option of the
Company or the holder, terms for sinking fund payment, if any, whether the
Securities are Debt Securities or Debt Warrants, the initial public offering
price or purchase price, the names of, and the principal amounts to be
purchased by dealers, if any, the compensation of such dealers and the proceeds
to be received by the Company and the other terms in connection with the
offering and sale of the Securities in respect of which this Prospectus is
being delivered, are set forth in the accompanying Prospectus Supplement (the
"Prospectus Supplement"). The Company may elect to deliver to purchasers of
Securities an abbreviated term sheet setting forth a description of the
Securities being offered, or a summary thereof, instead of a Prospectus
Supplement. As used herein, 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 units or composite
currencies or in amounts determined by reference to an index.
-----------
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.
-----------
The Securities may be sold to underwriters for public offering pursuant to
terms of an offering fixed at the time of sale. Such underwriters may include,
or may be a group of underwriters represented by, Merrill Lynch, Pierce, Fenner
& Smith Incorporated or one or more other firms. In addition, the Securities
may be sold by the Company directly or through agents. No Securities may be
sold without delivery of a Prospectus Supplement or a term sheet describing
such issue of Securities and the method and terms of offering thereof.
-----------
The Date of this Prospectus is August , 1996.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") Registration Statements on Form S-3 with respect to the
Securities under the Securities Act of 1933, as amended (the "Act"). This
Prospectus does not contain all of the information set forth in such
Registration Statements, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to these Securities and the Company, reference is made to the Registration
Statements. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports and other information with the Commission. Reports,
information statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: Chicago Regional Office, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and New York Regional
Office, Seven World Trade Center, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
Company's common stock is listed on the New York Stock Exchange and Pacific
Stock Exchange. Reports, proxy and information statements and other information
concerning the Company may also be inspected at the offices of the New York
Stock Exchange and Pacific Stock Exchange. The Commission maintains a Web site
at http: // www. sec. gov containing reports, proxy and information statements
and other information regarding registrants, including the Company, that file
electronically with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1995, Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, and
June 30, 1996, and Current Reports on Form 8-K dated April 17, 1996, May 31,
1996, June 5, 1996, July 8, 1996 and August 2, 1996, each as filed with the
Commission, are hereby incorporated by reference into this Prospectus and made
a part hereof.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Securities 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, or contained in
this Prospectus, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy
(without exhibits) of any or all documents incorporated by reference into this
Prospectus. Requests for such copies should be directed to Mr. Roger A. Krone,
Vice President-Treasurer, McDonnell Douglas Corporation, P.O. Box 516, Mailcode
1001330, St. Louis, Missouri 63166-0516; telephone number (314) 232-3359.
Unless otherwise indicated, currency amounts in this Prospectus and the
Prospectus Supplement are stated in United States dollars ("U.S. dollars,"
"dollars," "$" or "U.S. $").
2
<PAGE>
THE COMPANY
GENERAL
The Company was incorporated in Maryland in 1939 under the name McDonnell
Aircraft Corporation. On April 19, 1967, the shareholders approved the merger
with Douglas Aircraft Company and the name of the corporation was changed to
McDonnell Douglas Corporation (the "Company" or "The Company").
The Company, its divisions and its subsidiaries operate principally in four
industry segments: military aircraft; missiles, space and electronic systems;
commercial aircraft; and financial services and other. Operations in the first
two industry segments are conducted primarily by McDonnell Douglas Aerospace
and by Military Transport Aircraft, unincorporated operating divisions of the
Company, which are engaged in design, development, production, and support of
the following major products: military transport aircraft; combat aircraft and
training systems; commercial and military helicopters and ordnance; missiles;
space launch vehicles and space station systems; and defense and commercial
electronics, lasers, sensors, and command, control, communications, and
intelligence systems. Operations in the commercial aircraft segment are
conducted by Douglas Aircraft Company ("DAC"), an unincorporated operating
division of the Company, which designs, develops, produces and sells commercial
transport aircraft and related spare parts.
DAC separated its commercial and government programs into two operating units
effective January 1, 1992. Prior to the reorganization of DAC, the results of
operations of both the commercial and military programs were reported under the
combined caption of "transport aircraft". The "military aircraft" segment now
includes the former "combat aircraft" segment plus the C-17 Globemaster III
program and certain minor military programs reported under the "transport
aircraft" caption prior to 1992. The "commercial aircraft" segment includes the
commercial programs previously reported under the caption "transport aircraft".
In August 1992, the DAC military programs became part of the McDonnell Douglas
Aerospace division.
Through its McDonnell Douglas Financial Services Corporation ("MDFS")
subsidiary, the Company is engaged in aircraft financing and commercial
equipment leasing. The Company's subsidiary, McDonnell Douglas Realty Company
("MDRC"), was established in 1972 to develop the Company's surplus real estate.
While continuing to serve that role, MDRC has become a full-service developer
and property manager in the commercial real estate market as well as for the
Company's aerospace business.
The Company is a major participant in both the defense and the commercial
aerospace industries. The Company has a wide range of programs in production
and development, and is the world's leading producer of military aircraft. The
Company is one of the largest U.S. defense contractors and NASA prime
contractors based on prime contracts awarded and is one of the principal
manufacturers of large commercial transport aircraft. Programs and products
comprising most of the Company's business volume are of a highly technical
nature, comparatively few in number, high in unit cost, and have traditionally
enjoyed relatively long production lives.
MILITARY AIRCRAFT
The Company's McDonnell Douglas Aerospace division is currently producing the
F-15 Eagle, the F/A-18 Hornet, the AV-8B Harrier II Plus, and the T-45 Goshawk
and military training systems. The Company's Military Transport Aircraft
division is currently producing the C-17 Globemaster III. Additionally, the
Company is developing the F/A-18 E/F Super Hornet. The Super Hornet is expected
to add greater range and payload carrying ability and maintainability and allow
for the integration of new systems and technologies. The F-15 Eagle is a
supersonic, tactical fighter that is currently operated by the U.S. Air Force,
Japan, Saudi Arabia and Israel. The F/A-18 Hornet is a multi-mission strike
fighter produced primarily for the U.S. Navy and Marine Corps. The F/A-18
Hornet's customers include: Canada, Australia, Spain, Kuwait, Finland,
Switzerland, and Malaysia. The Company is the prime contractor for the U.S. Air
3
<PAGE>
Force C-17 Globemaster III military transport. The C-17 is designed to carry
outsize cargo over intercontinental distances into austere airfields. The AV-8B
Harrier II is a vertical/short takeoff and landing attack aircraft which began
U.S. Marine Corps service in January 1984. The AV-8B Harrier II is also
currently operated by the United Kingdom, Spain, and Italy. The T-45 Goshawk is
a carrier capable single engine trainer which the U.S. Navy selected in 1984 to
replace its intermediate T-2C and advanced TA-4J trainers. McDonnell Douglas
Helicopter Company, which operationally is part of the McDonnell Douglas
Aerospace division, currently produces the AH-64 Apache, an advanced attack
helicopter for the U.S. Army, Israel, Egypt, Saudi Arabia, United Arab
Emirates, Greece, the United Kingdom and the Netherlands.
MISSILES, SPACE AND ELECTRONIC SYSTEMS
The Company, through its McDonnell Douglas Aerospace division, is also
engaged in a wide variety of programs in tactical missiles and related systems.
The division produces several missile systems, including the Harpoon anti-ship
missile and the Standoff Land Attack Missile.
In addition, the McDonnell Douglas Aerospace division includes the Delta
Launch Vehicle, Space Products, Space Station, payload fairings and technical
services businesses. The McDonnell Douglas Aerospace division also develops and
produces a variety of defense and electronic systems and products, including
commercial and military aircraft avionics; command and information systems;
surveillance, detection, and tracking systems; and laser systems.
COMMERCIAL AIRCRAFT
The Company, through DAC, is producing MD-80 and MD-90 twin jets and MD-11
trijet commercial aircraft, developing the MD-95 twin jet commercial aircraft
and supporting commercial aircraft, spare parts and related services. The MD-90
is an advanced derivative of the MD-80, featuring additional seat capacity and
new fuel-efficient engines with reduced noise and exhaust emissions. Initial
customer deliveries of the MD-90 began in early 1995. The MD-11 is an advanced
technology trijet designed to fulfill airline needs in the l990s and beyond.
Current customers for the Company's commercial transport aircraft include
American Airlines, Delta Air Lines, and Federal Express Corporation in the
United States; and Alitalia, China Eastern, China Northern, Garuda Indonesia,
Japan Airlines, Japan Air Systems, KLM Royal Dutch Airlines, Korean Air,
Swissair, and Varig, among international carriers.
FINANCIAL SERVICES
MDFS, headquartered in Long Beach, California, is the parent company of
McDonnell Douglas Finance Corporation ("MDFC"), a subsidiary that is engaged in
aircraft financing and commercial equipment leasing. During 1991 and 1992, MDFS
significantly scaled back its operations, disposed of certain selected lines of
business and assets, and focused its new business efforts almost entirely
within its two core business lines, aircraft financing and commercial equipment
leasing.
MDRC, a subsidiary of the Company, was established to develop the Company's
surplus real estate. MDRC has since become a full-service developer and
property manager in the commercial real estate market. MDRC is active in
developing property adjacent to the Company's offices and plants, and is
involved in other property and construction projects that are not connected
with the Company's own requirements.
ADDRESS OF COMPANY
The Company's principal executive offices are located at the intersection of
J. S. McDonnell Boulevard and Airport Road, P.O. Box 516, St. Louis, Missouri
63166-0516; telephone (314) 232-0232.
4
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following tables present selected consolidated financial information
concerning the Company and its consolidated subsidiaries. The information in
the tables and the notes thereto should be read in conjunction with the
consolidated financial statements and related notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1996. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS(1)
Revenues by industry
segment:(2)
Military aircraft..... $ 8,158 $ 7,804 $ 6,852 $ 7,238 $ 7,795
Commercial aircraft... 3,891 3,155 4,760 6,595 6,752
Missiles, space and
electronic systems... 1,917 1,877 2,575 3,169 2,979
Financial services and 334 326 287 352 519
other................ ------- ------- ------- ------- -------
Operating revenues(2)... 14,300 13,162 14,474 17,354 18,045
Earnings (Loss) from
continuing operations
before cumulative
effect of accounting
change................. (416)(6) 598 359 698 (4) 357
Per share(3).......... (1.83)(6) 2.53 1.53 2.99 (4) 1.55
Net earnings (loss)..... (416)(6) 598 396 (781)(5) 423
Per share(3).......... (1.83)(6) 2.53 1.68 (3.35)(5) 1.84
Interest expense:
Aerospace segments(2). 116 (7) 131(7) 89(7) 309 232(7)
Financial services and 109 118 126 159 221
other segment........ ------- ------- ------- ------- -------
Total(2)............ 225 249 215 468 453
BALANCE SHEET INFORMA-
TION(1)
Total assets............ $10,466 $12,216 $12,026 $13,781 $14,601
Notes payable and long-
term debt:
Aerospace segments.... 1,251 1,272 1,625 2,767 2,324
Financial services and
other segment........ 1,469 1,297 1,513 1,474 1,891
Shareholders' equity.... 3,041 3,872 3,413 3,022 3,877
Per share(3).......... 13.60 16.59 14.47 12.85 16.83
Debt-to-equity ratios:
Aerospace segments.... .46 .36 .52 1.01 .66
Financial services and
other segment........ 4.44 4.14 5.22 5.42 5.25
OTHER INFORMATION(8)
Firm backlog............ $19,640 $17,503 $19,379 $24,052 $30,448
Total backlog(9)........ $28,353 $29,232 $35,698 $41,806 $42,577
Ratio of Earnings to
Fixed
Charges(1)(2)(10)...... -- (12) 4.2x 2.8x 3.1x 2.2x
</TABLE>
(Notes to table appear on page 7)
5
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1996 1995
---------- ----------
(DOLLAR AMOUNTS IN
MILLIONS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
SUMMARY OPERATIONS (8)
Revenues by industry segment:
Military aircraft................................... $ 3,962 $ 3,898
Commercial aircraft................................. 1,150 2,302
Missiles, space and electronic systems.............. 1,137 878
Financial services and other........................ 174 161
---------- ----------
Operating revenues.................................... 6,423 7,239
Net earnings.......................................... 386 328
Per share........................................... 1.76 1.43(11)
Interest expense:
Aerospace segments.................................. 62 72
Financial services and other segment................ 62 55
---------- ----------
Total............................................. 124 127
BALANCE SHEET INFORMATION(8)
Total assets.......................................... $ 10,639 $ 12,154
Notes payable and long-term debt:
Aerospace segments.................................. 1,233 1,296
Financial services and other segment................ 1,730 1,353
Shareholders' equity.................................. 3,019 3,927
Per share........................................... 13.96 17.37(11)
Debt-to-equity ratios:
Aerospace segments.................................. .46 .36
Financial services and other segment................ 4.89 4.27
OTHER INFORMATION (8)
Firm backlog.......................................... $22,629 $15,916
Total backlog(9)...................................... $45,562 $24,580
Ratio of Earnings to Fixed Charges(10)................ 5.1 4.6
</TABLE>
(Notes to table appear on page 7)
6
<PAGE>
- --------
(1) Summary of Operations, Balance Sheet Information and Ratio of Earnings to
Fixed Charges have been restated to reflect discontinued operations. The
captions "military aircraft" and "commercial aircraft" were shown as
"combat aircraft" and "transport aircraft" prior to 1992. "Military
aircraft" now includes the former "combat aircraft" segment plus the C-17
program and other minor military programs previously included in the
"transport aircraft" segment.
(2) In 1993, the Company reclassified certain income and expense related to an
executive life insurance program to general and administrative expenses.
These items were previously reflected as revenues or interest expense.
Years prior to 1993 have been restated.
(3) Per share data has been restated to reflect the 1994 three-for-one stock
split and the 1996 two-for-one stock split.
(4) Includes a gain of $676 million ($2.90 per share) from a postretirement
benefit curtailment relating to Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employer's Accounting for Postretirement
Benefits Other Than Pensions."
(5) Includes a net charge of $860 million ($3.69 per share) relating to the
initial adoption and subsequent curtailment gain associated with SFAS No.
106.
(6) Includes a charge of $1.123 billion ($4.95 per share) related to a change
in accounting for the MD-11 commercial aircraft.
(7) Includes reduction of $107 million in 1991, $135 million in 1993, $10
million in 1994, and $23 million in 1995 from resolution of several issues
with the Internal Revenue Service.
(8) Unaudited.
(9) Total backlog includes firm backlog plus (a) U.S. and other government
orders not yet funded, (b) U.S. and other government orders being
negotiated as continuations of authorized programs, and (c) unearned price
escalation on firm commercial aircraft orders. Backlog is that of the
aerospace segments only and includes all but a minor portion of the work
to be performed under long-term contracts. Customer options and products
produced for short-term lease are excluded from backlog.
(10) For purposes of calculating the ratio of earnings to fixed charges,
"earnings" have been calculated by adding interest expense (including
amortization of capitalized interest) and the portion of rentals estimated
to represent the interest factor to earnings from continuing operations
before income taxes and cumulative effect of accounting change, and
eliminating therefrom the undistributed earnings of less than 50% owned
affiliates. "Fixed charges" include interest charges (including
capitalized interest) and the portion of rentals estimated to represent
the interest factor.
(11) Per share data has been restated to reflect the 1996 two-for-one stock
split.
(12) For the year ended December 31, 1995, earnings were inadequate to cover
fixed charges. The amount of such deficiency for the period was $749
million.
7
<PAGE>
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities for
general corporate purposes, including the repayment of existing indebtedness.
Management of the Company expects that it will, on a recurrent basis, engage in
additional financings as the need arises to finance the operations of the
Company and its subsidiaries or to lengthen the average maturity of its
borrowings.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an indenture, as amended (the
"Indenture"), between the Company and The Bank of New York, (successor to
Citibank, N.A.) as trustee ("Trustee"). A copy of the Indenture is filed as an
exhibit to the Registration Statement. The Indenture provides that there may be
more than one Trustee thereunder, each with respect to one or more series of
Debt Securities.
The following information concerning the Debt Securities and certain
provisions of the Indenture is intended to provide a summary thereof and does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Indenture, including the definitions
therein of certain terms. Wherever reference is made to defined terms (which
are capitalized herein) of the Indenture, such defined terms are incorporated
herein by reference.
GENERAL
Reference is made to the Prospectus Supplement relating to a particular
series of Debt Securities offered thereby for the following terms of such Debt
Securities: (1) the title of such Debt Securities and the series of which such
Debt Securities shall be a part; (2) whether such Debt Securities are issuable
in global form; (3) the aggregate principal amount of such Debt Securities; (4)
the date or dates on which such Debt Securities will mature; (5) the rate or
rates per annum (which may be fixed or variable) at which such Debt Securities
will bear interest, if any; (6) the times at which such interest, if any, will
be payable; (7) the provisions for redemption, if any, of such Debt Securities
and the redemption prices; (8) the sinking fund requirements, if any, with
respect to such Debt Securities; (9) whether the Debt Securities are
denominated or provide for payment in United States dollars or a foreign
currency, units or composites of two or more foreign currencies; (10) whether
payment of the Debt Securities is to be determined by reference to an index,
formula or other method based on a coin or currency other than that in which
the Debt Securities are stated to be payable; (11) additional provisions, if
any, for the defeasance of such Debt Securities; and (12) any other terms of
such Debt Securities (which terms shall not be inconsistent with the provisions
of the Indenture).
The Debt Securities may be issued as Original Issue Discount Debt Securities
to be sold at a substantial discount below their principal amount and may be
denominated in currencies other than United States dollars. Special United
States federal income tax considerations applicable to any such Debt Securities
will be set forth in a Prospectus Supplement relating thereto.
The Debt Securities will be unsecured obligations of the Company and will
rank on a parity with all other unsecured and unsubordinated indebtedness of
the Company.
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder or of any particular series of such
Debt Securities and provides that securities, in addition to the Debt
Securities, may be issued thereunder from time to time in one or more series.
All Debt Securities issued under the Indenture will rank equally and ratably
with any such additional securities issued under the Indenture.
Under the Indenture, the Company will have the ability, in addition to the
ability to issue Debt Securities with terms the same as or different from those
of Debt Securities previously issued, to "reopen" a previous series of Debt
Securities and issue additional Debt Securities of such series.
8
<PAGE>
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities of a series may be issued only in fully registered form
without coupons and may be issuable in whole or in part in the form of one or
more global Debt Securities, as described below under "Global Securities."
Debt Securities may be presented for exchange, and, unless otherwise
indicated in an applicable Prospectus Supplement, may be presented for
registration of transfer (duly endorsed, or accompanied by a duly executed
written instrument of transfer), at the office of The Bank of New York, 101
Barclay Street, New York, New York, Attention: Corporate Trust Office (Trustee
being a "Security Registrar"), in each case, without service charge and upon
payment of any taxes and other governmental charges as described in the
Indenture. In addition, Debt Securities may be presented for exchange or
registration of transfer at the office of any transfer agent designated by the
Company for such purpose with respect to any series of Debt Securities and
referred to in the Prospectus Supplement relating thereto. Such transfer or
exchange will be effected by the Security Registrar, being satisfied with the
documents of title and identity of the person making the request. If a
Prospectus Supplement refers to any transfer agents (in addition to the
Security 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. 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 the day of the mailing of a notice of redemption of
Debt Securities selected for redemption and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) register the
transfer of or exchange any Debt Security, or portion thereof, called for
redemption, except the unredeemed portion of any Debt Security being redeemed
in part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the Prospectus Supplement relating thereto,
payment of principal of and interest, if any, on Debt 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 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 such security register. Unless otherwise indicated in the
Prospectus Supplement relating thereto, payment of any installment of interest
on Debt Securities will be made to the Person in whose name such Debt Security
is registered at the close of business on the Regular Record Date for such
interest.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
principal office of The Bank of New York will be designated as the Company's
sole Paying Agent for payments with respect to Debt Securities. Any Paying
Agents outside the United States and any other Paying Agents in the United
States initially designated by the Company for the 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.
All moneys paid by the Company to the applicable Paying Agent for the payment
of principal of or interest, if any, on any Debt Security which remain
unclaimed at the end of three years after such principal or interest shall have
become due and payable, will be repaid to the Company and the Holder of any
such Debt Security will thereafter look only to the Company for payment
thereof.
GLOBAL SECURITIES
The Indenture provides that the Debt Securities may be issued in global form.
If any series of Debt Securities is issuable in global form, the applicable
Prospectus Supplement will describe the circumstances, if
9
<PAGE>
any, under which beneficial owners of interests in any such global Debt
Securities may exchange such interests for Debt Securities of such series and
of like tenor and principal amount in any authorized form and denomination.
Principal of, and any premium and interest on, a global Debt Security will be
payable in the manner described in the applicable Prospectus Supplement.
CERTAIN DEFINED TERMS
The definitions which follow are qualified in their entirety by reference to
the definitions contained in the Indenture.
"Net Tangible Assets" is defined to mean the aggregate amount at which assets
of the Company and all Restricted Subsidiaries are reported on the asset side
of the consolidated statement of financial position (after deducting all
related depreciation, amortization and other valuation reserves and after
excluding patents, trademarks, goodwill and similar intangibles and investments
in and advances to Subsidiaries other than Restricted Subsidiaries) less all
current liabilities (excluding deferred taxes) on the consolidated statement of
financial position.
"Original Issue Discount Security" is defined as any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof, as provided in the
Indenture.
"Principal Property" is defined to mean any manufacturing plant owned by the
Company or any Restricted Subsidiary which is located within North America and
the gross book value of which (without deduction of any depreciation reserves)
on the date as of which the determination is being made exceeds 5% of Net
Tangible Assets. Principal Property excludes, however, (i) aircraft and
aerospace products and spare parts, (ii) certain other types of personal
property and equipment, (iii) property financed through tax-exempt state or
municipal securities and (iv) any real property held for development, lease or
sale.
"Restricted Subsidiary" is defined as a Subsidiary other than MDRC, MDFC,
MDFS or any other Subsidiary which is primarily engaged in the business of
financing or leasing.
"Subsidiary" of the Company is defined as a corporation more than 50% of the
voting stock of which is owned by the Company and/or one or more Subsidiaries.
LIMITATIONS ON LIENS
The Indenture provides that if the Company or any Restricted Subsidiary shall
issue, assume or guarantee any evidence of indebtedness for money borrowed
("indebtedness") secured by a mortgage, security interest, pledge or lien
("mortgage") on any Principal Property of the Company or any Restricted
Subsidiary, or shares of stock or indebtedness of any Restricted Subsidiary,
the Company will secure or cause such Restricted Subsidiary to secure the Debt
Securities equally and ratably with such secured indebtedness, unless the
aggregate amount of all such secured indebtedness, together with all
indebtedness with respect to sale and lease-back transactions involving
Principal Properties (with the exception of such transactions which are
excluded as described in "Limitations on Sale and Lease-Back Transactions"
below), would not exceed 10% of Net Tangible Assets.
Such limitation will not apply to indebtedness secured by (a) mortgages on
property of any corporation existing at the time such corporation becomes a
Restricted Subsidiary, (b) mortgages on any property existing at the date of
the Indenture or at the time of acquisition by the Company or a Restricted
Subsidiary (including acquisition through merger or consolidation), (c)
mortgages securing indebtedness of a Restricted Subsidiary to the Company or to
another Restricted Subsidiary, (d) purchase money and construction mortgages
entered into within specified time limits, (e) mechanics' liens, tax liens,
liens in favor of any governmental body to secure progress, advance or other
payments for the acquisition of real or personal property from such
governmental body pursuant to contract or provision of statute; any other
liens, charges and encumbrances incidental to construction, conduct of business
or ownership of property of the Company or any Restricted
10
<PAGE>
Subsidiary which were not incurred in connection with borrowing money,
obtaining advances or credits for the acquisition of property and which in the
aggregate, do not materially impair use of any Principal Property, or which are
being contested in good faith, or (f) any extension, renewal or replacement of
any of the aforementioned mortgages not in excess of the principal amount of
such indebtedness plus the fee incurred in connection with such transaction.
LIMITATIONS ON SALE AND LEASE-BACK TRANSACTIONS
The Indenture provides that neither the Company nor any Restricted Subsidiary
may enter into any Sale and Lease-Back Transaction involving any Principal
Property, unless the aggregate amount of all attributable debt (as defined in
the Indenture) with respect to such transaction plus all indebtedness secured
by mortgages on Principal Properties (with the exception of secured
indebtedness which is excluded as described in "Limitations on Liens" above)
would not exceed 10% of Net Tangible Assets.
Such limitation will not apply to any sale and lease-back transaction if (a)
the lease is for a period of not more than three years, (b) the sale or
transfer of the Principal Property is made within a specified period after its
acquisition or construction, (c) the rent payable pursuant to such lease is to
be reimbursed under a contract with the United States Government or any
instrumentality or agency thereof, (d) the transaction is between the Company
and a Restricted Subsidiary or between Restricted Subsidiaries, or (e) the
Company or such Restricted Subsidiary, within 180 days after the sale is
completed, applies to the retirement of indebtedness of the Company or a
Restricted Subsidiary, an amount not less than the greater of (i) the net
proceeds of the sale of the Principal Property leased or (ii) the fair market
value of the Principal Property leased. In lieu of applying proceeds to the
retirement of indebtedness, debentures or notes (including the Debt Securities)
of the Company or a Restricted Subsidiary may be surrendered to the applicable
trustee for cancellation at a value equal to the redemption price thereof or
the Company or a Restricted Subsidiary may credit the principal amount of
indebtedness voluntarily retired within 180 days after such sale.
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
The Company, without the consent of any Holder of Outstanding Debt
Securities, may consolidate or merge with or into, or transfer or lease its
assets substantially as an entirety to, any corporation or may acquire or lease
the assets of any Person, provided that the corporation formed by such
consolidation or into which the Company is merged or which acquires or leases
the assets of the Company substantially as an entirety is organized under the
laws of any United States jurisdiction and assumes the Company's obligations on
the Debt Securities and under the Indenture, that after giving effect to the
transaction no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing, and that certain other conditions are met.
The Indenture provides that neither the Company nor any Restricted Subsidiary
may transfer any Principal Property to MDRC, MDFC, MDFS or to any other
Subsidiary other than to a Restricted Subsidiary.
MODIFICATION AND WAIVER
Modification and amendment of the Indenture may be effected by the Company
and the Trustee with the consent of the Holders of 66 2/3% in principal amount
of the outstanding Debt Securities of each series affected thereby, provided
that no such modification or amendment may, without the consent of the Holder
of each outstanding Debt Security affected thereby, (a) change the Stated
Maturity of any installment of principal of, or interest on, any Debt Security
or change the Redemption Price; (b) reduce the principal amount of, or the
interest on, any Debt Security or reduce the amount of principal which could be
declared due and payable prior to the Stated Maturity; (c) change the place or
currency of any payment of principal 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; (e) reduce the percentage in principal
amount of the outstanding Debt Securities of any series, the consent of whose
Holders is required to modify or amend such Indenture; or (f)
11
<PAGE>
modify the foregoing requirements or reduce the percentage of outstanding Debt
Securities necessary to waive any past default to less than a majority. Except
with respect to certain fundamental provisions, the Holders of at least a
majority in principal amount of outstanding Debt Securities of any series may,
with respect to such series, waive past defaults under the Indenture and waive
compliance by the Company with certain provisions of the Indenture.
DEFEASANCE
If the terms of the particular series of Debt Securities so provide, the
Company may discharge its indebtedness and its obligations under the Indenture
with respect to such series by depositing funds or obligations issued or
guaranteed by the United States with the Trustee. The Prospectus Supplement
will more fully describe the provisions, if any, relating to such discharge.
EVENTS OF DEFAULT
Under the Indenture, the following will be Events of Default with respect to
any series of Debt Securities: (a) default in the payment of any interest upon
any Debt Security of that series when due, continued for 30 days; (b) default
in the payment of any principal or premium, if any, on any Debt Security of
that series when due; (c) default in the deposit of any sinking fund payment,
when due, in respect of any Debt Security of that series; (d) default in the
performance of any other covenant of the Company contained in the Indenture or
in the Debt Securities of such series, continued for 90 days after written
notice as provided in the Indenture; (e) acceleration of any indebtedness for
money borrowed in an aggregate principal amount exceeding $10 million by the
Company or any Restricted Subsidiary under the terms of the instrument under
which such indebtedness is issued or secured, if such acceleration is not
annulled, or such indebtedness is not discharged, within 10 days after written
notice as provided in the Indenture; (f) certain events in bankruptcy,
insolvency or reorganization; and (g) any other Event of Default provided with
respect of Securities of that series. The Trustee or the Holders of 25% in
principal amount of the outstanding Debt Securities of that series may declare
the principal amount (or such lesser amount as may be provided for in the Debt
Securities of that series) of all outstanding Debt Securities of that series
due and payable immediately if an Event of Default with respect to Debt
Securities of such series shall occur and be continuing at the time of
declaration. At any time after a declaration of acceleration has been made with
respect to Debt Securities of any series but before a judgment or decree for
payment of money due has been obtained by the Trustee, the Holders of a
majority in principal amount of the outstanding Debt Securities of that series
may rescind any declaration of acceleration and its consequences, if all
payments due (other than those due as a result of acceleration) have been made
and all Events of Default have been remedied or waived. Any Event of Default
with respect to Debt Securities of any series may be waived by the Holders of a
majority in principal amount of all outstanding Debt Securities of that series,
except (i) in a case of failure to pay principal or premium, if any, or
interest on any Debt Security of that series for which payment had not been
subsequently made or (ii) in respect of a covenant or provision which cannot be
modified or amended without the consent of the Holder of each Outstanding
Security of such series affected.
The Holders of a majority in principal amount of the outstanding Debt
Securities of a 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 Debt Securities of such series,
provided that such direction shall not be in conflict with any rule of law or
the Indenture. 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 against the costs,
expenses and liabilities which might be incurred by it in complying with any
such direction.
The Company will be required to furnish to the Trustee annually a statement
as to the fulfillment by the Company of all of its obligations under the
Indenture.
THE TRUSTEE UNDER THE INDENTURE
The Bank of New York is the Trustee under the Indenture. The Company
maintains banking and borrowing relations with The Bank of New York.
12
<PAGE>
DESCRIPTION OF DEBT WARRANTS
The Company may issue, together with Debt Securities or separately, Debt
Warrants for the purchase of Debt Securities. The Debt Warrants are to be
issued under Debt Warrant Agreements (each a "Debt Warrant Agreement") to be
entered into between the Company and a bank or trust company, as Debt Warrant
Agent (the "Debt Warrant Agent"), all as shall be set forth in the Prospectus
Supplement relating to Debt Warrants being offered thereby. A copy of the form
of Debt Warrant Agreement, including the form of Warrant Certificates
representing the Debt Warrants (the "Debt Warrant Certificates"), reflecting
the alternative provisions to be included in the Debt Warrant Agreements that
will be entered into with respect to particular offerings of Debt Warrants, is
filed as an exhibit to the Registration Statement relating to the Securities.
The following summaries of certain provisions of the Debt Warrant Agreement and
the Debt Warrant Certificates do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Debt Warrant Agreement and the Debt Warrant Certificates, respectively,
including the definitions therein of certain terms.
GENERAL
The applicable Prospectus Supplement will describe the terms of Debt Warrants
offered thereby, the Debt Warrant Agreement relating to such Debt Warrants and
the Debt Warrant Certificates representing such Debt Warrants, including the
following: (1) 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; (2)
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; (3) the date, if any, on and after which such Debt Warrants and
the related Debt Securities will be separately transferable; (4) 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; (5) the date on which the right to exercise such Debt
Warrants shall commence and the date on which such right shall expire (the
"Expiration Date"); (6) if the Debt Securities purchasable upon exercise of
such Debt Warrants are Original Issue Discount Debt Securities, a discussion of
federal income tax considerations applicable thereto; and (7) where Debt
Warrant Certificates may be transferred and registered.
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 Debt Warrant Agent or any other office
indicated in the 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 or 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 (or such other
consideration as may be set forth in the Prospectus Supplement relating to the
Debt Warrants offered thereby) 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 Prospectus Supplement relating to the Debt Warrants offered
thereby. Debt Warrants may be exercised at any time up to the close of business
on the Expiration Date set forth in the Prospectus Supplement relating to the
Debt Warrants offered thereby. After the close of business on the Expiration
Date, unexercised Debt Warrants will become void.
Debt Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Debt Warrants offered thereby. Upon receipt of payment and the
Debt Warrant Certificate properly completed and duly executed at the corporate
trust office of the Debt Warrant Agent or any other office indicated in the
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.
13
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Securities to or through underwriters, and also may
sell the Securities directly to other purchasers or through agents. Such
underwriters may include Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") or may be a group of underwriters represented by Merrill
Lynch or one or more other firms. Only underwriters named in the Prospectus
Supplement are deemed to be underwriters in connection with the Securities
offered thereby.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, 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 Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of the
Securities may be deemed to be underwriters, and any discounts or commissions
received by them and any profit on the resale of the Securities by them may be
deemed to be underwriting discounts and commissions under the Act. Any such
underwriter or agent will be identified, and any such compensation will be
described, in the Prospectus Supplement.
If so indicated in the Prospectus Supplement, the Company will authorize the
underwriters to solicit offers by certain institutions to purchase Securities
from the Company pursuant to Delayed Delivery Contracts providing for payment
and delivery on the date stated in the Prospectus Supplement. Delayed Delivery
Contracts will not be subject to any conditions except that the purchase by an
institution of the Securities covered thereby shall not at the time of delivery
be prohibited under the laws of any jurisdiction to which such institution is
subject.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of the Securities may be
entitled to indemnification by the Company against certain liabilities,
including liabilities under the Act, or to contribution with respect to
payments which the underwriters, dealers or agents may be required to make in
respect thereof.
The Company may authorize dealers or other persons acting as the Company's
agents to solicit offers by certain institutions to purchase the Securities
from the Company pursuant to contracts providing for payment and delivery on a
future date. The dealers and such other persons acting as the Company's agents
will not have any responsibility in respect of the validity or performance of
such contracts.
LEGAL MATTERS
The validity of each issue of the Securities will be passed upon for the
Company by F. Mark Kuhlmann, Esq., Senior Vice President and General Counsel of
the Company, and for the underwriters or agents by Brown & Wood LLP.
EXPERTS
The consolidated financial statements of McDonnell Douglas Corporation and
subsidiaries incorporated by reference in the Company's annual report (Form 10-
K) for the year ended December 31, 1995 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
14
<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR IN-
CORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPEC-
TUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RE-
LIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER OR
AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Description of Notes....................................................... S-2
Plan of Distribution....................................................... S-14
</TABLE>
<TABLE>
<S> <C>
PROSPECTUS
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
The Company................................................................. 3
Summary Financial Information............................................... 5
Use of Proceeds............................................................. 8
Description of Debt Securities.............................................. 8
Description of Debt Warrants................................................ 13
Plan of Distribution........................................................ 14
Legal Matters............................................................... 14
Experts..................................................................... 14
</TABLE>
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MCDONNELL
DOUGLAS
CORPORATION
MEDIUM-TERM NOTES
-----------------
PROSPECTUS SUPPLEMENT
-----------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
J.P. MORGAN & CO
SALOMON BROTHERS INC
AUGUST , 1996
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- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses in connection with the issuance
and distribution of the securities being registered. All the amounts shown are
estimates, except the registration fee.
<TABLE>
<S> <C>
Registration fee................................................... $344,828
Fees and expenses of accountants................................... 30,000
Fees and expenses of counsel....................................... 40,000
Blue Sky and Legal Investment fees and expenses.................... 10,000
Fees and expenses of Trustees...................................... 50,000
Printing expenses.................................................. 50,000
Rating agency fees................................................. 200,000
Miscellaneous...................................................... 5,172
--------
Total............................................................ $730,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-418 of the Maryland General Corporation Law permits indemnification
of any officer or director made a party to any proceeding by reason of service
in the capacity of an officer or director unless it is established that (i) the
director's or officer's act or omission was material to the matter giving rise
to the proceeding and was committed in bad faith or was the result of active
and deliberate dishonesty; or (ii) the director or officer actually received an
improper personal benefit in money, property or services or (iii) in the case
of any criminal proceeding, the director or officer had reasonable cause to
believe that the act or omission was unlawful. Indemnification may be against
judgments, penalties, fines, settlements, and reasonable expenses actually
incurred by the officer or director in connection with the proceeding. However,
if the proceeding was one by or in the right of the Company, indemnification
may not be made in respect of any proceeding in which the officer or director
shall have been adjudged to be liable to the Company. The termination of any
proceeding by judgment, order or settlement does not create a presumption that
the officer or director did not meet the requisite standard of conduct set
forth above. The termination of any proceeding by conviction, nolo contendere
or its equivalent, or probation prior to judgment creates a rebuttable
presumption that the director did not meet the requisite standard of conduct.
Section 2-418 of the Maryland General Corporation Law requires
indemnification of officers and directors (unless limited by the corporation's
charter) who have been successful, on the merits or otherwise, in the defense
of certain proceedings against reasonable expenses incurred by the officer or
director in connection with the proceeding. A court of appropriate
jurisdiction, upon application of an officer or director and such notice as the
court shall require, may order indemnification if it determines an officer or
director is entitled to reimbursement as provided above, in which case the
officer or director shall be entitled to recover the expenses of securing such
reimbursement, or if it determines that the officer or director is fairly and
reasonably entitled to indemnification in view of all the relevant
circumstances. However, indemnification with respect to any proceeding by or in
the right of the corporation or in which the director or officer is held liable
for receipt of improper personal benefit shall be limited to expenses.
Article IX of the Company's Bylaws and Resolution 1114 adopted by the
Company's Board of Directors provide indemnification of the Company's directors
and officers consistent with Section 2-418.
The form of Underwriting Agreement and Distribution Agreement filed as
Exhibits 1(a) and 1(b), respectively, to this Registration Statement provides
for the indemnification of the Company, its controlling persons, its directors
and certain of its officers, by the underwriters against certain liabilities,
including
II-1
<PAGE>
liabilities under the Securities Act of 1933, as amended. The Company maintains
a policy of insurance under which the directors and officers of the Company are
insured, subject to the limits of the policy, against certain losses, as
defined in the policy, arising from claims made against such directors and
officers by reason of any wrongful acts, as defined in the policy, in their
respective capacities as directors or officers.
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<C> <S>
*1(a) --Form of Underwriting Agreement, including Form of Terms Agreement
and Delayed Delivery Contract.
*1(b) --Form of Distribution Agreement.
*4(a) --Indenture, dated as of September 1, 1985, between the Company and
The Bank of New York, as successor trustee to Citibank, N.A.,
providing for the issuance of the Company's Senior Securities.
*4(b) --First Supplemental Indenture between the Company and The Bank of
New York, as successor trustee to Citibank, N.A., amending the
Company's Indenture providing for the issuance of Senior
Securities.
*4(c) --Form of Second Supplemental Indenture between the Company and The
Bank of New York, as successor trustee to Citibank, N.A., amending
the Company's Indenture providing for the issuance of Senior
Securities.
**4(d) --Form of Note.
*4(e) --Form of Fixed Rate Medium-Term Note.
4(f) --Form of Floating Rate Medium-Term Note.
*4(g) --Form of Warrant Agreement, including Form of Warrant
Certificate.
5 --Opinion of F. Mark Kuhlmann, Esq.
12 --Computation of Ratio of Earnings to Fixed Charges.
23(a) --Consent of F. Mark Kuhlmann (included in exhibit 5).
23(b) --Consent of Ernst & Young LLP.
24 --Power of Attorney (Included at II-4).
25 --Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 relating to The Bank of New York.
99 --Report of Ernst & Young LLP with respect to certain summary
financial information appearing or incorporated in the
Registration Statement.
</TABLE>
- --------
* Exhibits 1(a), 1(b), 4(a), 4(b), 4(c), 4(e), and 4(g) are incorporated by
reference as an exhibit hereto from Exhibits 1(a), 1(b), 4(a), 4(b), 4(c),
4(g) and 4(k), respectively, to Registrant's Registration Statement on form
S-3 (File No. 33-36180).
** Exhibit 4(d) is incorporated by reference as an exhibit hereto from Exhibit
4(b) to Registrant's Registration Statement on Form S-3 (File No. 33-
002496).
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
II-2
<PAGE>
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the Securities offered therein, and the
offering of such Securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the Securities being registered which remain unsold at the termination of the
offering.
(b) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to sections
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
Registration Statement relating to the Securities offered therein and the
offering of such Securities at the time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referred to in Item 15 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the Securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of St. Louis and State of Missouri on the day of
, 1996.
MCDONNELL DOUGLAS CORPORATION
/s/ Harry C. Stonecipher
BY___________________________________
HARRY C. STONECIPHER
PRESIDENT & CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below does hereby constitute and appoint F. Mark Kuhlmann and Steven N. Frank
and each of them, acting severally, his or her true and lawful attorneys and
agents to execute, in his or her name, place and stead, in any and all
capacities (including his or her capacity as a director and/or officer of
McDonnell Douglas Corporation), to sign any or all amendments (including post-
effective amendments) to this Registration Statement and to file the same, with
all exhibits thereto, and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys and agents
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys and agents may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have duly executed this Power of Attorney
as of the day of August, 1996.
SIGNATURE TITLE
/s/ Harry C. Stonecipher Director, President
- ------------------------------------- and Chief Executive
(HARRY C. STONECIPHER) Officer (Principal
Executive Officer)
/s/ John F. McDonnell Chairman of the
- ------------------------------------- Board
(JOHN F. MCDONNELL)
II-4
<PAGE>
SIGNATURE TITLE
/s/ James F. Palmer Senior Vice
- ------------------------------------- President and Chief
JAMES F. PALMER Financial Officer
(Principal
Financial Officer)
/s/ Robert L. Brand Vice President and
- ------------------------------------- Controller
(ROBERT L. BRAND) (Principal
Accounting Officer)
/s/ John H. Biggs Director
- -------------------------------------
(JOHN H. BIGGS)
/s/ B.A. Bridgewater, Jr. Director
- -------------------------------------
(B.A. BRIDGEWATER, JR.)
/s/ Beverly B. Byron Director
- -------------------------------------
(BEVERLY B. BYRON)
/s/ William E. Cornelius Director
- -------------------------------------
(WILLIAM E. CORNELIUS)
Director
- -------------------------------------
(WILLIAM H. DANFORTH)
/s/ Kenneth M. Duberstein Director
- -------------------------------------
(KENNETH M. DUBERSTEIN)
/s/ William S. Kanaga Director
- -------------------------------------
(WILLIAM S. KANAGA)
/s/ James S. McDonnell III Director
- -------------------------------------
(JAMES S. MCDONNELL III)
/s/ George A. Schaefer Director
- -------------------------------------
(GEORGE A. SCHAEFER)
/s/ Ronald L. Thompson Director
- -------------------------------------
(RONALD L. THOMPSON)
/s/ P. Roy Vagelos Director
- -------------------------------------
(P. ROY VAGELOS)
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE NO.
------- ----------- --------
<C> <S> <C>
*1(a) --Form of Underwriting Agreement, including Form of Terms
Agreement and Delayed Delivery Contract. .................
*1(b) --Form of Distribution Agreement. ..........................
*4(a) --Indenture, dated as of September 1, 1985, between the
Company and The Bank of New York, as successor trustee to
Citibank, N.A., providing for the issuance of the Company's
Senior Securities. .......................................
*4(b) --First Supplemental Indenture between the Company and The
Bank of New York, as successor trustee to Citibank, N.A.,
amending the Company's Indenture providing for the issuance
of Senior Securities. ....................................
*4(c) --Form of Second Supplemental Indenture between the Company
and The Bank of New York, as successor trustee to Citibank,
N.A., amending the Company's Indenture providing for the
issuance of Senior Securities. ...........................
**4(d) --Form of Note. ............................................
*4(e) --Form of Fixed Rate Medium-Term Note. .....................
4(f) --Form of Floating Rate Medium-Term Note. ..................
*4(g) --Form of Warrant Agreement, including Form of Warrant
Certificate. .............................................
5 --Opinion of F. Mark Kuhlmann, Esq. ........................
12 --Computation of Ratio of Earnings to Fixed Charges. .......
23(a) --Consent of F. Mark Kuhlmann (included in exhibit 5). .....
23(b) --Consent of Ernst & Young LLP. ............................
24 --Power of Attorney (Included at II-4). ....................
25 --Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 relating to The Bank of New
York. ....................................................
99 --Report of Ernst & Young LLP with respect to certain
summary financial information appearing or incorporated in
the Registration Statement . .............................
</TABLE>
- --------
* Exhibits 1(a), 1(b), 4(a), 4(b), 4(c), 4(e), and 4(g) are incorporated by
reference as an exhibit hereto from Exhibits 1(a), 1(b), 4(a), 4(b), 4(c),
4(g) and 4(k), respectively, to Registrant's Registration Statement on form
S-3 (File No. 33-36180).
** Exhibit 4(d) is incorporated by reference as an exhibit hereto from Exhibit
4(b) to Registrant's Registration Statement on Form S-3 (File No. 33-
002496).
<PAGE>
Exhibit 4(f)
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY OR NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN
WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY (THE
"DEPOSITORY") TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR
BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (55 WATER STREET, NEW
YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
REGISTERED REGISTERED
No.FLR $
CUSIP:
<TABLE>
<CAPTION>
McDonnell Douglas Corporation
Medium-Tenn Note
(Floating Rate)
<S> <C> <C>
INTEREST RATE BASIS: ORIGINAL ISSUE DATE: STATED MATURITY DATE:
INDEX MATURITY: INITIAL INTEREST RATE: INTEREST PAYMENT DATES:
SPREAD: INTEREST RATE RESET DATES: SPREAD MULTIPLIER:
INITIAL REDEMPTION DATE: ANNUAL REDEMPTION PERCENTAGE INITIAL REDEMPTION
PERCENTAGE REDUCTION PERCENTAGE:
MINIMUM INTEREST RATE: MAXIMUM INTEREST RATE: HOLDER'S OPTIONAL
REPAYMENT DATE(S):
CALCULATION AGENT: DAY COUNT CONVENTION: OTHER PROVISIONS:
(if other than [ ] Actual/360
The Bank of New York) [ ] Actual/Actual
ADDENDUM ATTACHED:
[ ] Yes
[ ] No
</TABLE>
<PAGE>
Exhibit 5
August 27, 1996
Re: Registration Statement on Form S-3
of McDonnell Douglas Corporation
Gentlemen:
I am acting as counsel for McDonnell Douglas Corporation, a Maryland
corporation (the "Company"), in connection with the Registration
Statement on Form S-3 filed by the Company on August 27, 1996 (the
"Registration Statement") with the Securities and Exchange Commission
under the Securities Act of 1993, as amended, pertaining to the proposed
issuance by the Company of up to U.S. $1,000,000,000 or the equivalent in
one or more foreign currencies, of Senior/Subordinated Debt Securities
("Debt Securities") and Warrants to purchase Debt Securities ("Warrants")
all as provided in the Registration Statement. In connection therewith,
the Company's law department has examined such corporate records of the
Company and other documents as it has deemed necessary to render the
opinion expressed herein, including resolutions adopted by the Company's
Board of Directors relating to the proposed issuance of the Debt
Securities and Warrants, the Indenture dated as of September 1, 1985, as
amended, between the Company and The Bank of New York (as successor to
Citibank, N.A.), as trustee, and the form of Debt Warrant Agreement
between the Company and the entity named therein.
Based upon the foregoing, I am of the opinion that:
1. The issuance of the Debt Securities has been duly authorized
and, when the terms of the Debt Securities have been established and the
execution and delivery of the Debt Securities have been authorized by the
authorized officers of the Company, and the Debt Securities have been
executed, authenticated and delivered in accordance with the applicable
Indenture against payment therefor, the Debt Securities will constitute
the legal, valid and binding obligations of the Company except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting the enforceability of creditors' rights
generally or by general equity principles.
2. The issuance of the Warrants has been duly authorized and, when
the terms of the Warrants have been established and execution and
delivery of the Warrants have been authorized by the authorized officers
of the Company, and the Warrants have been executed, authenticated and
delivered in accordance with the Debt Warrant Agreement and delivered
against payment therefor, the Warrants will be legally and validly
issued, fully paid and nonassessable and will be entitled to the benefits
of the related Debt Warrant Agreement.
I hereby consent to the use of my name under the caption "Legal
Matters" and the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ F. Mark Kuhlmann
F. Mark Kuhlmann
Senior Vice President and
General Counsel
<PAGE>
Exhibit 12
MCDONNELL DOUGLAS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Years Ended December 31
---------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ -----
EARNINGS
Earnings (loss) from
continuing operations
before income taxes
and cumulative effect
of accounting change ($750) $920 $459 $1,086 $615
ADD: Interest expense 225 249 215 468 453
Interest factor
in rents 32 35 39 57 66
Amortization of
capitalized
interest 1 1 1 2 2
------ ------ ------ ------ ------
($492) $1,205 $715 $1,613 $1,136
====== ====== ====== ====== ======
FIXED CHARGES
Interest expense $225 $249 $215 $468 $453
Capitalized interest 2
Interest factor in rents 32 35 39 57 66
------ ------ ------ ------ ------
$257 $284 $256 $525 $519
====== ====== ====== ====== ======
Ratio of earnings to fixed
charges --(A) 4.2X 2.8X 3.1X 2.2X
====== ====== ====== ====== ======
(A) For the year ended December 31, 1995, earnings were inadequate to
cover fixed charges. The amount of such deficiency for the period
was $749 million.
<PAGE>
Exhibit 12
McDonnell Douglas Corporation
Computation of Ratio of Earnings to Fixed Charges
Six Months Ended June 30, 1996
(Dollars in Millions)
SIX MONTHS ENDED JUNE 30 1996 1995
---- ----
EARNINGS
Earnings from continuing
operations income taxes $ 609 $ 519
ADD: Interest expense 124 127
Interest factor in rents 23 16
----- -----
$ 756 $ 662
===== =====
FIXED CHARGES
Interest expense $ 124 $ 127
Interest factor in rents 23 16
----- -----
$ 147 $ 143
===== =====
Ratio of earnings to fixed charges 5.1X 4.6X
===== =====
<PAGE>
Exhibit 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3 No. 33-XXXXX) and related
Prospectus of McDonnell Douglas Corporation for the registration of
$1,000,000,000 aggregate principal amount of Debt Securities and Debt
Warrants and to the incorporation by reference therein of our reports
dated January 17, 1996, with respect to the consolidated financial
statements and schedule of McDonnell Douglas Corporation and
subsidiaries included or incorporated by reference in its Annual Report
(Form 10-K) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
We also consent to the use herein of our report with respect to the
dollar amounts set forth in the "Summary Financial Information" under
the captions "Summary of Operation" and "Balance Sheet Information" for
each of the five years in the period ended December 31, 1995, included
in the Prospectus.
/s/ Ernst & Young LLP
St. Louis, Missouri Ernst & Young LLP
August 26, 1996
<PAGE>
Exhibit 25
=====================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) __
____________________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip Code)
____________________________
MCDONNELL DOUGLAS CORPORATION
(Exact name of obligor as specified in its charter)
Maryland 43-0400674
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
P.O. Box 516
St. Louis, Missouri 63166-0516
(Address of principal executive offices) (Zip Code)
____________________________
Debt Securities
(Title of the indenture securities)
=====================================================================
<PAGE>
1. General information. Furnish the following information as to
the Trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
- --------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------
Superintendent of Banks of the 2 Rector Street,
State of New York New York, N.Y. 10006,
and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit
hereto, pursuant to Rule 7a-29 under the Trust Indenture Act of 1939
(the "Act") and Rule 24 of the Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect, which contains
the authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4
to Form T-1 filed with Registration Statement No. 33-31019.)
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its supervising
or examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by
the Trustee of all facts on which to base a responsive answer to Item
2, the answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by
an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of
New York, a corporation organized and existing under the laws of the
State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on
the 21st day of August, 1996.
THE BANK OF NEW YORK
By: /s/ PAUL J. SCHMALZEL
--------------------------
Name: PAUL J. SCHMALZEL
Title: ASSISTANT TREASURER
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1996,
published in accordance with a call made
by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal
Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ................................$ 2,461,550
Interest-bearing balances ............................835,563
Securities:
Held-to-maturity securities ......................... 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic offices
of the bank:
Federal funds sold ...................................3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ..........................................27,820,159
LESS: Allowance for loan and
lease losses .......................................509,817
LESS: Allocated transfer risk
reserve...............................................1,000
Loans and leases, net of unearned
income, allowance, and reserve...................27,309,342
Assets held in trading accounts ........................837,118
Premises and fixed assets (including
capitalized leases) ..................................614,567
Other real estate owned .................................51,631
Investments in unconsolidated
subsidiaries and associated
companies ............................................225,158
Customers' liability to this bank on
acceptances outstanding ..............................800,375
Intangible assets ......................................436,668
Other assets .........................................1,247,908
----------
Total assets .......................................$41,558,682
===========
<PAGE>
Exhibit 7
LIABILITIES
Deposits:
In domestic offices ..............................$18,851,327
Noninterest-bearing ................................7,102,645
Interest-bearing ..................................11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ..................10,965,604
Noninterest-bearing ...................................37,855
Interest-bearing .................................10,927,749
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............................1,224,886
Securities sold under agreements
to repurchase .......................................29,728
Demand notes issued to the U.S.
Treasury .............................................118,870
Trading liabilities ....................................673,944
Other borrowed money:
With original maturity of one year
or less ..........................................2,713,248
With original maturity of more than
one year ............................................20,780
Bank's liability on acceptances exe-
cuted and outstanding ................................803,292
Subordinated notes and debentures ....................1,022,860
Other liabilities ....................................1,590,564
----------
Total liabilities ...................................38,015,103
==========
EQUITY CAPITAL
Common stock ...........................................942,284
Surplus ................................................525,666
Undivided profits and capital
reserves ...........................................2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities .............................................3,197
Cumulative foreign currency transla-
tion adjustments ..................................( 5,765)
Total equity capital .................................3,543,579
Total liabilities and equity
capital ..........................................$41,558,682
===========
<PAGE>
Exhibit 7
I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of Condition
has been prepared in conformance with the instructions issued by the
Board of Governors of the Federal Reserve System and is true to the
best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the corrrectness of this
Report of Condition and declare that it has been examined by us and to
the best of our knowledge and belief has been prepared in conformance
with the instructions issued by the Board of Governors of the Federal
Reserve System and is true and correct.
]
J. Carter Bacot ]
Thomas A. Renyi ] Directors
Alan R. Griffith ]
<PAGE>
Exhibit 99
REPORT OF INDEPENDENT AUDITORS
Board of Directors
McDonnell Douglas Corporation
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements of McDonnell Douglas
Corporation and subsidiaries for each of the five years in the period
ended December 31, 1995 (none of which are presented herein). We
expressed unqualified opinions on the aforementioned consolidated
financial statements. Our report on the consolidated financial
statements for the year ended December 31, 1991 included a reference as
to the change in the method of accounting for income taxes as described
in the notes to the 1991 consolidated financial statements. Our
reports on the consolidated financial statements for the year ended
December 31, 1992 included a reference as to the change in the method
of accounting for retiree health care benefits as described in the
notes to the 1992 consolidated financial statements. Our report on the
consolidated financial statements for the year ended December 31, 1995
included a reference as to the change in the method of accounting for
the MD-11 commercial aircraft program as described in the notes to the
1995 consolidated financial statements. In our opinion, the dollar
amounts set forth in the "Summary Financial Information" under the
captions "Summary of Operations" and "Balance Sheet Information" for
each of the five years in the period ended December 31, 1995 included
in the Prospectus are fairly stated in all material respects in
relation to the consolidated financial statements from which they have
been derived.
/s/ Ernst & Young LLP
St. Louis, Missouri Ernst & Young LLP
January 17, 1996
