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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 26, 1998
THIOKOL CORPORATION
_________________________________________
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-6179 36-2678716
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(Commission File Number) (I.R.S. Employer
(State or other jurisdiction Identification Number)
of Incorporation)
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2475 Washington Boulevard, Ogden, Utah 84401-3498
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(Address of principal executive offices) (Zip Code)
(801) 629-2000
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(Registrants' telephone number, including area code)
n/a
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(former name or former address, if changed since last report)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
The following exhibits are filed as part of this Report:
No. Exhibit
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1(a) Form of Underwriting Agreement, dated as of February 26, 1998.
1(b) Underwriting Agreement by and among the registrant and Morgan
Stanley & Co. Incorporated, Credit Suisse First Boston
Corporation, ABN AMRO Incorporated, BT Alex. Brown Incorporated
and First Chicago Capital Markets, Inc., dated as of February 26,
1998.
99 Prospectus Supplement, dated as of February 26, 1998 to the
prospectus contained in the registrant's registration statement
on Form S-3 (Registration No. 333-01753) under the Securities Act
of 1933, as amended.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THIOKOL CORPORATION
(Registrant)
By: /s/ Nicholas Iuanow
----------------------------------
Nicholas Iuanow
Vice President and
Treasurer
Dated: February 26, 1998
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EXHIBIT INDEX
1(a) Form of Underwriting Agreement.
1(b) Underwriting Agreement.
99 Prospectus Supplement.
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EXHIBIT 1(A)
THIOKOL CORPORATION
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
(DEBT SECURITIES AND WARRANTS
TO PURCHASE DEBT SECURITIES)
February 26, 1998
From time to time, Thiokol Corporation, a Delaware corporation (the
"Company"), may enter into one or more underwriting agreements that provide for
the sale of designated securities to the several underwriters named therein.
The standard provisions set forth herein may be incorporated by reference in any
such underwriting agreement (an "Underwriting Agreement"). The Underwriting
Agreement, including the provisions incorporated therein by reference, is herein
sometimes referred to as this Agreement. Terms defined in the Underwriting
Agreement are used herein as therein defined.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Debt Securities, Debt Warrants, shares of preferred stock of the Company, par
value $1.00 per share (the "Preferred Stock"), in one or more series, shares of
common stock of the Company, par value $1.00 per share (the "Common Stock") and
warrants to purchase Preferred Stock or Common Stock (the "Equity Warrants") and
has filed with, or transmitted for filing to, or shall promptly hereafter file
with or transmit for filing to, the Commission a prospectus supplement (the
"Prospectus Supplement") specifically relating to the Offered Securities and the
Debt Warrant Securities pursuant to Rule 424 under the Securities Act of 1933,
as amended (the "Securities Act"). The term "Registration Statement" means the
registration statement on Form S-3 (No. 333-01753), as amended to the date of
this Agreement. The term "Basic Prospectus" means the prospectus included in
the Registration Statement, as such prospectus is amended as of the date hereof.
The term "Prospectus" means the Basic Prospectus together with the Prospectus
Supplement. The term "preliminary prospectus" means a preliminary prospectus
supplement specifically relating to the Offered Securities and the Debt Warrant
Securities, together with the Basic Prospectus. As used herein, the terms
"Basic Prospectus," "Prospectus" and "preliminary prospectus" shall include in
each case the documents, if any, incorporated by reference therein. The terms
"supplement," "amendment" and "amend" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with
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the Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The term "Contract Securities" means the Offered Securities to be purchased
pursuant to the delayed delivery contracts substantially in the form of Schedule
I hereto, with such changes therein as the Company may approve (the "Delayed
Delivery Contracts"). The term "Underwriters' Securities" means the Offered
Securities other than Contract Securities.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to
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and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder, (ii)
the Registration Statement, when it became effective, did not contain, and
such Registration Statement, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (iii) the Registration Statement and the
Prospectus comply, and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the applicable
rules and regulations of the Commission thereunder and (iv) the Prospectus
does not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 1(b) do not apply
(A) to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to
the Company in writing by such Underwriter expressly for use therein or (B)
to that part of the Registration Statement that constitutes the Statement
of Eligibility ("Form T-1") under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), of any Trustee or (C) to the ratios of
earnings to fixed charges in the Registration Statement when it became
effective.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
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(d) Each Significant Subsidiary (as such term is defined in Rule 405
promulgated under the Securities Act) of the Company has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
(e) This Agreement has been duly authorized, executed and delivered by
the Company.
(f) The Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized, and as of the Closing Date for any such
Offered Securities, will have been executed and delivered by the Company
and will be a valid and binding agreement of the Company, enforceable in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(g) The Debt Warrant Agreement has been duly authorized, and as of the
Closing Date for any such Offered Securities, will have been executed and
delivered by the Company and will be a valid and binding agreement of the
Company, enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(h) The Delayed Delivery Contracts have been duly authorized, and as
of the Closing Date for any such Offered Securities, will have been
executed and delivered by the Company and will be valid and binding
agreements of the Company, enforceable in accordance with their respective
terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
(i) The Offered Securities and the Debt Warrant Securities have been
duly authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for (A) by the
Underwriters in accordance with the terms of the Underwriting Agreement, in
the case of the Underwriters' Securities, or by institutional investors in
accordance with the terms of the Delayed Delivery Contracts, in the case of
the Contract Securities and (B) upon the exercise of Debt Warrants pursuant
to the Debt Warrant Agreement, in the case of the Debt Warrant Securities,
will be entitled to the benefits of the Indenture or the Debt Warrant
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Agreement, as the case may be, and will be valid and binding obligations of
the Company, in each case enforceable in accordance with their respective
terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration, if any, and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(j) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indenture, the
Offered Securities, the Debt Warrant Securities, the Delayed Delivery
Contracts and the Debt Warrant Agreement will not contravene any provision
of applicable law or the certificate of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the Company or
any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, the
Indenture, the Offered Securities, the Debt Warrant Securities, the Delayed
Delivery Contracts or the Debt Warrant Agreement, except such as may be
required by the Securities Act and the rules and regulations thereunder,
the Exchange Act and the rules and regulations thereunder, the Trust
Indenture Act and the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Offered Securities.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(l) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed or
incorporated by reference as exhibits to the Registration Statement that
are not described, filed or incorporated as required.
(m) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
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(n) The Company is not an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
(o) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(p) The Company is eligible to use a registration statement on Form S-
3 under the Securities Act pursuant to the standards for that form as in
effect immediately prior to October 21, 1992.
2. DELAYED DELIVERY CONTRACTS. If the Prospectus provides for sales of
--------------------------
Offered Securities pursuant to Delayed Delivery Contracts, the Company hereby
authorizes the Underwriters to solicit offers to purchase Contract Securities on
the terms and subject to the conditions set forth in the Prospectus pursuant to
Delayed Delivery Contracts. Delayed Delivery Contracts may be entered into only
with institutional investors approved by the Company of the types set forth in
the Prospectus. On the Closing Date, the Company will pay to the Manager as
compensation for the accounts of the Underwriters the commission set forth in
the Underwriting Agreement in respect of the Contract Securities. The
Underwriters will not have any responsibility in respect of the validity or the
performance of any Delayed Delivery Contracts.
If the Company executes and delivers Delayed Delivery Contracts with
institutional investors, the aggregate amount of Offered Securities to be
purchased by the several Underwriters shall be reduced by the aggregate amount
of Contract Securities; such reduction shall be applied to the commitment of
each Underwriter pro rata in proportion to the amount of Offered Securities set
forth opposite such Underwriter's name in the Underwriting Agreement, except to
the extent that the Manager determines that such reduction shall be applied in
other proportions and so advises the Company; provided, however, that the total
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amount of Offered Securities to be purchased by all Underwriters shall be the
aggregate amount set forth above, less the aggregate amount of Contract
Securities.
3. TERMS OF PUBLIC OFFERING. The Company is advised by the Manager that
------------------------
the Underwriters propose to make a public offering of their respective portions
of the Underwriters' Securities as soon after this Agreement has been entered
into as in the Manager's judgment is advisable. The terms of the public
offering of the Underwriters' Securities are set forth in the Prospectus.
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4. PAYMENT AND DELIVERY. Except as otherwise provided in this Section 4,
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payment for the Underwriters' Securities shall be made to the Company by wire
transfer of same day funds at the time set forth in the Underwriting Agreement,
upon delivery to the Manager for the respective accounts of the several
Underwriters of the Underwriters' Securities registered in such names and in
such denominations as the Manager shall request in writing not less than one
full business day prior to the date of delivery, with any transfer taxes payable
in connection with the transfer of the Underwriters' Securities to the
Underwriters duly paid.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The several obligations
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of the Underwriters are subject to the following conditions:
(a) Subsequent to the execution and delivery of the Underwriting
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in the reasonable
judgment of the Manager, is material and adverse and that makes it, in
the reasonable judgment of the Manager, impracticable to market the
Offered Securities on the terms and in the manner contemplated in the
Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause (a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied in all material respects with all of the agreements
and satisfied in all material respects all of the conditions on its part to
be performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an
opinion from Daniel S. Hapke, Jr., Senior Vice President and General
Counsel of the Company, dated the Closing Date, to the effect that:
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(i) the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(ii) each Significant Subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and, to the best of such
counsel's knowledge, is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture, the Offered Securities, the Debt Warrant Securities,
the Delayed Delivery Contracts and the Debt Warrant Agreement will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any of its subsidiaries,
or, to the best of such counsel's knowledge, any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or,
any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary;
(iv) the statements (A) in "Item 3 - Legal Proceedings" of the
Company's most recent annual report on Form 10-K incorporated by
reference in the Prospectus and (B) in "Item 1 - Legal Proceedings" of
Part II of the Company's quarterly reports on Form 10-Q, if any, filed
since such annual report, in each case insofar as such statements
constitute summaries of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and
accurately summarize the matters referred to therein in all material
respects;
(v) to the best of such counsel's knowledge, there are no legal
or governmental proceedings pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or the
Prospectus and are not so described or of any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed or
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incorporated by reference as exhibits to the Registration Statement
that are not described, filed or incorporated as required;
(vi) each document filed pursuant to the Exchange Act and
incorporated by reference in the Prospectus (except for financial
statements and schedules and other financial data included therein, as
to which such counsel need not express any opinion) complied when so
filed as to form in all material respects with the Exchange Act and
the applicable rules and regulations of the Commission thereunder (in
passing upon the compliance as to form of each such document filed
pursuant to the Exchange Act and incorporated by reference in the
Prospectus, such counsel may assume that the statements made and
incorporated by reference therein are correct and complete); and
(vii) no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body (excluding any New York
court or governmental agency or body) is required for the issue and
sale of the Offered Securities or for the performance by the Company
of its obligations under this Agreement, the Indenture, the Offered
Securities, the Debt Warrant Securities, the Delayed Delivery
Contracts or the Debt Warrant Agreement, except such as have been
obtained under the Securities Act and the Trust Indenture Act and the
applicable rules and regulations of the Commission under the
Securities Act and the Trust Indenture Act and such as may be required
under state securities laws in connection with the purchase and
distribution of the Offered Securities by the Underwriters as to which
such counsel may express no opinion;
(d) The Underwriters shall have received on the Closing Date an
opinion of Latham & Watkins, outside counsel for the Company, dated the
Closing Date, to the effect that:
(i) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware,
with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus;
(ii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iii) the Indenture has been (a) duly qualified under the Trust
Indenture Act, and (b) duly authorized, executed and delivered by the
Company and is the legally valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms;
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(iv) the Debt Warrant Agreement has been duly authorized,
executed and delivered by the Company and is the legally valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms;
(v) the Delayed Delivery Contracts have been duly authorized,
executed and delivered by the Company and are legally valid and
binding agreements of the Company, enforceable against the Company in
accordance with their respective terms;
(vi) the Offered Securities and the Debt Warrant Securities
have been duly authorized and executed by the Company and, when
authenticated by the Trustee in accordance with the terms of the
Indenture and delivered to and paid for (A) by the Underwriters in
accordance with the terms of the Underwriting Agreement, in the case
of Underwriters' Securities, or by institutional investors in
accordance with the terms of the Delayed Delivery Contracts, in the
case of the Contract Securities and (B) upon the exercise of Debt
Warrants pursuant to the Debt Warrant Agreement, in the case of the
Debt Warrant Securities, will be entitled to the benefits of the
Indenture or the Debt Warrant Agreement, as the case may be, and will
be legally valid and binding obligations of the Company, in each case
enforceable against the Company in accordance with their respective
terms;
(vii) no consent, approval, authorization or order of, or filing
with, any New York court or governmental agency or body is required
for the issue and sale of the Offered Securities or for the
performance by the Company of its obligations under this Agreement,
the Indenture, the Offered Securities, the Debt Warrant Securities,
the Delayed Delivery Contracts or the Debt Warrant Agreement, except
such as have been obtained under the Securities Act and the Trust
Indenture Act and the applicable rules and regulations of the
Commission under the Securities Act and the Trust Indenture Act and
such as may be required under state securities laws in connection with
the purchase and distribution of the Offered Securities by the
Underwriters as to which such counsel may express no opinion;
(viii) the statements set forth in the Prospectus under the
captions "Description of the [Notes/Debentures]" (or other similar
caption, as the case may be), "Description of Debt Securities" and
"Description of Warrants," in each case insofar as such statements
constitute summaries of legal matters or documents referred to therein
are accurate in all material respects; and the Offered Securities
conform in all material respects to the description thereof in the
Prospectus;
(ix) the issue and sale of the Offered Securities being
delivered on the Closing Date by the Company and the compliance by the
Company with the provisions of the Underwriting Agreement will not
result in the violation by
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the Company of its Restated Certificate of Incorporation or By-laws or
any federal or New York statute, rule or regulation known to such
counsel to be applicable to the Company (other than federal securities
laws, which are specifically addressed in paragraph (vii) above, or
state securities laws, as to which such counsel may express no
opinion);
(x) the Company is not an "investment company," as such term is
defined in the Investment Company Act of 1940, as amended;
(xi) if applicable, such counsel is of the opinion ascribed to it
in the Prospectus under the caption "[Taxation]" (or other similar
caption, as the case may be);
(xii) the Registration Statement and the Prospectus, in each case
excluding the documents referred to in subparagraph (xiii) below,
comply as to form in all material respects with the requirements for
registration statements on Form S-3 under the Securities Act and the
applicable rules and regulations of the Commission thereunder; it
being understood however, that such counsel need express no opinion
with respect to financial statements, schedules and other financial
data included or incorporated in the Registration Statement or
Prospectus or with respect to the Form T-1 (in passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel may assume that the statements made and
incorporated by reference therein are correct and complete); and
(xiii) each document incorporated by reference in the Prospectus
(other than the financial statements, schedules and other financial
data included or incorporated by reference therein, as to which such
counsel need express no opinion), when it was filed with the
Commission, appeared on its face to comply as to form in all material
respects with the requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder (in passing upon
the compliance as to form of each of such documents, such counsel may
assume that the statements made and incorporated by reference therein
are correct and complete).
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Company,
counsel to the Company, representatives of the independent public
accountants for the Company, and representatives of the Underwriters,
at which the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although such counsel is not
passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and has not made any
independent check or verification thereof (except as set forth in
paragraph (viii) above), during the course of such participation, no
facts came to such
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counsel's attention that caused such counsel to believe that the
Registration Statement, at the time it became effective, contained an
untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, not misleading, or that
the Prospectus, as of the date of the Prospectus Supplement or as of
the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary
to make the statements therein, in the light of the circumstances
under which they were made, not misleading, it being understood that
such counsel expresses no belief with respect to the financial
statements, schedules or other financial data included or incorporated
by reference in the Registration Statement or the Prospectus or with
respect to the Form T-1.
(e) The Underwriters shall have received on the Closing Date an
opinion of Brown & Wood llp, special counsel for the Underwriters, dated
the Closing Date, covering the matters referred to in subparagraphs (ii),
(iii), (iv), (v), (vi), (viii), (xii) and the final paragraph of Section
5(d) above.
The opinions of Daniel S. Hapke, Jr., Senior Vice President and General
Counsel of the Company, and of Latham & Watkins described in paragraphs (c) and
(d) above shall be rendered to the Underwriters at the request of the Company
and shall so state therein.
(f) The Underwriters shall have received, on each of the date of any
Underwriting Agreement and the Closing Date, a letter, dated the date of
each such Underwriting Agreement or the Closing Date, as the case may be,
in form and substance satisfactory to the Underwriters, from Ernst & Young
LLP, the Company's independent public accountants, containing statements
and information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in or incorporated by reference
into the Prospectus; provided that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date of such Underwriting
Agreement.
6. COVENANTS OF THE COMPANY. In further consideration of the agreements
------------------------
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish the Manager, without charge, one copy of the executed
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and, during the period mentioned in paragraph
(c) below, as many copies of the Prospectus, any documents incorporated by
reference therein and any supplements and amendments thereto or to the
Registration Statement as the Manager may reasonably request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus with respect to the Offered Securities, to furnish to the
Manager a copy of
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each such proposed amendment or supplement and not to file any such
proposed amendment or supplement to which the Manager reasonably objects.
(c) If, during such period after the first date of the public offering
of the Offered Securities as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses the Manager will
furnish to the Company) to which Offered Securities may have been sold by
the Manager on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Offered Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the Manager
shall reasonably request and to maintain such qualification for as long as
the Manager shall reasonably request.
(e) To make generally available to the Company's security holders and
to the Manager as soon as practicable an earning statement covering a
twelve month period beginning on the first day of the first full fiscal
quarter after the date of this Agreement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and the rules
and regulations of the Commission thereunder. If such fiscal quarter is
the last fiscal quarter of the Company's fiscal year, such earning
statement shall be made available not later than 90 days after the close of
the period covered thereby and in all other cases shall be made available
not later than 45 days after the close of the period covered thereby.
(f) During the period beginning on the date of the Underwriting
Agreement and continuing to and including the Closing Date, not to offer,
sell, contract to sell or otherwise dispose of any debt securities of the
Company or warrants to purchase debt securities of the Company
substantially similar to the Offered Securities (other than (i) the Offered
Securities and (ii) commercial paper issued in the ordinary course of
business), without the prior written consent of the Manager.
(g) To pay all expenses incident to the performance of its obligations
under this Agreement, including: (i) the preparation and filing of the
Registration Statement and the Prospectus and all amendments and
supplements thereto; (ii) the preparation,
12
<PAGE>
issuance and delivery of the Offered Securities; (iii) the fees and
disbursements of the Company's counsel and accountants and of the Trustee
and its counsel; (iv) the qualification of the Offered Securities under
state securities or Blue Sky laws in accordance with the provisions of
Section 6(d), including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with
the preparation of any Blue Sky Memoranda; (v) the printing and delivery to
the Underwriters in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto and of any preliminary
prospectus and the Prospectus and any amendments or supplements thereto;
(vi) the printing and delivery to the Underwriters of copies of any Blue
Sky Memoranda; (vii) any fees charged by rating agencies for the rating of
the Offered Securities; (viii) the filing fees and expenses, if any,
incurred with respect to any filing with the National Association of
Securities Dealers, Inc. made in connection with the Offered Securities and
(ix) any expenses incurred by the Company in connection with a "road show"
presentation to potential investors.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
--------------------------------
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Manager expressly for use therein; provided,
however, that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such losses, claims, damages or liabilities purchased
Offered Securities, or any person controlling such Underwriter, if a copy of the
Prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto but excluding documents incorporated by
reference therein) was not sent or given by or on behalf of such Underwriter to
such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Offered Securities to such person, and
if the Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such failure
is the result of noncompliance by the Company with Section 6(c) hereof or unless
the defect giving rise to such losses, claims, damages or liabilities shall have
been cured in a document incorporated by reference in the Prospectus.
13
<PAGE>
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through the
Manager expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or (b) of this Section 7, such person
(the "indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel at the
indemnifying party's expense or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by the Manager, in
the case of parties indemnified pursuant to paragraph (a) above, and by the
Company, in the case of parties indemnified pursuant to paragraph (b) above.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
14
<PAGE>
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 7 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Offered Securities shall be deemed to be
in the same respective proportions as the net proceeds from the offering of such
Offered Securities (before deducting expenses) received by the Company and the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus Supplement,
bear to the aggregate public offering price of the Offered Securities. The
relative fault of the Company on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Underwriters' respective obligations to contribute pursuant to this Section
7 are several in proportion to the respective principal amounts of Offered
Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 7 were determined by pro
---
rata allocation (even if the Underwriters were treated as one entity for such
- ----
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 7. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
15
<PAGE>
person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 7 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
(f) The indemnity and contribution provisions contained in this
Section 7 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Offered Securities.
8. TERMINATION. This Agreement shall be subject to termination by notice
-----------
given by the Manager to the Company, if (a) after the execution and delivery of
the Underwriting Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange or the National
Association of Securities Dealers, Inc., (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or New York State authorities or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Manager, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event, singly or together with
any other such event, makes it, in the reasonable judgment of the Manager,
impracticable to market the Offered Securities on the terms and in the manner
contemplated in the Prospectus.
9. DEFAULTING UNDERWRITERS. If, on the Closing Date, any one or more of
-----------------------
the Underwriters shall fail or refuse to purchase Underwriters' Securities that
it has or they have agreed to purchase hereunder on such date, and the aggregate
amount of Underwriters' Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than one-tenth
of the aggregate amount of the Underwriters' Securities to be purchased on such
date, the other Underwriters shall be obligated severally in the proportions
that the amount of Underwriters' Securities set forth opposite their respective
names in the Underwriting Agreement bears to the aggregate amount of
Underwriters' Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Manager may specify, to
purchase the Underwriters' Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
--------
that in no event shall the amount of Underwriters' Securities that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 9 by an amount in excess of one-ninth of such amount of
Underwriters' Securities without the written consent of such Underwriter. If,
on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Underwriters' Securities and the aggregate amount of Underwriters'
Securities with respect to which such default occurs is more than one-tenth of
the aggregate amount of Underwriters' Securities to be purchased on such date,
16
<PAGE>
and arrangements satisfactory to the Manager and the Company for the purchase of
such Underwriters' Securities are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter or the Company. In any such case either the Manager or
the Company shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, or if for any
reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
10. COUNTERPARTS. This Agreement may be signed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and construed in
--------------
accordance with the internal laws of the State of New York.
12. HEADINGS. The headings of the sections of this Agreement have been
--------
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
17
<PAGE>
UNDERWRITING AGREEMENT
. , 1998
Thiokol Corporation
2475 Washington Boulevard
Ogden, Utah 84401-2398
Dear Sirs and Mesdames:
We (the "Manager") are acting on behalf of the underwriter or underwriters
(including ourselves) named below (such underwriter or underwriters being herein
called the "Underwriters"), and we understand that Thiokol Corporation, a
Delaware corporation (the "Company"), proposes to issue and sell $ . aggregate
[initial offering price/principal amount] of [Full title of Debt Securities]
(the "Debt Securities") [and . warrants (the "Debt Warrants") to purchase $ .
aggregate [initial offering price/principal amount] of its [title of Debt
Securities] (the "Debt Warrant Securities")]. [(The Debt Securities and the Debt
Warrants, but not the Debt Warrant Securities, are collectively referred to
herein as the "Offered Securities.")] [The Debt Securities are also referred to
herein as the "Offered Securities."] The Debt Securities [and the Debt Warrant
Securities] will be issued pursuant to the provisions of an Indenture dated as
of . , 1998 (the "Indenture") between the Company and . , as Trustee (the
"Trustee") [and the Debt Warrants will be issued pursuant to the provisions of a
Debt Warrant Agreement dated as of . , 1998 (the "Debt Warrant Agreement")
between the Company and . , as Debt Warrant Agent].
Subject to the terms and conditions set forth or incorporated by reference
herein, the Company hereby agrees to sell to the several Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the Company the
respective principal amounts of Debt Securities [and numbers of Debt Warrants]
set forth below opposite their names at a purchase price of . % of the principal
amount of Debt Securities[, plus accrued interest, if any, from [Date of Offered
Securities] to the date of payment and delivery] [and at a purchase price of $ .
per Debt Warrant]:
18
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of
Name Debt Securities
- ------------------------------------ -------------------
<S> <C>
Morgan Stanley & Co. Incorporated
[Insert syndicate list]
Total..........................
</TABLE>
<TABLE>
<CAPTION>
Number of Debt
Name Warrants
- ------------------------------------ --------------
<S> <C>
Morgan Stanley & Co. Incorporated
[Insert syndicate list]
Total..........................
</TABLE>
[The principal amount of Debt Securities and number of Debt Warrants to be
purchased by the several Underwriters shall be reduced by the aggregate
principal amount of Debt Securities and number of Debt Warrants sold pursuant to
delayed delivery contracts.]
The Underwriters will pay for the Offered Securities [(less any Offered
Securities sold pursuant to delayed delivery contracts)] upon delivery thereof
at . at . a.m. (New York time) on . , 1998, or at such other time, not later
than 5:00 p.m. (New York time) on . , 1998, as shall be designated by the
Manager. The time and date of such payment and delivery are hereinafter referred
to as the Closing Date.
The Offered Securities shall have the terms set forth in the Prospectus
dated . , 199 . , and the Prospectus Supplement dated . , 1998, including the
following:
Terms of Debt Securities
Maturity Date:
Interest Rate:
Redemption Provisions:
Interest Payment Dates: . and . commencing . , 1998 [(Interest
accrues from . , 1998)]
Form and Denomination:
[Other Terms:]
Terms of Debt Warrants
19
<PAGE>
[Number of Debt Warrants issued
with each $ . principal amount of
Debt Securities:]
[Detachable Date:]
Exercise Date:
Expiration Date:
Exercise Price:
Principal amount of Debt Warrant
Securities purchasable upon
exercise of one Debt Warrant:
Form:
[Other Terms:]
Terms of Debt Warrant Securities
Maturity Date:
Interest Rate:
Redemption Provisions:
Interest Payment Dates:
Form and Denomination:
[Other Terms]:
[The commission to be paid to the Underwriters in respect of the Offered
Securities purchased pursuant to delayed delivery contracts arranged by the
Underwriters shall be . % of the principal amount of the Debt Securities so
purchased [and $ . per Debt Warrant so purchased].
All provisions contained in the document entitled Thiokol Corporation
Underwriting Agreement Standard Provisions (Debt Securities and Warrants to
Purchase Debt Securities) dated . , 1998, a copy of which is attached hereto,
are herein incorporated by reference in their entirety and shall be deemed to be
a part of this Agreement to the same extent as if such provisions had been set
forth in full herein, except that (i) if any term defined in such
20
<PAGE>
document is otherwise defined herein, the definition set forth herein shall
control, (ii) all references in such document to a type of security that is not
an Offered Security shall not be deemed to be a part of this Agreement, (iii) if
the Offered Securities do not include Debt Warrants, then all references in such
document to Debt Warrant Securities shall not be deemed to be a part of this
Agreement and (iv) all references in such document to a type of agreement that
has not been entered into in connection with the transactions contemplated
hereby shall not be deemed to be a part of this Agreement.
21
<PAGE>
[SIGNATURE PAGE WHERE MORGAN STANLEY & CO. INCORPORATED IS A CO-LEAD MANAGER]
---------------------------------------------------------------------------
Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
[NAMES OF OTHER LEAD MANAGERS]
Acting severally on behalf of themselves
and the several Underwriters named herein
By: MORGAN STANLEY & CO. INCORPORATED
By:
----------------------------------
Name:
Title:
Accepted:
THIOKOL CORPORATION
By:
-------------------------
Name:
Title:
22
<PAGE>
[SIGNATURE PAGE WHERE MORGAN STANLEY & CO. INCORPORATED IS SOLE MANAGER]
----------------------------------------------------------------------
Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
Acting severally on behalf of itself
and the several Underwriters named herein
By:
---------------------------------------
Name:
Title:
Accepted:
THIOKOL CORPORATION
By:
----------------------------
Name:
Title:
23
<PAGE>
Schedule I
DELAYED DELIVERY CONTRACT
. , 1998
Dear Sirs and Mesdames:
The undersigned hereby agrees to purchase from Thiokol Corporation, a
Delaware corporation (the "Company"), and the Company agrees to sell to the
undersigned the Company's securities described in Schedule A annexed hereto (the
"Securities"), offered by the Company's Prospectus dated . , 199 . and
Prospectus Supplement dated . , 1998, receipt of copies of which are hereby
acknowledged, at a purchase price stated in Schedule A and on the further terms
and conditions set forth in this Agreement. The undersigned does not contemplate
selling Securities prior to making payment therefor.
The undersigned will purchase from the Company Securities in the principal
amount and numbers on the delivery dates set forth in Schedule A. Each such
date on which Securities are to be purchased hereunder is hereinafter referred
to as a "Delivery Date."
Payment for the Securities which the undersigned has agreed to purchase on
each Delivery Date shall be made to the Company by wire transfer of same day
funds on the Delivery Date, upon delivery to the undersigned of the Securities
to be purchased by the undersigned on the Delivery Date, in such denominations
and registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than five full
business days prior to the Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
the Securities on the Delivery Date shall be subject to the conditions that (1)
the purchase of Securities to be made by the undersigned shall not at the time
of delivery be prohibited under the laws of the jurisdiction to which the
undersigned is subject and (2) the Company shall have sold, and delivery shall
have taken place to the underwriters (the "Underwriters") named in the
Prospectus Supplement referred to above of, such part of the Securities as is to
be sold to them. Promptly after completion of sale and delivery to the
Underwriters, the Company will mail or deliver to the undersigned at its address
set forth below notice to such effect, accompanied by a copy of the opinion of
counsel for the Company delivered to the Underwriters in connection therewith.
Failure to take delivery of and make payment for Securities by any
purchaser under any other Delayed Delivery Contract shall not relieve the
undersigned of its obligations under this agreement.
24
<PAGE>
This Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
If this Agreement is acceptable to the Company, it is requested that the
Company sign the form of acceptance below and mail or deliver one of the
counterparts hereof to the undersigned at its address set forth below. This
will become a binding agreement, as of the date first above written, between the
Company and the undersigned when such counterpart is so mailed or delivered.
25
<PAGE>
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
Yours very truly,
--------------------------------------------------
(Purchaser)
By:
-----------------------------------------------
-----------------------------------------------
(Title)
-----------------------------------------------
-----------------------------------------------
(Address)
Accepted:
Thiokol Corporation
By:
------------------------------------
26
<PAGE>
PURCHASER --- PLEASE COMPLETE AT TIME OF SIGNING
The name and telephone and department of the representative of the
Purchaser with whom details of delivery on the Delivery Date may be discussed is
as follows: (Please print.)
Telephone No.
Name (Including Area Code) Department
---------- ----------------------- ------------------
---------- ----------------------- ------------------
27
<PAGE>
SCHEDULE A
----------
Securities:
- ----------
Principal Amounts or Numbers to be Purchased:
- --------------------------------------------
Purchase Price:
- --------------
Delivery Date:
- -------------
28
<PAGE>
EXHIBIT 1(B)
UNDERWRITING AGREEMENT
February 26, 1998
Thiokol Corporation
2475 Washington Boulevard
Ogden, Utah 84401-2398
Dear Sirs and Mesdames:
We (the "Manager") are acting on behalf of the underwriters (including
ourselves) named below (such underwriters being herein called the
"Underwriters"), and we understand that Thiokol Corporation, a Delaware
corporation (the "Company"), proposes to issue and sell $150,000,000 aggregate
principal amount of 6 5/8% Senior Notes due 2008 (the "Debt Securities"). The
Debt Securities are also referred to herein as the "Offered Securities." The
Debt Securities will be issued pursuant to the provisions of an Indenture dated
as of March 3, 1998 (the "Indenture") between the Company and Harris Trust and
Savings Bank, as Trustee (the "Trustee").
Subject to the terms and conditions set forth or incorporated by reference
herein, the Company hereby agrees to sell to the several Underwriters, and each
Underwriter agrees, severally and not jointly, to purchase from the Company the
respective principal amounts of Debt Securities set forth below opposite their
names at a purchase price of 98.773% of the principal amount of Debt Securities,
plus accrued interest from March 1, 1998 to the date of payment and delivery:
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of
Name Debt Securities
----------------------------------------- -------------------
<S> <C>
Morgan Stanley & Co. Incorporated $ 60,000,000
Credit Suisse First Boston Corporation 30,000,000
ABN AMRO Incorporated 20,000,000
BT Alex. Brown Incorporated 20,000,000
First Chicago Capital Markets, Inc. 20,000,000
------------
Total............................... $150,000,000
</TABLE>
The Underwriters will pay for the Offered Securities upon delivery thereof
at the offices of Latham & Watkins, 505 Montgomery Street, Suite 1900, San
Francisco, California 94111 at 10:00 a.m. (New York time) on March 3, 1998, or
at such other time, not later than 5:00 p.m. (New York time) on March 10, 1998,
as shall be designated by the Manager. The time and date of such payment and
delivery are hereinafter referred to as the Closing Date.
The Offered Securities shall have the terms set forth in the Prospectus
dated February 26, 1998, and the Prospectus Supplement dated February 26, 1998
(the "Prospectus Supplement"), including the following:
Terms of Debt Securities
Maturity Date: March 1, 2008
Interest Rate: 6 5/8% per annum, payable semiannually in
arrears on each Interest Payment Date
2
<PAGE>
Redemption Provisions: The Debt Securities will be redeemable, in
whole or from time to time in part, at the
option of the Company at any time at a
redemption price equal to the greater of (i)
100% of the principal amount of the Debt
Securities to be redeemed and (ii) the sum of
the present values of the remaining scheduled
payments of principal and interest thereon
(exclusive of interest accrued to the date of
redemption) discounted to the date of
redemption on a semiannual basis (assuming a
360-day year consisting of twelve 30-day
months) at the Treasury Rate (as defined in
the Prospectus Supplement) plus 20 basis
points plus, in either case, accrued and
unpaid interest on the principal amount being
redeemed to the date of redemption.
Interest Payment Dates: March 1 and September 1, commencing
September 1, 1998 (Interest accrues from
March 1, 1998)
Form and Denomination: The Debt Securities will be represented by a
global note registered in the name of a
nominee of The Depository Trust Company,
as depositary. The Debt Securities will be
issued in denominations of $1,000 and
integral multiples thereof.
All provisions contained in the document entitled Thiokol Corporation
Underwriting Agreement Standard Provisions (Debt Securities and Warrants to
Purchase Debt Securities) dated February 26, 1998, a copy of which is attached
hereto, are herein incorporated by reference in their entirety and shall be
deemed to be a part of this Agreement to the same extent as if such provisions
had been set forth in full herein, except that (i) if any term defined in such
document is otherwise defined herein, the definition set forth herein shall
control, (ii) all references in such document to a type of security that is not
an Offered Security shall not be deemed to be a part of this Agreement, (iii) if
the Offered Securities do not include Debt Warrants, then all references in such
document to Debt Warrant Securities shall not be deemed to be a part of this
Agreement and (iv) all references in such document to a type of agreement that
has not been entered into in connection with the transactions contemplated
hereby shall not be deemed to be a part of this Agreement.
3
<PAGE>
Please confirm your agreement by having an authorized officer sign a copy
of this Agreement in the space set forth below.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
Acting severally on behalf of itself
and the several Underwriters named herein
By: /s/ Mark H. Bradley
---------------------------------------
Name: Mark H. Bradley
Title: Principal
Accepted:
THIOKOL CORPORATION
By: /s/ Nicholas Iuanow
------------------------------
Name: Nicholas Iuanow
Title: Vice President and Treasurer
4
<PAGE>
EXHIBIT 99
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 26, 1998)
$150,000,000
[THIOKOL LOGO]
6 5/8% SENIOR NOTES DUE 2008
---------------
Interest payable March 1 and September 1
---------------
THE 6 5/8% SENIOR NOTES DUE 2008 (THE "NOTES") MATURE ON MARCH 1, 2008. THE
NOTES WILL BE REDEEMABLE, IN WHOLE OR FROM TIME TO TIME IN PART, AT THE
OPTION OF THE COMPANY AT ANY TIME AT A REDEMPTION PRICE EQUAL TO THE GREATER
OF (I) 100% OF THE PRINCIPAL AMOUNT OF THE NOTES TO BE REDEEMED AND (II)
THE SUM OF THE PRESENT VALUES OF THE REMAINING SCHEDULED PAYMENTS OF
PRINCIPAL AND INTEREST THEREON (EXCLUSIVE OF INTEREST ACCRUED TO THE DATE
OF REDEMPTION) DISCOUNTED TO THE DATE OF REDEMPTION ON A SEMIANNUAL BASIS
(ASSUMING A 360-DAY YEAR CONSISTING OF TWELVE 30-DAY MONTHS) AT THE
TREASURY RATE (AS DEFINED HEREIN) PLUS 20 BASIS POINTS, PLUS, IN EITHER
CASE, ACCRUED AND UNPAID INTEREST ON THE PRINCIPAL AMOUNT BEING
REDEEMED TO THE DATE OF REDEMPTION. THE NOTES WILL BE REPRESENTED BY A
GLOBAL NOTE REGISTERED IN THE NAME OF A NOMINEE OF THE DEPOSITORY
TRUST COMPANY, AS DEPOSITARY (THE "DEPOSITARY"). BENEFICIAL
INTERESTS IN THE NOTES WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL
BE EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY THE DEPOSITARY OR
ITS PARTICIPANTS. EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE PROSPECTUS, NOTES IN CERTIFICATED FORM WILL NOT BE ISSUED IN
EXCHANGE FOR A GLOBAL NOTE. SEE "DESCRIPTION OF THE NOTES."
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE S-6 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
---------------
PRICE 99.423% AND ACCRUED INTEREST
---------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
--------- -------------- -------------
<S> <C> <C> <C>
Per Note ................ 99.423% .650% 98.773%
Total.................... $149,134,500 $975,000 $148,159,500
</TABLE>
- -------
(1) Plus accrued interest from March 1, 1998.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriters."
(3) Before deduction of expenses payable by the Company estimated at
$200,000.
---------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriters and subject to approval of certain legal matters by Brown &
Wood llp, counsel for the Underwriters. It is expected that delivery of the
Notes will be made on or about March 3, 1998, through the book-entry
facilities of the Depositary against payment therefor in immediately available
funds.
---------------
MORGAN STANLEY DEAN WITTER
CREDIT SUISSE FIRST BOSTON
ABN AMRO INCORPORATED
BT ALEX. BROWN
FIRST CHICAGO CAPITAL MARKETS, INC.
February 26, 1998
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE 6 5/8% SENIOR NOTES DUE 2008
(THE "NOTES") OFFERED HEREBY, NOR DO THEY CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE NOTES BY ANYONE IN ANY JURISDICTION 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 ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY
SALE OR OFFER MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary............................................. S-3
Risk Factors.............................................................. S-6
Business Overview......................................................... S-9
Use of Proceeds........................................................... S-12
Capitalization............................................................ S-13
Selected Consolidated Financial Data...................................... S-14
Pro Forma Condensed Combined Financial Information........................ S-15
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-16
Description of the Notes.................................................. S-28
Underwriters.............................................................. S-34
Legal Matters............................................................. S-35
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................................... 2
Information Incorporated by Reference....................................... 2
The Company................................................................. 3
Use of Proceeds............................................................. 3
Ratios of Earnings to Fixed Charges......................................... 4
General Description of Securities........................................... 4
Description of Debt Securities.............................................. 4
Description of Warrants..................................................... 12
Description of Preferred Stock.............................................. 13
Plan of Distribution........................................................ 16
Legal Matters............................................................... 17
Experts..................................................................... 17
</TABLE>
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITERS."
S-2
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following Prospectus Supplement Summary as well as "Business Overview"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" should be read in conjunction with the other information and
Consolidated Financial Statements of the Company, the notes thereto and the
other financial data contained elsewhere in this Prospectus Supplement and the
accompanying Prospectus or incorporated by reference therein. Prospective
investors should carefully consider the factors set forth herein under the
caption "Risk Factors" and are urged to read this Prospectus Supplement and the
accompanying Prospectus in their entirety. This Prospectus Supplement contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such
statements are indicated by words or phrases such as "anticipate," "estimate,"
"project," "management believes," "the Company believes" and similar words or
phrases. Such statements are based on current expectations and are subject to
certain risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. All references to the "Company" or "Thiokol" shall mean Thiokol
Corporation and its consolidated subsidiaries, unless the context indicates
otherwise.
THE COMPANY
Thiokol Corporation (the "Company" or "Thiokol") is a leading producer of
high technology solid rocket motors for space, defense and commercial launch
applications and a major supplier of precision fastening systems for aerospace
and industrial markets worldwide. Thiokol's 62 percent owned subsidiary, Howmet
International Inc. ("Howmet"), is a leading manufacturer of investment cast
turbine engine components for jet aircraft and industrial gas power generation
markets, as well as a leading producer of aluminum investment castings for the
commercial aerospace and defense electronics industries.
In recent years, the Company has reduced its dependence on government
aerospace and defense contracts by broadening its business base into industrial
and commercial markets. Thiokol's investments in new products and markets have
focused on its operating and technical strengths in solid rocket launch
vehicles, propellants, gas generants, composites, and highly engineered
products sold to large, technically sophisticated customers. Through
acquisitions, Thiokol has become a leading producer of threaded and non-
threaded fasteners which serve a broad range of industrial and aerospace
applications. Through Howmet, Thiokol participates in the high technology
superalloy and titanium investment castings markets for aerospace and
industrial gas turbine ("IGT") industries and manufactures aluminum investment
castings for the commercial aerospace and defense electronics industries.
The Company's shift from sales dominated by propulsion systems to a broader
base of business is illustrated by a comparison of its sales mix in fiscal year
1991 and fiscal year 1997.
PRO FORMA SALES MIX
LOGO
*Represents pro forma sales for fiscal year 1997 assuming Thiokol owned 62
percent of Howmet since the beginning of such year.
S-3
<PAGE>
The Company's strategy is to improve profitability and increase shareholder
value by (i) maintaining the Company's leadership position in space and defense
propulsion, (ii) expanding the fastener business both internally and with
selected acquisitions, and (iii) enhancing its market position at Howmet by
leveraging its technological capabilities and generating growth through new
casting applications and technological innovations. In addition, the Company
intends to continue focusing on improving operating efficiencies through cost
reductions and productivity improvements.
In December 1997, Thiokol purchased an additional 13 percent of Howmet from
The Carlyle Group ("Carlyle") for approximately $184 million, increasing the
Company's ownership from 49 percent to 62 percent. Thiokol began consolidating
Howmet's operating results as of December 2, 1997. In connection with the sale
to Thiokol, Carlyle also sold 15.35 percent of Howmet to the public through an
initial public offering, resulting in a reduction of Carlyle's ownership from
51 percent to 22.65 percent. The Company has the right, during a two year
period commencing in December 1999, to acquire all of Carlyle's remaining
shares of Howmet common stock and a right of first refusal to acquire any
shares Carlyle proposes to sell, in each case at market price. Carlyle has also
agreed with Thiokol that it will not dispose of any of its shares of Howmet
common stock until the earlier of December 1999 or the occurrence of a change
of control of Thiokol. Thiokol and its affiliates are prohibited from acquiring
shares of Howmet common stock from the public if less than 14 percent of the
Howmet common stock would be held by the public following such acquisition. In
December 1995, Thiokol and Carlyle invested $98 million and $102 million,
respectively, to purchase the common stock of Howmet.
S-4
<PAGE>
THE OFFERING
A complete description of the terms of the Notes is set forth under
"Description of the Notes" herein and "Description of Debt Securities" in the
accompanying Prospectus.
Securities Offered.......... $150,000,000 aggregate principal amount of 6 5/8%
Senior Notes due 2008.
Maturity Date............... March 1, 2008.
Interest Payment Dates...... March 1 and September 1, commencing September 1,
1998.
Optional Redemption......... The Notes will be redeemable, in whole or from
time to time in part, at the option of the
Company at any time at the redemption prices
described herein, plus accrued and unpaid
interest on the principal amount being redeemed
to the date of redemption.
Ranking..................... The Notes will be senior unsecured obligations of
the Company and will rank pari passu in right of
payment with all other senior unsecured
obligations of the Company and senior in right of
payment to all existing and future subordinated
debt of the Company. A significant portion of the
Company's operations are conducted through its
directly and indirectly owned subsidiaries, and
therefore, the Company is dependent on the cash
flow of its subsidiaries to meet its debt
obligations, including its obligations under the
Notes. See "Risk Factors--Ownership of Howmet."
The claims of holders of the Notes effectively
will be subordinated to the prior claims of
creditors, including trade creditors, of the
Company's operating subsidiaries. At December 31,
1997, after giving pro forma effect to the
offering, the total current and other liabilities
and long-term debt of the subsidiaries included
in the Company's consolidated liabilities would
have been approximately $728.4 million (excluding
the Pechiney Notes, see footnote (d) under
"Capitalization").
Covenants................... The Indenture governing the Notes will contain
covenants that, among other things, (i) limit the
ability of the Company and certain of its
subsidiaries to create certain liens, (ii) limit
the ability of the Company to consolidate or
merge with or into or transfer all or
substantially all of its assets to another person
and (iii) limit the ability of the Company and
certain of its subsidiaries to engage in sale-
leaseback transactions. The foregoing
restrictions are subject to a number of
significant exceptions. See "Description of the
Notes."
Use of Proceeds............. The net proceeds from the offering will be used
to repay outstanding borrowings under the
Company's credit facilities and for working
capital and other general corporate purposes. See
"Use of Proceeds."
S-5
<PAGE>
RISK FACTORS
Purchasers of the Notes offered hereby should consider the specific factors
set forth in the Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1997 and below as well as the other information set forth in this
Prospectus Supplement and the accompanying Prospectus or incorporated by
reference therein.
NASA RSRM CONTRACT
The Company's National Aeronautics and Space Administration ("NASA")
reusable solid rocket motor ("RSRM") contract for the Space Shuttle program is
subject to substantial performance and financial risks. The contract may be
terminated without cause by the United States government. Deliveries under the
contract may also be delayed or extended at the election of the United States
government, or Congress may change the funding available to the contract.
Additionally, the Company's work under its current RSRM contract is expected
to be completed in fiscal 2001, and there is no assurance the Company will be
awarded additional follow-on RSRM contracts in the future. If the Company is
awarded such a follow-on contract, the effects on the Company's results of
operations from such contract may not be the same as the current RSRM
contract. NASA's proposed privatization of the Space Shuttle program or the
development of alternative propulsion sources could also adversely impact the
Company's RSRM contract in the future. Any change in, or discontinuance of,
the Company's RSRM contract or the benefits it receives thereunder could have
a material adverse effect on the Company's results of operations and its
ability to pay amounts due on the Notes.
SPACE AND DEFENSE CONTRACTS
The Company's maintenance of non-RSRM space and defense contracts, including
commercial launch vehicles and programs (collectively, "non-RSRM programs"),
and the availability and award of future programs with the United States
government and prime contractors are subject to the risk of termination or
renegotiation by the customer or failure of such programs to be funded. The
termination or discontinuance of funding of a substantial portion of such
business would have a material adverse effect on the Company and its ability
to pay amounts due on the Notes. The Company's ability to successfully compete
and win new non-RSRM programs or retain current non-RSRM programs may be
affected by the availability of program funding; competition with others for
such non-RSRM programs on price, quality, technology, facilities, delivery,
and product performance; changes in Congressional funding objectives;
continued declines in United States defense spending; federal agency demand
and program management, including but not limited to program termination,
consolidation, or privatization; and the degree the Company successfully
manages current non-RSRM programs. There can be no assurance that the Company
will successfully win new non-RSRM programs or retain current non-RSRM
programs and the failure to do so could have a material adverse effect on the
Company and its ability to pay amounts due on the Notes.
CYCLICALITY OF THE AEROSPACE MARKET
The Company derives significant revenues from the commercial aerospace
industry. The domestic and international commercial aerospace markets are
highly cyclical in nature, and the demand by commercial airlines for new
aircraft historically has been highly related to the stability and health of
the United States and world economies. Although the United States airline
industry has returned to profitability in recent years, recent events in Asia
may significantly affect the airline industry thereby negatively impacting
orders and deliveries of engines for commercial aircraft. There can be no
assurance that delays or changes in aircraft and component orders and build
schedules will not impact the future demand for the Company's products,
thereby impacting the Company's results of operations. Fluctuations in demand
for the Company's products in the aerospace industry could have a material
adverse effect on the Company and its ability to pay amounts due on the Notes.
SUPPLIER AND CUSTOMER PRODUCT QUALIFICATIONS
Supplier and customer product qualifications are important to the Company as
a supplier and as a purchaser. As a supplier, loss or failure to maintain
product or manufacturing qualifications from major customers including
S-6
<PAGE>
the United States government and major commercial defense and aerospace
manufacturers may result in loss of markets and business for, and have a
material adverse effect on, the Company. Vendor, component parts, and raw
materials qualifications are important to the Company in the manufacture of
its products, including major propulsion systems such as the RSRM. Vendor,
component parts and raw material qualifications may be limited and the loss of
a major vendor as a supplier could cause a material delay in production or
program management, which could have a material adverse effect on the Company
and its ability to pay amounts due on the Notes.
ENVIRONMENTAL MATTERS
The Company is subject to comprehensive and changing federal, state, local
and international laws, regulations and ordinances (together, "Environmental
Laws") that (i) govern activities or operations that may have adverse
environmental effects such as discharges to air and water, as well as handling
and disposal practices for solid and hazardous wastes, and (ii) impose
liability for the costs of cleaning up, and certain damages resulting from,
sites of past spills, disposals or other releases of hazardous substances and
materials, including liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, and similar state statutes for the
investigation and remediation of environmental contamination at properties
owned and/or operated by it and at off-site locations where it has arranged
for the disposal of hazardous substances. The Company is involved from time to
time in legal proceedings involving remediation of environmental contamination
from past or present operations, as well as compliance with environmental
requirements applicable to ongoing operations. There can be no assurance that
material costs or liabilities will not be incurred in connection with any such
proceedings, claims or compliance requirements or in connection with currently
unknown environmental liabilities.
GENERAL ECONOMIC AND INDUSTRY RISKS
The products and services sold by the Company for domestic and international
industrial markets, primarily through the fastening systems business segment
and the investment castings segment, are subject to the risks of the level of
general economic activity and industry capacity in mature industrial markets,
product applications, and technology associated primarily with aircraft,
automotive, transportation, power generation, construction, and other
industrial applications. The risks for the Company include management's
ability to successfully expand new and existing product lines, and to improve
margins and returns on investment by successfully implementing asset
management, pricing and cost reduction strategies. The Company's ability to
maintain competitive products, pricing, availability, delivery, and service
are important customer and competitor risk factors.
OWNERSHIP OF HOWMET
Additional future increases in ownership percentage of Howmet will in part
be dependent on Howmet's operational and financial performance, economic
conditions, price of Howmet common stock, and the availability of financing at
reasonable costs and on reasonable terms at the time the Company's option to
acquire the balance of Carlyle's equity ownership of Howmet is exercisable.
Howmet's assets include significant goodwill, the value of which may not be
realized by stockholders, including the Company, if Howmet were sold or
liquidated. Financial covenants and restrictions contained in certain Howmet
credit agreements restrict Howmet's ability to pay cash dividends to
stockholders, including the Company. As a result, Thiokol is restricted in its
access to Howmet's cash flows and other resources. If the Company is unable to
generate sufficient cash flows from other subsidiaries without restrictions on
their ability to pay dividends, the Company's ability to pay amounts due on
the Notes would be materially adversely affected.
In 1988, Pechiney Corporation, the then parent company of Howmet and a
wholly-owned subsidiary of Pechiney International ("Pechiney"), issued notes
(the "Pechiney Notes") to third parties in connection with the acquisition of
American National Can Company. Following the 1995 acquisition of Howmet by
Thiokol and Carlyle, Pechiney agreed with Howmet to be responsible for all
payments due on or in connection with the Pechiney Notes. Accordingly,
Pechiney issued its own note to Howmet in an amount sufficient to satisfy all
obligations under the Pechiney Notes, which note was deposited in a restricted
trust (the "Restricted Trust") for
S-7
<PAGE>
the benefit of Howmet. At December 31, 1997, the Pechiney Notes had a
principal balance of $716.4 million. The Restricted Trust is secured by $772
million in letters of credit issued by Banque Nationale de Paris, a French
bank with a Standard & Poor's Ratings Group ("S&P") rating of A+, and by
substantially identical "back up" letters of credit issued by Caisse des
Depots et Consignations, a French bank with a S&P AAA credit rating. In the
event that Pechiney fails to meet its obligations under the Restricted Trust
and both banks fail to meet their obligations under their respective letters
of credit, such events, which management believes is remote, would have a
material effect on Howmet's financial condition, the value of the Company's 62
percent equity ownership of Howmet and the Company's ability to pay amounts
due on the Notes.
LACK OF PUBLIC MARKET FOR THE NOTES
There is no public market for any of the Notes, and there can be no
assurance as to: (i) the liquidity of any such market that may develop for the
Notes; (ii) the ability of holders to sell their Notes; or (iii) the price at
which holders would be able to sell their Notes. The Company does not intend
to apply for listing or quotation of the Notes on any securities exchange or
stock market, so there is no assurance that an active trading market will
develop or be maintained for the Notes. See "Underwriters."
S-8
<PAGE>
BUSINESS OVERVIEW
Thiokol is a leading producer of high technology solid rocket motors for
space, defense and commercial launch applications and a major supplier of
precision fastening systems for aerospace and industrial markets worldwide.
Thiokol's 62 percent owned subsidiary, Howmet, is a leading manufacturer of
investment cast turbine engine components for jet aircraft and industrial gas
power generation markets, as well as a leading producer of aluminum investment
castings for commercial aerospace and defense electronics industries.
In recent years, the Company has reduced its dependence on government
aerospace and defense contracts by broadening its business base into
industrial and commercial markets. Thiokol's investments in new products and
markets have focused on its operating and technical strengths in solid rocket
launch vehicles, propellants, gas generants, composites, and highly engineered
products sold to large, technically sophisticated customers. Through
acquisitions, Thiokol has become a leading producer of threaded and non-
threaded fasteners which serve a broad range of industrial and aerospace
applications. Through Howmet, Thiokol participates in the high technology
superalloy and titanium investment castings markets for aerospace and IGT
industries and manufactures aluminum investment castings for the commercial
aerospace and defense electronics industries.
The Company's strategy is to improve profitability and increase shareholder
value by (i) maintaining the Company's leadership position in space and
defense propulsion, (ii) expanding the fastener business both internally and
with selected acquisitions, and (iii) enhancing its market position at Howmet
by leveraging its technological capabilities and generating growth through new
casting applications and technological innovations. In addition, the Company
intends to continue focusing on improving operating efficiencies through cost
reductions and productivity improvements.
In December 1997, Thiokol purchased an additional 13 percent of Howmet from
Carlyle for approximately $184 million, increasing the Company's ownership
from 49 percent to 62 percent. Thiokol began consolidating Howmet's operating
results as of December 2, 1997. In connection with the sale to Thiokol,
Carlyle also sold 15.35 percent of Howmet to the public through an initial
public offering, resulting in a reduction of Carlyle's ownership from 51
percent to 22.65 percent. The Company has the right, during a two year period
commencing in December 1999, to acquire all of Carlyle's remaining shares of
Howmet common stock and a right of first refusal to acquire any shares Carlyle
proposes to sell, in each case at market price. Carlyle has also agreed with
Thiokol that it will not dispose of any of its shares of Howmet common stock
until the earlier of December 1999 or the occurrence of a change of control of
Thiokol. Thiokol and its affiliates are prohibited from acquiring shares of
Howmet common stock from the public if less than 14 percent of the Howmet
common stock would be held by the public following such acquisition. In
December 1995, Thiokol and Carlyle invested $98 million and $102 million,
respectively, to purchase the common stock of Howmet.
BUSINESS SEGMENTS
Propulsion
Thiokol is a recognized leader in solid propulsion and related technology.
In fiscal year 1997, the Company consolidated its Space, Defense and Launch
Vehicle divisions and Science and Engineering unit into a single business
unit, the Propulsion Group. The Propulsion Group is focused on solid
propulsion and related products for the nation's space program and defense
industry, and domestic and international commercial space markets. The
Propulsion Group maintains on-going research and development projects in
propulsion, gas generants, infrared flares, composite materials and resins.
National Aeronautics and Space Administration. Thiokol has been the nation's
leading supplier of solid rocket propulsion systems for space launch vehicles
since the inception of human space flight and is the sole source supplier of
reusable solid rocket motors for NASA's Space Shuttle program. As the sole
supplier qualified to produce RSRM solid rocket motors for the Space Shuttle
program, the Company does not compete with other
S-9
<PAGE>
manufacturers. Thiokol's current contract with NASA runs into 2001, and NASA
has initiated long-lead funding for a follow-on contract that the Company
believes will extend RSRM production through 2005. See "Risk Factors -- NASA
RSRM Contract."
Defense and Commercial Space. Thiokol is a leading provider of solid rocket
propulsion for satellite launch vehicles for the defense and commercial space
industries. The Company's family of CASTOR solid rocket motors is used in the
first and second stages of a number of expendable launch vehicles. The CASTOR
120 motor, designed as a low-cost motor for the small launch vehicle market,
has been selected as the propulsion system for the Lockheed Launch Vehicle
("LLV") and the Orbital Science Taurus launch vehicle. The Company's family of
STAR motors provides upper stage propulsion systems for a number of launch
vehicle systems and satellite positioning for commercial space and defense
applications. Thiokol is supplying motors for a variety of international
launch programs and continues to supply propulsion for the global positioning
satellite ("GPS") program. Boeing North American recently awarded Thiokol a
contract for apogee kick motors for the next generation of GPS satellites.
The Propulsion Group participates as a subcontractor in various defense
programs providing propulsion systems and related technology for the Theater
Missile Defense Program, Minuteman Strategic Missile Replacement Program and
propulsion and ordnance for the Trident Submarine Missile Program through a
joint venture with Alliant Technologies, Inc. The Propulsion Group also
manufactures infrared and illuminating flares; provides solid rocket motor
propellant reclamation services; and aging and surveillance technologies.
Commercial applications are being developed for composite resin prepreg
materials, airbag inflater gas generants and igniters and composite resin
based conformable storage tanks.
Investment Castings
Thiokol, through its 62 percent equity ownership of Howmet, is a leading
manufacturer of investment cast turbine engine components for the jet aircraft
and industrial gas power generation markets. The Company produces superalloy
and titanium investment castings for the major aerospace and IGT engine
manufacturers as well as aluminum investment castings for the commercial
aerospace and defense electronic industries.
Aerospace. The Company's aerospace products consist principally of airfoils
(both moving blades and stationary vanes) used in the hot gas path of aircraft
turbine engines, the area of these engines with the most severe operating
conditions. The Company believes it manufactures airfoils for every major jet
aircraft turbine engine program currently in production or under development
by its major customers, primarily for commercial applications. The Company's
aerospace airfoil business is approximately equally divided between parts for
new engines and airfoil replacement parts. The Company also produces large
structural cast components for engine and airframe manufacturers.
Industrial Gas Turbine. The Company is a leading producer of airfoils for
IGT engines. These engines are primarily used in utility power generation, as
well as in mechanical drive applications for oil and gas processing and off-
shore drilling. The IGT airfoil products manufactured by the Company have
performance and reliability requirements similar to those produced for the
aerospace market, but the products generally are significantly larger in size.
The Company believes that it is currently the only manufacturer in volume
production of technologically advanced directional solidification and single
crystal airfoils for the IGT market.
Growth in demand for efficient, lower cost electrical generation facilities
with shorter construction lead times has resulted in IGT engines now
accounting for approximately 25 percent of new electric utility generating
capacity ordered worldwide. Sales of spare parts are expected to increase as
the installed base of IGT castings grows and ages.
Aluminum. The Company is a leading producer of aluminum investment castings,
produced principally for commercial aerospace and defense electronics industry
applications. As a result of its proprietary technology,
S-10
<PAGE>
the Company's aluminum investment castings have been able to penetrate
component markets for structural airframes and engines, displacing parts
traditionally made by other processes, such as forging, fabrication, welding
and assembly. The Company expects that this trend will increase its business
in this area.
Fastening Systems
Thiokol, through its wholly owned subsidiary Huck International Inc.
("Huck"), is a major supplier of precision fastening systems for aerospace and
industrial markets worldwide. The Company designs, manufactures and sells a
wide range of high performance fasteners and fastener systems utilizing high
strength metal and metal alloys.
Aerospace. Thiokol's aircraft fasteners are qualified for use by major
aircraft manufacturers on a variety of major commercial and military aircraft
programs. Certain of the Company's fasteners are proprietary. The Company is
implementing programs to expand fastener applications usage with major
commercial aircraft manufacturers and is developing fastening systems
materials management programs to help major customers manage fastener
inventories.
Industrial. The Company's industrial fasteners serve the truck, trailer,
railcar, automotive, construction and mining industries. Thiokol's ability to
provide a total fastening system--fastener, tools, automation and gauging in
an integrated system--provides significant value to its industrial customers.
The Company is introducing programs with major customers to enhance new
fastener applications. The Company has qualified the Ultra-Twist Blind Bolt
for use on Japanese construction projects, which serves as the first viable
alternative to the costly and difficult conventional method of joining
structural hollow steel beams by welding.
S-11
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby
are estimated to be approximately $148.0 million after deducting underwriting
discounts and estimated offering expenses. The Company intends to use
approximately $108.0 million of the net proceeds for the repayment of bank
indebtedness, which indebtedness currently bears interest at a variable rate
(currently 5.81%) and matures in March 1998. See "Underwriters." Such
indebtedness was incurred in December 1997 for the Company's acquisition of an
increased interest in Howmet. The Company intends to use the remaining net
proceeds for working capital and other general corporate purposes. Pending the
application of the net proceeds, the Company expects to invest such proceeds
in short-term, interest-bearing instruments or other investment-grade
securities.
S-12
<PAGE>
CAPITALIZATION
The following table sets forth the short-term debt and the capitalization of
the Company at December 31, 1997 and as adjusted to give effect to the
offering made hereby and the application of the estimated net proceeds
therefrom. The information presented below should be read in conjunction with
the Consolidated Financial Statements of the Company, the notes thereto and
the other financial or statistical information contained elsewhere or
incorporated by reference in this Prospectus Supplement and the accompanying
Prospectus. See "Selected Consolidated Financial Data" and "Pro Forma
Condensed Combined Financial Information."
<TABLE>
<CAPTION>
AS OF DECEMBER
31, 1997
-----------------
AS
ACTUAL ADJUSTED
-------- --------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Short-term debt.............................................. $ 8.2 $ 8.2
======== ========
Long-term debt, including current portion:
Senior revolving credit facility(a)......................... 306.0 198.0
Senior bank term loan....................................... 7.7 7.7
Senior notes due 2008....................................... -- 150.0
Senior subordinated notes due 2003(b)....................... 3.0 3.0
Payment-in-kind junior subordinated note(c)................. 6.0 6.0
Other....................................................... 3.4 3.4
-------- --------
Total long-term debt....................................... 326.1 368.1
Pechiney Notes(d)............................................ 716.4 716.4
Total stockholders' equity................................... 550.5 550.5
-------- --------
Total capitalization......................................... $1,593.0 $1,635.0
======== ========
Total capitalization, excluding Pechiney Notes............... $ 876.6 $ 918.6
======== ========
</TABLE>
- --------
(a) The senior revolving credit facility consists of two separate revolving
facilities. A $150 million unsecured revolving credit facility for Thiokol
matures in May 2001. At December 31, 1997, the Company had $90 million of
borrowings outstanding under this facility, leaving $60 million of
additional borrowing capacity. In addition at December 31, 1997, the
Company had borrowed $18 million under an uncommitted money market line.
Howmet has a $300 million unsecured revolving credit facility which
matures in December 2002. At December 31, 1997, there were $198 million of
borrowings outstanding and $7.6 million in letters of credit outstanding,
leaving $94.4 million of additional borrowing capacity.
(b) The senior subordinated notes are unsecured and bear interest at 10% per
annum. The senior subordinated notes are redeemable in whole or in part on
December 1, 1999 at 105% of principal amount, declining annually to 100%
on December 1, 2002. In December 1997, the Company completed a tender
offer for the senior subordinated notes, prior to which $125 million
principal amount was outstanding. The Company accepted and paid for $122
million principal amount of the senior subordinated notes in the tender
offer.
(c) The 10% payment-in-kind junior subordinated note is due December 13, 2006.
Interest accumulates through the issuance of payment-in-kind notes through
December 13, 2003 and is payable in cash semi-annually thereafter. In
December 1997, the Company prepaid $24 million of the $30 million
outstanding principal amount of the 10% payment-in-kind junior
subordinated note.
(d) Pechiney has agreed with Howmet to repay the Pechiney Notes. This
agreement to repay is supported by a $716.4 million note receivable from
Pechiney which is held in the Restricted Trust. If Pechiney fails to make
payments, the trustee for the Restricted Trust has two separate sets of
irrevocable letters of credit issued by certain French banks to draw upon
to satisfy the Pechiney Notes. Pechiney is solely responsible as
reimbursement party for draws under the letters of credit, and, by
agreement with the banks, Howmet has no responsibility therefor. See "Risk
Factors--Ownership of Howmet."
S-13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below relate to each of
the five years in the period ended June 30, 1997 and to the six-month periods
ended December 31, 1996 and December 31, 1997. The selected consolidated
financial data for the years ended June 30, 1993 to 1997 have been derived
from the Consolidated Financial Statements of the Company which have been
audited by Ernst & Young LLP, independent auditors. The selected consolidated
financial data as of December 31, 1996 and December 31, 1997 and for the six-
month periods then ended have been derived from unaudited interim consolidated
financial statements which, in the opinion of management, reflect all material
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the financial position and the results of operations for
these periods. The unaudited financial data set forth below are not
necessarily indicative of the results of operations or related effects on
financial position that may be achieved in the future. The following financial
data are qualified in their entirety by, and should be read in conjunction
with, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Consolidated Financial Statements of the Company, notes
thereto and other financial and statistical information contained elsewhere or
incorporated by reference in this Prospectus Supplement and the accompanying
Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED DECEMBER 31, FISCAL YEAR ENDED JUNE 30,
--------------------- ------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
---------- --------- ------ ------ ------ -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............... $ 587.9 $ 407.9 $890.1 $889.5 $956.8 $1,043.9 $1,201.7
Cost of goods sold...... 460.3 329.2 723.7 738.7 769.1 859.6 992.9
---------- -------- ------ ------ ------ -------- --------
Gross margin............ 127.6 78.7 166.4 150.8 187.7 184.3 208.8
Restructuring and im-
pairment............... -- (2.2) (2.2) 5.9 61.4 -- 2.3
Income from operations.. 62.5 35.4 75.6 61.8 39.4 99.3 120.6
Equity income in affili-
ates................... 15.3 10.5 30.5 4.5 -- -- --
Interest income ........ 3.5 7.4(1) 10.9(2) 30.2(3) 46.2(4) 12.9 6.6
Interest expense........ (3.5) (1.2) (1.7) (3.9) (9.3) (14.4) (25.5)
Other expense........... (1.1) -- -- -- -- -- --
---------- -------- ------ ------ ------ -------- --------
Income before income
taxes, minority inter-
est, extraordinary item
and cumulative
effect of accounting
changes................ 76.7 52.1 115.3 92.6 76.3 97.8 101.7
Income taxes............ 22.8 14.2 32.9 34.3 24.0 37.5 37.9
Minority interest....... (1.8) -- -- -- -- -- --
Income before extraordi-
nary item and
cumulative effect of
accounting changes..... 52.1 37.9 82.4 58.3 52.3 60.3 63.8
Extraordinary item...... (7.1) -- -- -- (4.8) -- --
Cumulative effect of ac-
counting changes....... -- -- -- -- -- (63.8) --
---------- -------- ------ ------ ------ -------- --------
Net income (loss)....... $ 45.0 $ 37.9 $ 82.4 $ 58.3 $ 47.5 $ (3.5) $ 63.8
========== ======== ====== ====== ====== ======== ========
Income per share before
extraordinary item and
cumulative effect of
accounting changes:
Basic.................. $ 2.84 $ 2.08 $ 4.51 $ 3.20 $ 2.82 $ 3.07 $ 3.18
Diluted................ $ 2.75 $ 2.03 $ 4.41 $ 3.14 $ 2.78 $ 3.02 $ 3.13
Net income (loss) per
share:
Basic.................. $ 2.46 $ 2.08 $ 4.51 $ 3.20 $ 2.56 $ (.18) $ 3.18
Diluted................ $ 2.38 $ 2.03 $ 4.41 $ 3.14 $ 2.53 $ (.18) $ 3.13
OTHER DATA:
Ratio of earnings to
fixed charges.......... 11.0x 12.5x 14.0x 12.7x 6.9x 6.5x 4.5x
Total assets............ $ 2,473.4 $ 818.2 $854.4 $818.3 $810.7 $ 805.3 $ 834.2
Short-term and long-term
debt................... 334.3 27.1 24.6 65.1 65.4 115.1 149.6
Stockholders' equity.... 550.5 480.4 521.1 447.9 403.8 384.5 443.2
Capital expenditures.... n/m n/m 33.1 29.1 33.8 21.2 19.8
</TABLE>
- --------
(1) Includes $7.0 million of interest income from an income tax refund.
(2) Includes $8.7 million of interest income from an income tax refund in
1997.
(3) Includes $27.5 million of interest income relating to income taxes in
1996.
(4) Includes $43.5 million of interest income from an income tax refund in
1995.
n/m--data not meaningful due to less than 12 months of data.
S-14
<PAGE>
PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
On December 2, 1997, the Company acquired an additional 13 percent of the
common stock of Howmet in two separate transactions increasing its equity
ownership to 62 percent of Howmet's outstanding shares. Below is an unaudited
pro forma condensed combined statement of income of the year ended June 30,
1997, giving effect to the acquisition as if this transaction had occurred at
the beginning of the period. The pro forma condensed combined financial
information has been prepared by Thiokol management based upon the historical
financial statements of Howmet after updating these statements to coincide
with Thiokol's June 30 fiscal year end. The Howmet financial statements were
updated by combining results for the six months ended December 31, 1996, and
for the six months ended June 30, 1997, to yield results for the year ended
June 30, 1997. The Thiokol statement of income for the year ended June 30,
1997 was audited by Ernst & Young LLP, independent auditors. The pro forma
combined results in the statement referred to above are not necessarily
indicative of the actual operating results that would have occurred had the
acquisition been consummated on July 1, 1996, or of future operating results
of the combined operations. The pro forma financial information should be read
in conjunction with Thiokol's Consolidated Financial Statements, including
notes thereto, incorporated by reference in the accompanying Prospectus, and
Howmet's audited financial statements, including notes thereto, contained in
Howmet's Registration Statement on Form S-1 (Registration No. 333-37573).
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1997
----------------------------------------------------------------
THIOKOL HOWMET PRO FORMA PRO FORMA
CORPORATION INTERNATIONAL INC. ADJUSTMENTS STATEMENT OF INCOME
----------- ------------------ ----------- -------------------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales............... $890.1 $1,205.0 $ (4.0)(1) $2,091.1
Cost of sales........... 723.7 885.8 -- 1,609.5
General and administra-
tive................... 80.5 161.5 4.1 (2) 246.1
Research and develop-
ment................... 12.5 23.1 -- 35.6
Restructuring and im-
pairment............... (2.2) -- -- (2.2)
------ -------- ------ --------
Income from operations.. 75.6 134.6 (8.1) 202.1
Equity income........... 30.5 1.3 (30.5)(3) 1.3
Interest income......... 10.9 1.5 (1.7)(4) 10.7
Interest expense........ (1.7) (35.2) (8.9)(5) (45.8)
------ -------- ------ --------
Income before income
taxes.................. 115.3 102.2 (49.2) 168.3
Income taxes............ (32.9) (45.1) 5.4 (6) (72.6)
Minority interest in in-
come................... -- -- (19.9)(7) (19.9)
------ -------- ------ --------
Net income.............. $ 82.4 $ 57.1 $(63.7) $ 75.8
====== ======== ====== ========
</TABLE>
- --------
(1) Decrease in sales due to the loss of the Company's ability to claim
reimbursable general and administrative expenses allocable to cost type
contracts with the United States government. Thiokol's previous 49 percent
interest did not require allocation of general and administrative expenses
to Howmet. Following the purchase of the additional Howmet common stock,
Thiokol owns a controlling (62 percent) interest of Howmet and is required
under United States government cost accounting standards to allocate
Thiokol corporate overhead expenses with respect to Howmet.
(2) Increase in goodwill amortization expense.
(3) Elimination of Howmet equity income.
(4) Reduction of interest income due to the use of cash and cash equivalents
to purchase additional Howmet common stock.
(5) Increase in interest expense due to the increased debt incurred to
purchase additional Howmet common stock.
(6) Income tax expense was adjusted based on pro forma net income.
(7) Minority interest in Howmet's income.
S-15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED TO
THE SIX MONTHS ENDED DECEMBER 31, 1996
The Company increased its ownership in Howmet from 49 percent to 62 percent
on December 2, 1997. Accordingly, Howmet's December earnings, cash flows and
balance sheet have been consolidated with the Company's. As a result, the
first six months of operating results for fiscal 1998 include five months of
Howmet earnings reported under the equity method and one month of Howmet
earnings on a consolidated basis. Minority interest in income and equity is
also reported for the 38 percent of Howmet the Company does not own. Due to
the consolidation of Howmet in the Company's financial statements, comparison
of financial information for the respective periods is difficult and may not
be relevant. In order to facilitate an understanding of the Company's data,
separate Howmet comparative data and analysis have been included below for the
respective periods being reported.
Income Year-To-Date
Income before extraordinary item for the six months ended December 31, 1997,
was $52.1 million or $2.75 per share compared to $37.9 million or $2.03 per
share in the prior year. Net income for the six months ended December 31, 1997
was $45 million or $2.38 per share, a 19 percent increase compared to $37.9
million or $2.03 per share last year. The current year included Howmet debt
refinancing charges of $7.1 million or $.37 per share, and Howmet initial
public offering ("IPO") and additional stock appreciation rights ("SARs")
accruals of $3.4 million or $.19 per share. The current period benefited by
$4.1 million or $.22 per share from reduced income tax rates. The reduced
rates result from a United States tax benefit related to a reorganization of
investments in certain overseas operations, from the recognition of certain
tax refunds, and from the return to tax profitability of European operations
enabling the use of tax loss carry forward amounts. The prior year's income
included federal income tax and interest refunds of $7.3 million or $.39 per
share and release of excess restructuring reserves of $1.3 million or $.07 per
share.
Summary unaudited financial information follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
-----------------------
1997 1996 PERCENT
------ ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Sales:
Propulsion systems.................................. $319.5 $280.1 14
Fastening systems................................... 163.2 127.8 28
Investment castings................................. 105.2 -- --
------ ------ ------
Total sales....................................... $587.9 $407.9 44
====== ====== ======
Operating income:
Propulsion systems.................................. $ 37.6 $ 30.6 23
Fastening systems................................... 21.4 8.0 168
Investment castings................................. 11.7 -- --
Unallocated corporate expense....................... (8.2) (3.2) (156)
------ ------ ------
Total operating income............................ 62.5 35.4 77
Equity income of affiliates......................... 15.3 10.5 46
Interest income..................................... 3.5 7.4 (53)
Interest expense.................................... (3.5) (1.2) (192)
Other, net.......................................... (1.1) -- --
Income taxes........................................ (22.8) (14.2) (61)
------ ------ ------
Income before minority interest and extraordinary
item............................................. 53.9 37.9 42
Minority interest................................... (1.8) -- --
------ ------ ------
Income before extraordinary item.................... 52.1 37.9 37
Extraordinary item--loss on early retirement of
debt............................................... (7.1) -- --
------ ------ ------
Net income........................................ $ 45.0 $ 37.9 19
====== ====== ======
</TABLE>
S-16
<PAGE>
Propulsion Systems
Propulsion systems sales and income increased $39.4 million and $7.0
million, respectively. The prior year six months income included a $1.3
million restructuring reserve release. The sales gains were due to increases
in the Commercial Launch Motor program ($15.7 million), Space Shuttle RSRM
program ($15.4 million), and Missile Defense programs ($15 million). The
higher income was due to the Commercial Launch Motor program, RSRM program,
and Missile Defense programs.
Fastening Systems
Fastening systems sales for the six month period increased $35.4 million or
28 percent over last year. Aerospace sales increased $27.7 million and
industrial sales increased $7.7 million over the prior year. The growth
reflects stronger worldwide commercial aircraft and domestic industrial
markets. Fastening systems margins increased to 13.1 percent from 5.6 percent
last year, excluding the $.9 million restructuring reserve release in the
prior year. The increased margins were primarily the result of continuing cost
control initiatives, pricing increases, and volume growth.
Operating income for the six month period was $14.3 million higher,
excluding the restructuring reserve release of $.9 million in the prior year.
Aerospace and industrial income increased $11.8 million and $2.5 million,
respectively, over the prior year. Stronger domestic aerospace and industrial
markets provided the improvement. Production problems of a major customer may
impact commercial aircraft revenues.
Investment Castings
On December 2, 1997, the Company purchased an additional 13 percent of
Howmet common stock, increasing the Company's ownership percentage to 62
percent. The six month period includes consolidated Howmet results for one
month at 62 percent and Howmet equity income at 49 percent for five months.
The following unaudited information summarizes Howmet's results before
consolidation:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
---------------------
1997 1996
---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Net sales.......................................... $ 615.2 $ 562.0
Cost of goods sold................................. 446.1 428.1
Gross profit....................................... 169.1 133.9
Operating income................................... 71.5 55.3
Income before extraordinary item................... 33.9 19.0
Net income......................................... $ 21.6 $ 19.0
========== ==========
</TABLE>
Following is a reconciliation of Howmet's contribution to the Company's
income before extraordinary item for the six months ended December 31:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Howmet income before extraordinary item.......... $ 33.9 $ 19.0
Less preferred paid-in-kind dividend............. (2.6) (2.4)
---------- ----------
Income available to common shareholders.......... 31.3 16.6
---------- ----------
Company's interest in Howmet income.............. 15.9 8.1
Add preferred paid-in-kind dividend.............. 2.6 2.4
---------- ----------
Howmet's contribution to the Company's income
before extraordinary item....................... $ 18.5 $ 10.5
========== ==========
</TABLE>
S-17
<PAGE>
Investment castings sales for the six month period increased 9 percent to
$615.2 million from the prior year period. The sales increase came from the
commercial aircraft market.
Investment castings earnings before extraordinary item were $33.9 million
for the period, an increase of 78 percent from $19 million in the prior year's
period. Income continued to benefit from operational and cost improvements.
Howmet's current period includes an extraordinary charge of $12.3 million, net
of taxes, related to refinancing debt to take advantage of favorable interest
rates. Howmet's six months earnings were reduced by $5.8 million after tax for
IPO expenses and additional SARs accruals.
Income Taxes and Other Activities
The Company had an effective income tax rate of 25 percent, compared with 27
percent for the same six months period in the prior year. The current year
lower rate results from a United States tax benefit related to a
reorganization of investments in certain overseas operations, from the
recognition of certain tax refunds, and from the return to tax profitability
of European operations enabling the use of tax loss carry forward amounts. In
addition, the Company's overall effective income tax rate was also reduced by
taxing five months of higher Howmet equity income at a 7 percent rate. The
Company's tax rate for the remainder of fiscal 1998 will increase as the
result of consolidating Howmet's financial results, whose tax rate is expected
to approximate the statutory 40 percent rate. In addition, Thiokol must
continue to provide tax at a 7 percent rate on its share of Howmet net income.
The fiscal year 1999 tax rate is expected to approximate statutory rates, plus
the addition of 7 percent on Thiokol's share of Howmet net income.
For the six months ended December 31, 1997, selling, general and
administrative expenses increased $17.3 million compared to the prior year.
The addition of Howmet's general and administrative expenses accounted for
most of the increase. For the current six month period, selling and
administrative expenses in the fastening segment also increased as a result of
higher sales volume.
The adverse Asian economic conditions caused no material impact to fastening
systems and investment castings sales or earnings during the second quarter.
Propulsion system sales in Asia are minimal. To the extent the Asian economic
conditions impact the commercial aerospace market, such impact may affect the
Company.
The Request for Proposal ("RFP") for the RSRM Buy IV contract was received
in February 1998, and the Company's proposal is due to NASA in April 1998. The
Buy IV RFP baseline requests 35 flight sets, or 70 motors, and three flight
support motors with contract completion in approximately fiscal year 2005.
NASA has also requested an alternate proposal for 20 flight sets, or 40
motors, and one flight support motor, with contract completion in
approximately fiscal year 2003. Motor deliveries and periods of performance
may change in negotiations. Currently, the Company anticipates follow-on
contracts for RSRM motors through the life of the Space Shuttle Program. The
contract type is anticipated to be a cost plus incentive/award fee, similar to
the current Buy III structure. NASA has provided the Company with long lead
material procurement authorization to support the Buy IV production start in
September 1998. The contract is subject to annual congressional funding by the
United States government.
On December 22, 1997, the Company was selected as the propulsion team leader
by TRW for the Air Force's Intercontinental Ballistic Missile ("ICBM") Prime
Integration Contract. The Company will lead a joint effort with United
Technologies Corporation, Chemical Systems Division ("CSD") to provide
remanufactured Minuteman III solid rocket motors for all three stages as well
as propulsion sustaining engineering for the Minuteman and Peacekeeper ICBM
weapons systems. The propulsion program, beginning as early as February 1998,
is valued at over $1 billion to the Company over the expected 15-year life of
the contract. The contract is subject to annual congressional funding by the
United States government.
Subsequent to the quarter end, on January 22, 1998, the Company's Board of
Director's declared a two-for-one stock split in the form of a stock dividend
payable March 13, 1998, for each stockholder of record on
S-18
<PAGE>
February 27, 1998. As a result of the stock split, the associated preferred
share purchase rights (the "Rights") have been adjusted so that each Right,
upon proper exercise, entitles the holder to purchase one two-hundredth of a
share of the Company's Series A Junior Participating Preferred Stock at a
purchase price of $120. Until the acquisition by a person or a group of 15% or
more of the outstanding common stock of the Company, the Rights may be
redeemed by the Board of Directors of the Company at a price of $.005 per
Right. A regular quarterly dividend of $.10 per common share, reflecting the
split, was also declared payable March 13, 1998, for each stockholder of
record on February 27, 1998.
Subsequent to the quarter-end, the Company determined it will change its
fiscal year from June 30 to a calendar year effective December 31, 1998. The
change is to coordinate the Thiokol and Howmet reporting periods and to reduce
the confusion that accompanies a fiscal year versus a calendar year. Howmet
currently reports on a calendar year basis.
RESULTS OF OPERATIONS FOR THE FISCAL YEAR 1997 COMPARED TO THE FISCAL YEAR
1996
Net income for 1997 was $82.4 million or $4.41 per share, an increase of 40
percent compared to $58.3 million or $3.14 in 1996. Net income for 1996
included recognition of $21.3 million after-tax ($1.15 per share) of income
related to income taxes and after-tax fastening systems charges of $8.5
million ($.46 per share) for inventory and $5.9 million for restructuring
($.32 per share). Net income for 1997 included after-tax income related to
income tax refunds and interest on the refunds and restructuring credits
totaling $9.7 million after-tax or $.52 per share.
Following is summary unaudited financial information for the twelve months
ended June 30:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED JUNE
30,
--------------
1997 1996 PERCENT
------ ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Sales
Propulsion systems................................... $606.1 $651.1 (7)
Fastening systems.................................... 284.0 238.4 19
------ ------ ---
Total sales........................................ $890.1 $889.5 --
====== ====== ===
Operating income
Propulsion systems................................... $ 55.1 $ 77.1 (29)
Fastening systems.................................... 27.0 (6.3) --
Unallocated corporate expense........................ (6.5) (9.0) 28
------ ------ ---
Total operating income............................. 75.6 61.8 22
Equity income, Howmet................................ 30.5 4.5 578
Interest income...................................... 10.9 30.2 (64)
Interest expense..................................... (1.7) (3.9) 56
Income taxes......................................... (32.9) (34.3) 4
------ ------ ---
Net income......................................... $ 82.4 $ 58.3 41
====== ====== ===
</TABLE>
Business Segment Sales and Income for 1997
Propulsion systems sales declined in 1997 compared to the prior year due to
defense sales being down $60 million, partially offset by an increase in space
programs of $15 million.
Propulsion systems income was down $22 million in 1997 compared to 1996 as a
result of completion of the shuttle processing contract in 1996, reduced
margins on the RSRM contract, and additional start-up and warranty costs on
commercial launch motors. Defense related programs income declined $11.2
million due to lower activity as a result of reduced government spending,
completion of several defense programs during fiscal year 1996, and closure of
two government-owned contractor-operated ("GOCO") plants.
S-19
<PAGE>
Fastening systems sales and income increased $45.6 million and $33.3
million, respectively, over 1996. Commercial aerospace sales were up $38.9
million from the prior year. The increase in sales provided a corresponding
increase in income. Cost reductions due to plant closures and consolidations,
and relocation of the subsidiary headquarters also contributed to income. In
fiscal year 1997, pre-tax income benefited $.8 million from the reversal of
excess restructuring reserves versus the prior year's $18.1 million pre-tax
charges for inventory and restructuring. Excluding both non-recurring items,
1997 income increased 121 percent. In fiscal year 1997, fastening systems
margins increased to 9.2 percent from 5 percent in 1996 excluding unusual
items.
Net income for 1997 included $28.3 million or $1.52 per share from the
Company's investment in Howmet.
Also affecting income was a 28.5 percent effective tax rate for 1997
compared to 37 percent for 1996, reflecting the lower 7 percent tax rate on
higher equity income from Howmet.
The following unaudited table summarizes the impact on earnings of major
unusual items affecting both years:
<TABLE>
<CAPTION>
AFTER-TAX INCOME
---------------------
1997 1996
---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Income before unusual items........................... $ 72.7 $ 51.4
Restructuring credit (charge)......................... 1.3 (5.9)
Huck inventory charges................................ -- (8.5)
Income tax interest income/credits.................... 8.4 21.3
---------- ----------
Net income............................................ $ 82.4 $ 58.3
========== ==========
</TABLE>
Excluding unusual items in both years, net income in 1997 increased by 40
percent or $1.12 per share.
General and administrative expense for 1997 increased 15 percent or $10.7
million compared to 1996. General corporate expense increased $7.7 million
while selling and administrative costs increased $3 million in the fastening
systems segment. Interest expense decreased $2.2 million as a result of the
reduction in short-term debt.
Prior Years Restructuring and Impairment
As a result of a comprehensive review of the Company's operating performance
in Europe, a pre-tax restructuring charge of $5.9 million was recognized in
the second quarter of 1996 relating to the anticipated shutdown of the
fastening systems' Germany operations. During the third quarter of fiscal year
1996, the Company notified the 82 affected employees of the Germany plant
shutdown. The charge included $3.6 million of employee severance expense and
$1.7 million write down of long-lived assets.
During the 1993-1994 defense industry downturn, pricing pressures required
the Company to review operations and reduce operating costs to remain
competitive. During the third quarter of 1995, the Board of Directors
determined a consolidation of the Company's manufacturing facilities and
associated write down of assets was required. The Company recorded a $61.4
million pre-tax defense systems restructuring and related impairment charge
including a $20 million write down for impaired long-lived assets and a $23.6
million write down of goodwill. Fair value of goodwill and fixed asset write
downs was determined by estimating discounted cash flows from future defense
and non-shuttle vehicle operations. Also included was an estimated
restructuring loss of $10.5 million on the disposition of fixed assets from
two manufacturing facilities (Huntsville and Omneco), and a $7.3 million cash
restructuring charge for costs related to the facility closures including $2.3
million of employee severance costs. The restructuring included 360 employee
terminations. Fair value of the Huntsville and Omneco assets was based on
estimated cash proceeds from asset sales net of the costs of disposal. During
the second quarter of 1997, the restructuring was substantially completed and
excess reserves from both
S-20
<PAGE>
programs were closed and credited to income. The propulsion and the fastening
systems segments recognized $1.4 million and $.8 million in income,
respectively. The restructuring plan included charges for certain issues that
have not currently been resolved, and the Company believes remaining reserves
will be adequate to cover future costs.
A summary of restructuring reserve activity by program follows:
<TABLE>
<CAPTION>
U.S. GERMAN
PLANT PLANT
SHUTDOWNS SHUTDOWN TOTAL
--------- -------- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Reserve balance at March 31, 1995..................... $17.8 -- $17.8
Reductions (noncash).................................. (.5) -- (.5)
Payments made......................................... (.3) -- (.3)
----- ---- -----
Balance at June 30, 1995.............................. 17.0 -- 17.0
Fastening systems restructuring....................... -- $5.9 5.9
Reductions (noncash).................................. (8.7) (2.3) (11.0)
Payments made......................................... (.9) -- (.9)
----- ---- -----
Balance at June 30, 1996.............................. 7.4 3.6 11.0
Reductions (noncash).................................. (5.2) (2.8) (8.0)
Payments made......................................... (.8) -- (.8)
----- ---- -----
Fiscal year 1997 restructuring credit................. $ 1.4 $ .8 $ 2.2
===== ==== =====
</TABLE>
The Company has successfully negotiated with the United States government
for recovery of certain of these costs. The Company estimates approximately $9
million to be recognized in Company profits during fiscal year 1998 through
fiscal year 2000.
Equity Investment in Howmet
In December 1995 the Company purchased 49 percent of Howmet. The Company's
1997 results include equity income of $30.5 million, reflecting a full year of
Howmet ownership compared to $4.5 million of equity income for the 28 weeks of
Company ownership in 1996. Howmet experienced an 18.5 percent increase in
sales for the twelve months ended June 30, 1997, compared to the same period
in the prior year, reflecting an increased demand in the commercial aerospace
market and continued strength in the industrial gas turbine market. Howmet's
income increased in 1997 due to: sales increasing 18.5 percent, additional
revenue of $9.7 million from the finalization of a pricing adjustment with a
major customer, fixed cost containment, variable cost reduction, and other
operational improvements, a lower effective tax rate of 44 percent in 1997
compared to 60 percent in 1996, and lower interest expense due to lower debt
and lower interest rates in 1997 compared to 1996. Partially offsetting the
above increases were additional stock appreciation rights expenses of $20.7
million recorded in 1997 versus 1996. For the year ended June 30, 1997, Howmet
contributed 34.4% of the Company's net income.
RESULTS OF OPERATIONS FOR THE FISCAL YEAR 1996 COMPARED TO THE FISCAL YEAR
1995
Net income for 1996 was $58.3 million or $3.14 per share, an increase of 11
percent compared to $52.3 million or $2.78 per share before an extraordinary
charge in 1995. Income for 1996 included recognition of $21.3 million after-
tax of income related to income taxes or $1.15 per share after-tax. Results
for 1996 also reflected fastening systems charges of $12.2 million for
inventory and $5.9 million for restructuring. Income for 1995 included a
refund of income taxes of $17.5 million and related interest income of $43.5
million, resulting in a net after-tax impact of $44.5 million or $2.37 per
share. Results for 1995 were also impacted by a propulsion systems
restructuring charge of $61.4 million or $2.62 per share. Net income for 1995
was $47.5 million or $2.53 per share including an extraordinary loss of $4.8
million related to the early retirement of debt.
S-21
<PAGE>
Following is summary unaudited financial information for the twelve months
ended June 30:
<TABLE>
<CAPTION>
1996 1995 PERCENT
------ ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Sales
Propulsion systems................................... $651.1 $729.1 (11)
Fastening systems.................................... 238.4 227.7 5
------ ------ ----
Total sales........................................ $889.5 $956.8 (7)
====== ====== ====
Operating Income
Propulsion systems................................... $ 77.1 $ 87.0 (11)
Fastening systems.................................... (0.4) 19.2 (102)
Restructuring and impairment......................... (5.9) (61.4) 90
Unallocated corporate expense........................ (9.0) (5.4) (67)
------ ------ ----
Operating income..................................... 61.8 39.4 57
Equity income, Howmet................................ 4.5 -- --
Interest income...................................... 30.2 46.2 (35)
Interest expense..................................... (3.9) (9.3) 58
Income taxes......................................... (34.3) (24.0) (43)
------ ------ ----
Income before extraordinary item..................... 58.3 52.3 11
Extraordinary item--debt retirement.................. -- (4.8) --
------ ------ ----
Net income........................................... $ 58.3 $ 47.5 23
====== ====== ====
</TABLE>
Operating income was favorably impacted by recognition of cost management
fees on the RSRM contract, and lower general and administrative and research
and development costs. Adversely impacting operating income were lower margins
and the restructuring charges and inventory write down for the fastening
systems segment, Castor IV motor requalification costs and completion of the
Shuttle Processing Contract during the first quarter of 1996.
Business Segment Sales and Income for 1996
Propulsion systems sales decreased due to NASA reducing the RSRM flight sets
from eight to seven per year, continued Company emphasis on cost reductions on
the RSRM program ($30 million), as well as the first quarter termination of
the RSRM processing work at the Kennedy Space Center ($22.5 million). Castor
IV motor and CASTOR 120 motor sales also declined while STAR motor sales
increased. The sales decrease also was caused by significantly lower operating
levels at the GOCO ammunition plants ($17.8 million), and lower Standard
missile ($12.6 million) and Trident ($11.5 million) production. A sales
increase in flares ($19.2 million) and Minuteman sales ($8.6 million)
partially offset the decrease. The decrease in income was primarily related to
Castor IV requalification costs ($3.6 million), lower RSRM motor production
($3.4 million), the completion of the RSRM processing contract ($3.1 million),
and lower margins in other space programs. Income in 1995 included a $6.1
million pension curtailment gain which accounts for a portion of the 1996
decline. The decrease was partially offset by higher RSRM income recognized as
a result of higher cost management fees ($10.1 million).
Fastening systems income for 1996 decreased 38 percent to $11.8 million,
excluding $18.1 million of inventory and restructuring charges, from $19.2
million in 1995. Domestic and international aerospace sales increased
significantly in 1996. Earnings from aerospace continue to be impacted by
losses at the Lakewood facility due to manufacturing inefficiencies. The
Lakewood losses declined significantly in the fourth quarter of 1996.
Industrial operating results were impacted by weak transportation markets.
Lower international operating margins resulted from the Germany plant losses,
lower margin sales, and new product marketing costs. The Company announced in
the second quarter of fiscal year 1996 the closure of the Germany operations.
S-22
<PAGE>
The following unaudited table summarizes the impact on earnings of major
unusual items affecting both years:
<TABLE>
<CAPTION>
AFTER-TAX INCOME
----------------------
1996 1995
---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Income before unusual items.......................... $ 51.4 $ 57.0
Restructuring charges................................ (5.9) (49.2)
Fastening systems inventory charges.................. (8.5) --
Income tax interest income/credits................... 21.3 27.0
Income tax refund.................................... -- 17.5
---------- ----------
Income before extraordinary item................... $ 58.3 $ 52.3
Extraordinary item-debt retirement................... -- (4.8)
---------- ----------
Net income......................................... $ 58.3 $ 47.5
========== ==========
</TABLE>
General and administrative expense for 1996 of $69.8 million decreased 3
percent or $2.1 million compared to 1995. General corporate expense decreased
$3.9 million while selling and administrative costs increased $1.8 million in
the fastening systems segment. Interest expense decreased $5.4 million as a
result of the reduction in long-term debt in the third quarter of 1995.
Thiokol purchased 49 percent of Howmet in December 1995. The investment in
Howmet was accounted for on the equity method and equity income of $4.5
million was recognized in 1996. Howmet sales of $1,017.1 million for the
twelve months ended June 30, 1996 increased $127.4 million from $889.7 million
or 14.3 percent over 1995. Income from operations for 1996, before
amortization of acquisition related assets, was $82.1 million, a 22.4 percent
increase over 1995.
Also impacting income was a 37 percent effective income tax rate compared to
31.5 percent for 1995 reflecting lower research tax credits, refunds, and
nondeductible restructuring charges.
Liquidity and Capital Resources
The increase in the Company's Howmet ownership to 62 percent and subsequent
consolidation has resulted in consolidation of one month (December 1997) of
Howmet's cash flows with that of the Company. Due to the consolidation of
Howmet, comparison of the two periods' cash flows is difficult. As a result of
Howmet's financing agreements, Howmet is limited as to the amount of dividends
it can declare, which limits Thiokol's access to Howmet's cash flows and
resources. Separate cash flow information for Howmet has been included below
for the respective periods being reported.
For the six months ended December 31, 1997, net cash flows from operating
activities were $75.6 million compared to $79.3 million for the prior year.
The current year benefited from increased collections of receivables over the
prior year and was primarily due to cash receipts at Howmet, and the
settlement of Post Retirement Benefits ("PRB") issues ($8.9 million) at the
government-owned, company-operated facilities. The prior year decrease in
receivables was due to timing differences in cash receipts. The increase in
depreciation and amortization over the prior year was due to the addition of
Howmet. The decrease in income taxes was due to tax payments made by Howmet.
The prior year benefited from an increase in income tax accruals due to lower
tax payments.
The purchase of an additional 13 percent of Howmet common stock used $183.8
million, less $27.2 million of acquired cash, or $156.6 million. Net capital
spending on property, plant and equipment used $22.6 million in the current
period compared to $18.6 million in the prior year. The increased capital
spending was due to the addition of Howmet, but was partially offset by
decreased capital spending in the other segments of the Company due to timing
issues and lower overall expenditures in the six month period.
S-23
<PAGE>
Financing activities for the six month period provided $97.8 million of cash
compared to $43.1 million of cash used in the prior year period. The Company
issued $138 million of debt for the purchase of Howmet common stock, of which
$30 million was repaid during the period. The Company also repaid $7.5 million
of its consolidated debt. During the period, Howmet refinanced its debt to
take advantage of favorable interest rates. As part of the refinancing, Howmet
incurred pre-tax charges of $20.2 million, including a $6.5 million non-cash
charge for the writeoff of unamortized debt issuance costs. Howmet repaid $146
million of debt at a 10 percent fixed interest rate, and refinanced $198
million of new debt under a new revolving bank facility at a substantially
lower variable rate.
During the six month period, the Company repurchased 107,900 shares of the
Company's common stock for $7.9 million. The Company did not repurchase shares
in the prior year period. Subsequent to the quarter-end, in January 1998, the
Company repurchased approximately 133,000 shares of the Company's common stock
for $10.8 million. There are approximately 1.3 million shares remaining for
repurchase under the Company's current share repurchase authorization. The
Company will repurchase shares in amounts and at times as the Company deems
appropriate.
The initial public offering of Howmet did not generate any cash to Howmet or
to the Company.
On December 31, 1997, the Company's current ratio was 1.49, debt-to-equity
ratio was 60.7 percent, excluding the Pechiney Notes, and working capital was
$188 million, a $15.8 million increase from June 30, 1997.
At December 31, 1997, Thiokol had available $150 million in revolving credit
facilities, of which $90 million had been borrowed. In addition, on December
31, 1997, Howmet had available $300 million in revolving credit facilities
with $94.4 million unused. The Company's $300 million shelf registration
statement filed with the Securities and Exchange Commission became effective
October 16, 1996, and permits the Company access to public markets to issue
long-term financing with amounts, type, and timing as considered appropriate.
A comparative cash flow statement for Howmet for the six month period for
both years follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income......................................... $ 20.7 $ 18.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................... 34.6 31.6
Equity income of affiliates..................... (.9) (.7)
Extraordinary item.............................. 12.3 --
Changes in operating assets and liabilities:
Accounts receivable............................ 26.4 25.3
Inventories.................................... (14.0) 12.2
Accounts payable and accrued expenses.......... 12.8 17.0
Income taxes payable........................... 18.3 1.6
Long-term SAR accrual.......................... 15.5 5.8
Other-net...................................... 2.4 1.1
---------- ----------
Net cash provided by operating activities..... 128.1 112.1
INVESTING ACTIVITIES
Purchases of property, plant and equipment-net... (38.4) (22.5)
Proceeds from sale of refurbishment business-net
of tax.......................................... 44.9 --
---------- ----------
Net cash provided by (used in) investing
activities................................... 6.5 (22.5)
</TABLE>
S-24
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
----------------------
1997 1996
---------- ----------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C>
FINANCING ACTIVITIES
Issuance of long-term debt........................ 236.8 51.8
Repayment of long-term debt....................... (315.0) (147.0)
Premiums paid on early retirement of debt......... (13.7) --
Foreign currency rate changes..................... (.3) (.2)
---------- ----------
Net cash used for financing activities......... (92.3) (95.4)
Increase (decrease) in cash and cash equivalents.... 42.4 (5.8)
Cash and cash equivalents at beginning of period.... 3.0 29.3
---------- ----------
Cash and cash equivalents at end of period.......... $ 45.4 $ 23.5
========== ==========
</TABLE>
Net cash flows provided from operations for the six month period were $128.1
million compared to $112.1 million for the same period in the prior year.
Increases in income taxes payable and other accruals were primarily
responsible for the increase. The 1996 inventory reductions were due to
improved manufacturing controls, scrap alloy sales, continued strong sales,
and timing of deliveries. In 1997, inventories increased to meet increased
customer demands. Net cash used for financing activities totaled $92.3 million
for the period.
Estimated future cash flows from operations, current financial resources and
available credit facilities are expected to be adequate to fund the Company's
anticipated working capital requirements, capital expenditures, dividend
payments and stock repurchase program.
Future Operations/Business Environment
The Propulsion Group produces high-technology solid propellant motors for
space and defense applications. Production of and services for the RSRM
represented 40 percent of 1997 consolidated sales and 56 percent of
consolidated operating income before recognition of the restructuring credit.
The current contract with NASA extends the Company's production of the RSRM
through fiscal year 2001. NASA planning includes follow-on RSRM contracts with
the Company and projects replacing the shuttle program with another system in
2012. RSRM Buy III contract incentives to reduce costs over the life of the
contract should result in higher incentive fees in the future based on actual
and anticipated contract cost performance. As of December 31, 1997, cost
management award fees of $93.2 million had been recognized on the current RSRM
Buy III contract. Realization of such fees is reasonably expected based on
actual and anticipated contract cost performance. However, all of the cost
management award fees remain at risk until completion of the current contract
and final NASA review.
Unanticipated program problems which erode cost management performance could
cause some or all of the recognized cost management award fees to be reversed
and would be offset against receivable amounts from the United States
government or be directly reimbursed. Circumstances which could erode cost
management performance include, but are not limited to, a failure of a Company
supplied component, performance problems with the RSRM leading to a major
redesign and/or requalification effort, manufacturing problems including
supplier problems which result in RSRM production interruptions or delays, and
major safety incidents.
In 1997, the Company consolidated it's Northern Utah Propulsion operations
to provide a more efficient and competitive solid rocket motor design,
development, and manufacturing organization. Consolidation costs, consisting
primarily of employee severance expense, were minimal and were offset by
savings in the periods incurred.
The level of United States government funding of space programs including
the Space Station may impact the Space Shuttle launch schedule. Significant
reductions in the launch schedule would lower the Company's production rates
and reduce related revenue and profits to the Company. The Company
participates in the commercial satellite launch business through the CASTOR
and STAR series of motors. During the fiscal year 1997, the Company expanded
its international participation in the commercial launch market with contract
wins in Japan and Spain.
S-25
<PAGE>
With continuing reductions in federal government defense spending, the
Company expects its defense sales and income to continue declining in fiscal
year 1998 and begin to stabilize in 1999. Generally the industry is
characterized by significant over capacity. Decreased defense spending has
created a highly competitive pricing environment for tactical programs and has
reduced margins on existing programs and new program opportunities. In
December 1997, the Company was awarded a contract to remanufacture the United
States' existing Minuteman ballistic missiles.
The fastening systems segment operates in both aerospace and industrial
markets. The aerospace segment is greatly influenced by build schedules of
commercial aircraft which increased significantly in fiscal year 1997 and are
anticipated to increase again in fiscal year 1998, although there can be no
assurance as to the impact of recent events in Asia on such build schedules.
The industry has historically been quite cyclical and the Company anticipates
the cyclicality will continue. Military aircraft spending is expected to
continue at low production levels. As a result of higher sales, continued
improvements in operations, and the closure of the Germany facility, the
Company has improved operating margins in the fastening systems segment.
Industrial sales in 1998 are expected to increase over 1997 levels if the
build schedules in the transportation industry continue to rise.
Howmet is a leading manufacturer of investment cast turbine engine
components for the jet aircraft and industrial gas power generation markets.
Major products include aerospace castings, blades and vanes, aerospace
structural components, IGT castings and aluminum castings. The Company
believes Howmet manufactures airfoils for every major jet aircraft turbine
engine program currently in production or under development by its major
customers. Airfoils are also produced for land-based IGT engines primarily
used in utility power generation as well as in mechanical drive applications
for oil and gas processing and off-shore drilling.
Both the aerospace castings and fastening systems markets are strongly
influenced by both the level of new aircraft construction and demand for
commercial air travel both of which are expected to continue to increase,
although there can be no assurance that the recent events in Asia will not
negatively impact such factors.
OTHER MATTERS
The Company has operating leases, the majority of which are short-term and
real estate related. Rental expense amounted to $14.5 million in 1997. Renewal
and purchase options are available on certain of these leases. Future minimum
rental commitments under non-cancelable operating leases total approximately
$37 million with $9.1 and $8.1 million committed in 1998 and 1999,
respectively, and in declining amounts thereafter.
YEAR 2000 COMPLIANCE
Thiokol Corporation has a decentralized Information Systems (I.S.) function,
where each of its three major business segments operate autonomously with its
own I.S. organization. The Propulsion I.S. organization is two years into a
scheduled three-year Year 2000 date compliance project which addresses all
major production applications supported by the Propulsion Group. The project
is on schedule and is expected to be completed prior to the year 2000. The
estimated cost for the project is $4.1 million, which is being expensed when
incurred over the three year life of the project.
Huck I.S. has engaged an independent consulting firm to provide a
comprehensive assessment of its Year 2000 compliance exposure. The scope of
this engagement is to assess Huck's vulnerability to Year 2000 problems,
determine the significance of individual findings and to recommend specific
actions. Huck believes its compliance exposure is minimal, since it uses
primarily commercial, vendor-supported application software products. Huck is
currently working with its various software vendors to validate that the
vendors' products will be compliant on a timely basis.
Howmet I.S. is actively working on its Year 2000 compliance issues. All date
logic problems on the central mainframe applications have been identified and
remedial action to correct or replace the problematic code is currently
underway. Work is scheduled to be completed by June 30, 1999.
S-26
<PAGE>
Howmet has also initiated formal communications with all of its significant
suppliers, including raw materials, services, and computer hardware/software
suppliers, and large customers to determine the extent to which Howmet's
manufacturing processes and interface systems are vulnerable to those third
parties' failure to resolve their own Year 2000 issues. There can be no
guarantee that the systems of other companies on which Howmet's systems rely
will be timely converted and would not have an adverse effect on the Howmet
systems. However, at this point, no material problems have been discovered or
are anticipated.
Howmet expects to incur future incremental costs for such efforts of
approximately $6 million. In addition, Howmet has diverted internal resources
with an annual cost of approximately $600,000 for each of 1997, 1998 and 1999.
S-27
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (which are included in the "Debt Securities" described in the
accompanying Prospectus) supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Debt
Securities set forth in the accompanying Prospectus, to which description
reference is hereby made.
The Notes are to be issued under an Indenture (the "Indenture") between the
Company and Harris Trust and Savings Bank, as trustee (the "Trustee"), and
will constitute a single series of Debt Securities described in the
accompanying Prospectus. The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Indenture,
including the definitions of certain terms therein and those terms that are
made a part thereof by reference to the Trust Indenture Act of 1939, as
amended. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the accompanying Prospectus or the Indenture. As
used in this "Description of the Notes," all references to the Company shall
mean Thiokol Corporation excluding, unless the context otherwise requires or
as otherwise expressly stated, its subsidiaries. For definitions of certain
capitalized terms used in the following summary, see "-- Certain Definitions."
GENERAL
The Notes will be limited to $150,000,000 aggregate principal amount and
will mature on March 1, 2008. The Notes will be unsecured obligations of the
Company and will be issued in denominations of $1,000 and integral multiples
of $1,000.
The Notes will bear interest at the rate per annum shown on the front cover
of this Prospectus Supplement from March 1, 1998 or the most recent date to
which interest has been paid or duly provided for, payable semi-annually in
arrears on March 1 and September 1 of each year, commencing September 1, 1998,
to the persons in whose names the Notes are registered at the close of
business on the February 15 and August 15, as the case may be, immediately
prior to such interest payment dates, regardless of whether any such record
date is a Business Day. Interest on the Notes will be computed on the basis of
a 360-day year of twelve 30-day months.
If any interest payment date, any Redemption Date (as defined below), or any
other day on which the principal of or premium, if any, or interest on a Note
becomes due and payable falls on a day that is not a Business Day, the
required payment shall be made on the next Business Day as if it were made on
the date such payment was due and no interest shall accrue on the amount so
payable for the period from and after such interest payment date, Redemption
Date, or other date, as the case may be.
Principal and interest on the Notes will be payable, the transfer of Notes
will be registrable and the Notes may be presented for exchange, at the office
or agency of the Company maintained for such purpose (which initially will be
the corporate trust office of the Trustee located at 88 Pine Street, New York,
New York 10005, Attention: Corporate Trust Services). So long as the Notes are
represented by a Global Security, the interest payable on the Notes will be
paid to Cede & Co., the nominee of the Depositary, or its registered assigns
as the registered owner of such Global Security, by wire transfer of
immediately available funds on each of the applicable interest payment dates.
If any of the Notes are no longer represented by a Global Security, payment of
interest may, at the option of the Company, be made by check mailed to the
address of the person entitled thereto. No service charge will be made for any
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.
No sinking fund is provided for the Notes and the Notes are not subject to
redemption or repurchase by the Company at the option of the Holders.
S-28
<PAGE>
REDEMPTION AT THE OPTION OF THE COMPANY
The Notes will be redeemable, in whole or from time to time in part, at the
option of the Company on any date (a "Redemption Date"), at a redemption price
equal to the greater of (i) 100% of the principal amount of the Notes to be
redeemed and (ii) the sum of the present values of the remaining scheduled
payments of principal and interest thereon (exclusive of interest accrued to
such Redemption Date) discounted to such Redemption Date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate plus 20 basis points, plus, in either case, accrued and unpaid interest
on the principal amount being redeemed to such Redemption Date; provided that
installments of interest on Notes which are due and payable on an interest
payment date falling on or prior to the relevant Redemption Date shall be
payable to the holders of such Notes, registered as such at the close of
business on the relevant record date according to their terms and the
provisions of the Indenture.
"Treasury Rate" means, with respect to any Redemption Date for the Notes,
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which
is published weekly by the Board of Governors of the Federal Reserve System
and which establishes yields on actively traded United States Treasury
securities adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Comparable Treasury Issue
(if no maturity is within three months before or after the Maturity Date,
yields for the two published maturities most closely corresponding to the
Comparable Treasury Issue shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight line basis,
rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue, calculated
using a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such
Redemption Date. The Treasury Rate shall be calculated on the third Business
Day preceding the Redemption Date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable
to the remaining term of the Notes to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.
"Independent Investment Banker" means Morgan Stanley & Co. Incorporated or,
if such firm is unwilling or unable to select the Comparable Treasury Issue,
an independent investment banking institution of national standing appointed
by the Trustee after consultation with the Company.
"Comparable Treasury Price" means with respect to any Redemption Date for
the Notes (i) the average of five Reference Treasury Dealer Quotations for
such Redemption Date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than five
such Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means each of Morgan Stanley & Co. Incorporated,
Credit Suisse First Boston Corporation, ABN AMRO Incorporated, BT Alex. Brown
Incorporated and First Chicago Capital Markets, Inc. and their respective
successors; provided, however, that if any of the foregoing shall cease to be
a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company will substitute therefor another Primary
Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New
York City time, on the third Business Day preceding such Redemption Date.
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<PAGE>
Notice of any redemption by the Company will be mailed at least 30 days but
not more than 60 days before any Redemption Date to each holder of Notes to be
redeemed. If less than all the Notes are to be redeemed at the option of the
Company, the Trustee shall select, in such manner as it shall deem fair and
appropriate, the Notes to be redeemed in whole or in part.
Unless the Company defaults in payment of the redemption price, on and after
any Redemption Date interest will cease to accrue on the Notes or portions
thereof called for redemption.
RANKING
With respect to the assets of the Company, the Notes will be senior
unsecured obligations of the Company and will rank pari passu in right of
payment with all other senior unsecured obligations of the Company, including
the Company's obligations under its revolving credit facilities (which are
currently unsecured), and senior in right of payment to all existing and
future subordinated debt of the Company. A significant portion of the
Company's operations are conducted through its directly and indirectly owned
subsidiaries, and therefore, the Company is dependent on the cash flow of its
subsidiaries to meet its debt obligations, including its obligations under the
Notes. Although earnings from the Company's subsidiaries may be provided to
the Company through dividends and payments on intercompany indebtedness,
certain outstanding indebtedness of Howmet restricts the payment of dividends
by Howmet to the Company. These restrictions prevent Thiokol from accessing
Howmet's cash flows and other resources. In addition, under applicable law,
the Company's subsidiaries may be limited in the amount that they are
permitted to pay as dividends on their capital stock. The claims of holders of
the Notes effectively will be subordinated to the prior claims of creditors,
including trade creditors, of the operating subsidiaries. At December 31,
1997, after giving pro forma effect to the offering of the Notes, the total
current and other liabilities and long-term debt of the subsidiaries included
in the Company's consolidated liabilities would have been approximately $728.4
million (excluding the Pechiney Notes, see footnote (d) under
"Capitalization").
COVENANTS
The Indenture will contain, among others, the following covenants:
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, incur, assume or guarantee any Debt secured by a
Lien on any Principal Property or on any Debt or shares of capital stock of,
or other ownership interests in, any Restricted Subsidiary ("Secured Debt")
(whether such Principal Property, Debt, capital stock or ownership interests
are owned or outstanding at the date of the Indenture or thereafter acquired
or issued, as the case may be) if, immediately after giving effect thereto,
the sum, without duplication, of (a) the aggregate principal amount of all
Secured Debt (other than Excluded Debt) and (b) the aggregate amount of all
Attributable Debt in respect of Sale and Leaseback Transactions (other than
Excluded Transactions) would exceed 15% of the Company's Consolidated Net
Tangible Assets, unless the Company provides, concurrently with or prior to
the incurrence, assumption or guarantee of such Secured Debt, that the Debt
Securities shall be secured equally and ratably with (or, at the option of the
Company, prior to) such Secured Debt.
The provisions described in the foregoing paragraph shall not apply to Debt
secured by the following Liens ("Excluded Debt"):
(i) Liens existing as of the date of the Indenture;
(ii) Liens on any Principal Property, Debt, shares of capital stock or
other ownership interests existing at the time of acquisition thereof
(whether such acquisition is direct or by merger, acquisition of stock or
assets or otherwise) by the Company or any of its Subsidiaries, provided
such Liens were not created in contemplation of or in connection with such
acquisition;
(iii) Liens upon or with respect to any Principal Property acquired,
constructed or improved by the Company or any of its Subsidiaries after the
date of the Indenture which (A) are created, incurred or
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<PAGE>
assumed contemporaneously with, or within 12 months after, the latest to
occur of the acquisition (whether by merger, acquisition of stock or assets
or otherwise), or the completion of construction or improvement, or the
commencement of commercial operation, of such Principal Property, and (B)
secure or provide for the payment of any part of the purchase price of such
Principal Property or the cost of such construction or improvement;
provided, however, that in the case of any such construction or
improvement, the Lien shall relate only to Debt incurred to finance such
construction or improvement;
(iv) Liens securing Debt owing by any Subsidiary to the Company or to any
other Subsidiary;
(v) Liens for taxes not yet due or which are being contested by the
Company in good faith;
(vi) Liens securing reimbursement obligations with respect to letters of
credit;
(vii) Liens on receivables, inventory, and patents, trademarks, trade
names and other intangibles, securing Debt;
(viii) Liens encumbering deposits securing Debt under Hedging
Obligations;
(ix) Liens arising out of conditional sale, title retention, consignment
or similar arrangements for the sale of goods entered into by the Company
or any of its Subsidiaries in the ordinary course of business;
(x) Liens created in substitution of or as replacements for any Liens
permitted by the preceding clauses (i) through (ix), provided that, based
on a good faith determination of an officer of the Company, the Principal
Property encumbered under any such substitute or replacement Lien is
substantially similar in nature and value to the Principal Property
encumbered by the Lien which is being replaced; and
(xi) Liens for the sole purpose of extending, renewing or replacing in
whole or in part the Debt secured thereby referred to in the foregoing
clauses (i) to (x), inclusive, or in this clause (xi); provided, however,
that the Debt excluded pursuant to this clause (xi) shall be excluded only
in an amount not to exceed the principal amount of Debt so secured at the
time of such extension, renewal or replacement, and that such extension,
renewal or replacement shall be limited to all or part of the Principal
Property, Debt, shares of capital stock or other ownership interests, as
the case may be, subject to the Lien so extended, renewed or replaced (plus
improvements on or to such Principal Property).
Limitation on Sale and Leaseback Transactions. The Company will not, and
will not permit any of its Restricted Subsidiaries to, enter into, assume,
guarantee or otherwise become liable with respect to any Sale and Leaseback
Transaction involving any Principal Property (whether such Principal Property
is owned at the date of the Indenture or thereafter acquired), if, immediately
after giving effect thereto, the sum, without duplication, of (a) the
aggregate principal amount of all Secured Debt (other than Excluded Debt) and
(b) the aggregate amount of all Attributable Debt in respect of Sale and
Leaseback Transactions (other than Excluded Transactions) would exceed 15% of
the Company's Consolidated Net Tangible Assets. The provisions set forth in
the immediately preceding sentence shall not apply to any Sale and Leaseback
Transaction (an "Excluded Transaction") if (w) within 270 days from the
effective date of such Sale and Leaseback Transaction, the Company or such
Subsidiary applies an amount not less than the greater of (i) the net proceeds
of the sale of the Principal Property sold pursuant to such Sale and Leaseback
Transaction or (ii) the fair value (as determined by the Company) of such
Principal Property to retire (other than pursuant to any mandatory prepayment
or retirement) Funded Debt of the Company or any Subsidiary (other than Funded
Debt held by the Company or any Subsidiary of the Company), including, for
this purpose, any currently maturing portion of such Funded Debt, or to
purchase other property having a fair value (as determined by the Company) at
least equal to the fair value (as determined by the Company) of the Principal
Property sold in such Sale and Leaseback Transaction, (x) such Sale and
Leaseback Transaction occurs within 180 days after the latest to occur of the
date of acquisition by the Company or such Subsidiary, completion of
construction or commencement of commercial operations of the Principal
Property sold pursuant to such transaction, (y) such Sale and Leaseback
Transaction (A) is between the Company and any Subsidiary or between any
Subsidiaries, or (B) is entered into prior to the date of the Indenture or (z)
at the time such Sale and Leaseback Transaction is entered into, the term of
the related lease to the Company or such Subsidiary of the Principal Property
sold pursuant to such transaction is three years or less.
S-31
<PAGE>
EVENT OF DEFAULT
In addition to the Events of Default set forth in the Prospectus, the
following is an Event of Default with respect to the Notes: acceleration of
$100 million or more, individually or in the aggregate, in principal amount of
Indebtedness of the Company under the terms of the instrument under which such
Indebtedness is issued or secured, except as a result of compliance with
applicable laws, orders or decrees, if such Indebtedness shall not have been
discharged or such acceleration is not annulled within 10 days after written
notice of such acceleration.
TERMINATION AND DEFEASANCE
The provisions described under "Description of Debt Securities--Termination
of the Company's Obligations under the Debt Securities and the Indenture" in
the accompanying Prospectus are applicable to the Notes.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be represented by one or more Global Securities that will be
deposited with, or on behalf of, the Depositary and registered in the name of
Cede & Co., the nominee of the Depositary.
The Depositary has advised the Company and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary was created to hold securities of its participating
organizations ("participants") and to facilitate the clearance and settlement
of securities transactions, such as transfers and pledges, among its
participants in such securities through electronic computerized book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. Participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own the Depositary. Access to the Depositary's book-
entry system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Persons who are not participants
may beneficially own securities held by the Depositary only through
participants.
Unless and until it is exchanged in whole or in part for certificated Notes,
in definitive form, a Global Security may not be transferred except as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor depositary or a nominee of such
successor depositary.
A further description of the Depositary's procedures with respect to the
Notes is set forth in the accompanying Prospectus under the heading
"Description of Debt Securities -- Global Debt Securities."
CERTAIN DEFINITIONS
"Attributable Debt" in respect of a Sale and Leaseback Transaction means, as
of the time of determination, the present value (discounted at the rate per
annum equal to the rate of interest implicit in the lease involved in such
Sale and Leaseback Transaction, as determined in good faith by the Company) of
the obligation of the lessee thereunder for rental payments (excluding,
however, any amounts required to be paid by such lessee, whether or not
designated as rent or additional rent, on account of maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges or any amounts
required to be paid by such lessee thereunder contingent upon the amount of
sales or similar contingent amounts) during the remaining term of such lease
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended). In the case of any lease which is
terminable by the lessee upon the payment of a penalty, such rental payments
shall also include the amount of such penalty, but no rental payments shall be
considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated.
S-32
<PAGE>
"Consolidated Net Tangible Assets" means, with respect to the Company as at
any date, the total assets of the Company and its consolidated Subsidiaries
determined in accordance with GAAP as they appear on the most recently
prepared consolidated balance sheet of the Company as of the end of a fiscal
quarter, less (i) all liabilities shown on such consolidated balance sheet
that are classified and accounted for as current liabilities or that otherwise
would be considered current liabilities under GAAP; and (ii) all assets shown
on such consolidated balance sheet that are classified and accounted for as
intangible assets or that otherwise would be considered intangible assets
under GAAP, including, without limitation, franchises, patents and patent
applications, trademarks, brand names and goodwill.
"Debt" means indebtedness for borrowed money or evidenced by bonds, notes,
debentures or other similar instruments.
"Funded Debt" means Debt of the Company or any of its Subsidiaries which,
under GAAP, would appear as indebtedness on the most recent consolidated
balance sheet of the Company, which matures by its terms more than 12 months
from the date of such consolidated balance sheet or which matures by its terms
in less than 12 months but by its terms is renewable or extendible beyond 12
months from the date of such consolidated balance sheet at the option of the
borrower.
"GAAP" means generally accepted accounting principles in the United States
as in effect on the date of application thereof.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange, interest rate or commodity swap
agreements, currency exchange, interest rate or commodity cap agreements and
currency exchange, interest rate or commodity collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in currency exchange, interest rates or commodity prices.
"Lien" means any mortgage, pledge, lien, charge, security interest,
conditional sale or other title retention agreement or other encumbrance of
any nature whatsoever.
"Person" means any individual, corporation, business trust, partnership,
joint venture, joint-stock company, limited liability company, association,
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Principal Property" means any manufacturing, processing, distribution,
research, research and development, warehousing or principal administration
facility (including, without limitation, land, fixtures and equipment) owned
or leased by the Company or any Subsidiary (including any of the foregoing
acquired or leased after the date of the Indenture) and located within the
United States of America, other than any of the foregoing which the Board of
Directors of the Company by Board Resolution and in good faith declares,
together with all other manufacturing, processing, distribution, research,
research and development, warehousing and principal administration facilities
(including, without limitation, land, fixtures and equipment) previously so
declared, are not of material importance to the business conducted by the
Company and its Subsidiaries taken as an entirety.
"Restricted Subsidiary" means any Subsidiary of the Company which (i) owns
or leases a Principal Property and (ii) (A) substantially all of the property
of which is located, or substantially all of the business of which is carried
on, within the United States of America or (B) which is incorporated or
organized under the laws of any state of the United States of America or the
District of Columbia.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Subsidiary of any Principal Property, whether
owned at the date of the Indenture or thereafter acquired, which has been or
is to be sold or transferred by the Company or such Subsidiary to such Person
or to any other Person to whom funds have been or are to be advanced by such
Person on the security of such Principal Property.
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<PAGE>
"Subsidiary" means any corporation, partnership or limited liability company
of which the Company, or the Company and one or more Subsidiaries, or any one
or more Subsidiaries, directly or indirectly own (i) in the case of a
corporation, voting securities entitling the holders thereof to elect a
majority of the directors, either at all times or so long as there is no
default or contingency which permits the holders of any other class of
securities to vote the election of one or more directors, (ii) in the case of
a partnership, at least a majority of the general partnership interests and at
least a majority of total outstanding partnership interests or (iii) in the
case of a limited liability company, at least a majority of the membership
interests.
UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the
Underwriters named below have severally agreed to purchase, and the Company
has agreed to sell to them, severally, the respective principal amount of the
Notes set forth opposite their respective names below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
NAME NOTES
---- ------------
<S> <C>
Morgan Stanley & Co. Incorporated........................... $ 60,000,000
Credit Suisse First Boston Corporation...................... 30,000,000
ABN AMRO Incorporated....................................... 20,000,000
BT Alex. Brown Incorporated................................. 20,000,000
First Chicago Capital Markets, Inc.......................... 20,000,000
------------
Total................................................. $150,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the
Notes offered hereby if any are taken.
The Underwriters propose to offer part of the Notes directly to the public
at the public offering price set forth on the cover page of this Prospectus
Supplement and in part to certain dealers at a price that represents a
concession not in excess of .40% of the principal amount of the Notes. Any
Underwriter may allow, and such dealers may reallow, a concession not in
excess of .25% of the principal amount of the Notes to certain other dealers.
After the initial offering of the Notes, the offering price and other selling
terms may from time to time be varied by the Underwriters.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable
laws and regulations. The Underwriters are not obligated, however, to make a
market in the Notes and any such market making may be discontinued at the sole
discretion of any Underwriter. Accordingly, no assurance can be given as to
the liquidity of, or trading markets for, the Notes.
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Notes. Specifically, the Underwriters may overallot in connection with
the offering, creating a short position in the Notes for their own account. In
addition, to cover overallotments or to stabilize the price of the Notes, the
Underwriters may bid for, and purchase, Notes in the open market. Finally, the
Underwriters may reclaim selling concessions allowed to an Underwriter or
dealer for distributing the Notes in the offering, if the Underwriters
repurchase previously distributed Notes in transactions to cover syndicate
short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Notes above
independent market levels. The Underwriters are not required to engage in
these activities, and may end any of these activities at any time.
S-34
<PAGE>
In connection with the use of proceeds by the Company to repay certain
outstanding borrowings under the Company's senior revolving credit facility,
affiliates of each of ABN AMRO Incorporated, BT Alex. Brown Incorporated,
Credit Suisse First Boston Corporation and First Chicago Capital Markets, Inc.
will receive in excess of 10% of the net proceeds of this offering.
LEGAL MATTERS
Certain legal matters with respect to the Notes will be passed upon by
Latham & Watkins, San Francisco, California, as counsel for the Company. Brown
& Wood llp, San Francisco, California, will act as counsel for the
Underwriters.
S-35
<PAGE>
THIOKOL CORPORATION
DEBT SECURITIES
WARRANTS TO PURCHASE DEBT SECURITIES
WARRANTS TO PURCHASE EQUITY SECURITIES
PREFERRED STOCK
COMMON STOCK
Thiokol Corporation (the "Company"), directly or through agents, dealers, or
underwriters designated from time to time, may offer, issue and sell, together
or separately, up to $300,000,000 in the aggregate of (a) unsecured debt
securities (the "Debt Securities") of the Company, in one or more series,
which may be either senior debt securities (the "Senior Debt Securities"),
senior subordinated debt securities (the "Senior Subordinated Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"), (b) shares of preferred stock of the Company, par value $1.00
per share (the "Preferred Stock"), in one or more series, (c) shares of common
stock of the Company, par value $1.00 per share (the "Common Stock"), (d)
warrants to purchase Debt Securities (the "Debt Warrants") and (e) warrants to
purchase Preferred Stock or Common Stock (the "Equity Warrants" and together
with the Debt Warrants, the "Warrants"), or any combination of the foregoing,
either individually or as units consisting of one or more of the foregoing,
each on terms to be determined at the time of sale. The Debt Securities may be
issued as exchangeable and/or convertible Debt Securities exchangeable for or
convertible into shares of Common Stock or Preferred Stock. The Preferred
Stock may also be exchangeable for and/or convertible into shares of Common
Stock or another series of Preferred Stock. The Debt Securities, the Preferred
Stock, the Common Stock and the Warrants are collectively referred to herein
as the "Securities." When a particular series of Securities is offered, a
supplement to this Prospectus (each a "Prospectus Supplement") will be
delivered with this Prospectus. The Prospectus Supplement will set forth the
terms of the offering and sale of the offered Securities.
Except as described more fully herein or as set forth in the Prospectus
Supplement relating to any offered Debt Securities, the Indenture will not
provide holders of Debt Securities protection in the event of a highly-
leveraged transaction, reorganization, restructuring, merger or similar
transaction involving the Company which could adversely affect holders of Debt
Securities. See "Description of Debt Securities -- Consolidation, Merger and
Sale of Assets." There is not currently any absolute limitation on the amount
of senior indebtedness that may be issued by the Company in the future.
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol TKC. On February 25, 1998, the last reported sale price of the
Common Stock on the New York Stock Exchange was $93.875 per share. The Company
has not yet determined whether any of the Debt Securities, Preferred Stock or
Warrants offered hereby will be listed on any exchange or over-the-counter
market. If the Company decides to seek listing of any such Securities, the
Prospectus Supplement relating thereto will disclose such exchange or market.
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 directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. The
Company reserves the sole right to accept, and together with its agents, from
time to time, to reject in whole or in part any proposed purchase of
Securities to be made directly or through agents. See "Plan of Distribution."
If any such agents or underwriters are involved in the sale of any Securities,
the names of such agents or underwriters and any applicable fees, commissions
or discounts will be set forth in the applicable Prospectus Supplement.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by the applicable Prospectus Supplement.
The date of this Prospectus is February 26, 1998.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all
amendments and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, part of which has been
omitted in accordance with the rules and regulations of the Commission. For
further information about the Company and the Securities offered hereby,
reference is made to the Registration Statement, including the exhibits filed
as a part thereof or otherwise incorporated therein. Statements made in this
Prospectus as to the contents of any document referred to herein are not
necessarily complete, and in each instance reference is made to such document
for a more complete description, and each such statement is qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Commission. The Registration Statement, including the exhibits thereto, as
well as such reports and other information filed by the Company with the
Commission, can be inspected, without charge, and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington D.C., 20549; 7 World Trade Center, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Reports and other information concerning the Company can also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005. Such material can also be inspected on the Internet at
the Commission's Web Site at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated by reference in this Prospectus: (1) the
Company's Annual Report on Form 10-K for the year ended June 30, 1997, (2) the
Company's Proxy Statement for the 1997 Annual Meeting of Stockholders, (3) the
Company's Quarterly Reports on Form 10-Q for the quarter ended September 30,
1997 and the quarter ended December 31, 1997, (4) the description of the
Common Stock contained in the Company's Registration Statement on Form 8-A
filed on July 3, 1989, (5) the description of the Preferred Share Purchase
Rights contained in the Company's Registration Statement on Form 8-A filed on
May 28, 1997, (6) the Company's reports on Form 8-K dated October 10, 1997 and
December 2, 1997 and the Form 8-K/A dated December 15, 1997, and (7) all other
documents subsequently filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and before the termination
of the offering, which shall be deemed to be a part hereof from the date of
filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is incorporated
or 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.
This Prospectus may not be used to consummate sales of offered securities
unless accompanied by a Prospectus Supplement. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular offered
Securities in any jurisdiction shall not constitute an offer in the
jurisdiction of any other securities covered by this Prospectus.
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The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon request, a copy
of any documents incorporated into this Prospectus by reference (other than
exhibits incorporated by reference into such document). Requests for documents
should be submitted to the Corporate Secretary, Thiokol Corporation, 2475
Washington Boulevard, Ogden, Utah 84401, (telephone (801) 629-2000). The
information relating to the Company contained in this Prospectus does not
purport to be comprehensive and should be read together with the information
contained in the documents incorporated or deemed to be incorporated by
reference herein.
THE COMPANY
Thiokol is a leading producer of high technology solid rocket motors for
space, defense and commercial launch applications and a major supplier of
precision fastening systems for aerospace and industrial markets worldwide.
Thiokol's 62 percent owned subsidiary, Howmet International Inc. ("Howmet") is
a leading manufacturer of investment cast turbine engine components for jet
aircraft and industrial gas power generation markets, as well as a leading
producer of aluminum investment castings for the commercial aerospace and
defense electronics industries.
In December 1997, Thiokol purchased an additional 13 percent of Howmet from
The Carlyle Group ("Carlyle") for approximately $184 million, increasing the
Company's ownership from 49 percent to 62 percent. Thiokol began consolidating
Howmet's operating results as of December 2, 1997. In connection with the sale
to Thiokol, Carlyle also sold 15.35 percent of Howmet to the public through an
initial public offering, resulting in a reduction of Carlyle's ownership from
51 percent to 22.65 percent. The Company has the right, during a two year
period commencing in December 1999, to acquire all of Carlyle's remaining
shares of Howmet common stock and a right of first refusal to acquire any
shares Carlyle proposes to sell, in each case at market price. Carlyle has
also agreed with Thiokol that it will not dispose of any of its shares of
Howmet common stock until the earlier of December 1999 or the occurrence of a
change of control of Thiokol. Thiokol and its affiliates are prohibited from
acquiring shares of Howmet common stock from the public if less than 14
percent of the Howmet common stock would be held by the public following such
acquisition. In December 1995, Thiokol and Carlyle invested $98 million and
$102 million, respectively, to purchase the common stock of Howmet.
The Company's principal offices are located at 2475 Washington Boulevard,
Ogden, Utah 84401, and its telephone number is (801) 629-2000.
USE OF PROCEEDS
The Company currently has no specific plans for the use of the net proceeds
from the sale of Securities offered hereby. However, the Company currently
anticipates that any such net proceeds would be used for general corporate
purposes, which may include but are not limited to working capital, capital
expenditures and acquisitions. When a particular series of Securities is
offered, the Prospectus Supplement relating thereto will set forth the
Company's intended use for the net proceeds received from the sale of such
Securities. Pending the application of the net proceeds, the Company expects
to invest such proceeds in short-term, interest-bearing instruments or other
investment-grade securities.
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RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Company for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
----------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges and
ratio of earnings to fixed charges and
preferred stock dividends.............. 14.0 12.7 6.9 6.5 4.5
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges and
the ratio of earnings to fixed charges and preferred stock dividends, earnings
consist of income before income taxes and fixed charges (exclusive of
preferred stock dividends). Because the Company did not distribute any
preferred stock dividends during fiscal years 1992-1996 the two above ratios
are identical.
GENERAL DESCRIPTION OF SECURITIES
The Company directly or through agents, dealers, or underwriters designated
from time to time, may offer, issue and sell, together or separately, up to
$300,000,000 in the aggregate of (a) unsecured debt securities (the "Debt
Securities") of the Company, in one or more series, which may be either senior
debt securities (the "Senior Debt Securities"), senior subordinated debt
securities (the "Senior Subordinated Debt Securities") or subordinated debt
securities (the "Subordinated Debt Securities"), (b) shares of preferred stock
of the Company, par value $1.00 per share (the "Preferred Stock"), in one or
more series, (c) shares of common stock of the Company, par value $1.00 per
share (the "Common Stock"), (d) warrants to purchase Debt Securities (the
"Debt Warrants") and (e) warrants to purchase Preferred Stock or Common Stock
(the "Equity Warrants" and together with the Debt Warrants, the "Warrants"),
or any combination of the foregoing, either individually or as units
consisting of one or more of the foregoing, each on terms to be determined at
the time of sale. The Debt Securities may be issued as exchangeable and/or
convertible Debt Securities exchangeable for or convertible into shares of
Common Stock or Preferred Stock. The Preferred Stock may also be exchangeable
for and/or convertible into shares of Common Stock or another series of
Preferred Stock. The Debt Securities, the Preferred Stock, the Common Stock
and the Warrants are collectively referred to herein as the "Securities." When
a particular series of Securities is offered, a supplement to this Prospectus
(each a "Prospectus Supplement") will be delivered with this Prospectus. The
Prospectus Supplement will set forth the terms of the offering and sale of the
offered Securities.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. As of the
date of this Prospectus, the Company has not determined that it will offer any
Debt Securities nor has it negotiated an indenture with respect to any Debt
Securities. Accordingly, the terms of the Debt Securities described below
(including with respect to covenants, events of default, indenture provisions,
etc.) are general and are subject to the terms of the fully-negotiated
indenture related to any Debt Securities. The particular terms of the Debt
Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions do not apply to the Debt Securities so offered
will be described in the Prospectus Supplement relating to such Debt
Securities.
Debt Securities may be issued from time to time in series under an
indenture, and one or more indentures supplemental thereto (collectively, the
"Indenture"), between the Company and a trustee to be identified in the
applicable Prospectus Supplement (the "Trustee"). The terms of the Debt
Securities will include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (the "TIA")
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<PAGE>
as in effect on the date of the Indenture. The Debt Securities will be subject
to all such terms, and potential purchasers of the Debt Securities are
referred to the Indenture and the TIA for a statement thereof. The following
summary of certain provisions of the Indenture does not purport to be complete
and is qualified in its entirety by reference to the Indenture, including the
definitions therein of certain terms used below. A copy of the proposed form
of Indenture has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. As used under this caption, unless the
context otherwise requires, "Offered Debt Securities" shall mean the Debt
Securities offered by this Prospectus and the accompanying Prospectus
Supplement.
GENERAL
The Indenture will provide for the issuance of Debt Securities in series and
will not limit the principal amount of Debt Securities which may be issued
thereunder. In addition, except as may be provided in the Prospectus
Supplement relating to such Debt Securities, the Indenture will not limit the
amount of additional indebtedness the Company may incur.
The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the series of Offered Debt Securities in respect of
which this Prospectus is being delivered: (1) the title of the Offered Debt
Securities; (2) whether the Offered Debt Securities are Senior Debt
Securities, Senior Subordinated Debt Securities or Subordinated Debt
Securities or any combination thereof; (3) any limit upon the aggregate
principal amount of the Offered Debt Securities; (4) the date or dates on
which the principal of the Offered Debt Securities is payable; (5) the rate or
rates at which the Offered Debt Securities will bear interest, if any, or the
manner in which such rate or rates are determined; (6) the date or dates from
which any such interest will accrue, the interest payment dates on which any
such interest on the Offered Debt Securities will be payable and the record
dates for the determination of holders to whom such interest is payable; (7)
the place or places where the principal of and any interest on the Offered
Debt Securities will be payable; (8) the obligation of the Company, if any, to
redeem, purchase or repay the Offered Debt Securities in whole or in part
pursuant to any sinking fund or analogous provisions or at the option of the
holders and the price or prices at which and the period or periods within
which and the terms and conditions upon which the Offered Debt Securities
shall be redeemed, purchased or repaid pursuant to such obligation; (9) the
denominations in which any Offered Debt Securities will be issuable, if other
than denominations of U.S. $1,000 and any integral multiple thereof; (10) if
other than the principal amount thereof, the portion of the principal amount
of the Offered Debt Securities of the series which will be payable upon
declaration of the acceleration of the maturity thereof; (11) any addition to
or change in the covenants which apply to the Offered Debt Securities; (12)
any Events of Default with respect to the Offered Debt Securities, if not
otherwise set forth under "Events of Default"; (13) whether the Offered Debt
Securities will be issued in whole or in part in global form, the terms and
conditions, if any, upon which such global Offered Debt Securities may be
exchanged in whole or in part for other individual securities, and the
depositary for the Offered Debt Securities; (14) the terms and conditions, if
any, upon which the Offered Debt Securities shall be exchanged for or
converted into other securities or property; (15) the provisions, if any,
relating to any security provided for Offered Debt Securities; and (16) any
other terms of the Offered Debt Securities which terms shall not be
inconsistent with the provisions of the Indenture.
Debt Securities may be issued at a discount from their principal amount
("Original Issue Discount Securities"). Federal income tax considerations and
other special considerations applicable to any such Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Debt Securities may be issued in bearer form, with or without coupons.
Federal income tax considerations and other special considerations applicable
to bearer securities will be described in the applicable Prospectus
Supplement.
Unless otherwise indicated in this Prospectus or a Prospectus Supplement,
the Debt Securities will not have the benefit of any covenants that limit or
restrict the Company's business or operations, the pledging of the Company's
assets or the incurrence of indebtedness by the Company.
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<PAGE>
STATUS OF DEBT SECURITIES
The Senior Debt Securities will be unsubordinated obligations of the Company
and will rank pari passu with all other unsecured and unsubordinated
indebtedness of the Company.
The obligations of the Company pursuant to Senior Subordinated Debt
Securities will be subordinate in right of payment, to the extent and in the
manner set forth in the Indenture, to all Senior Indebtedness of the Company.
Except to the extent set forth in the Prospectus Supplement, "Senior
Indebtedness" of the Company is defined to mean the principal of, and premium,
if any, and any interest (including interest accruing subsequent to the
commencement of any proceeding for the bankruptcy or reorganization of the
Company under any applicable bankruptcy, insolvency or similar law now or
hereafter in effect) on (a) all indebtedness of the Company whether heretofore
or hereafter incurred (i) for borrowed money or (ii) in connection with the
acquisition by the Company or a subsidiary of assets other than in the
ordinary course of business, for the payment of which the Company is liable
directly or indirectly by guarantee, letter of credit, obligation to purchase
or acquire or otherwise, or the payment of which is secured by a lien, charge
or encumbrance on assets acquired by the Company, (b) amendments,
modifications, renewals, extensions and deferrals of any such indebtedness,
and (c) any indebtedness issued in exchange for any such indebtedness (clauses
(a) through (c) hereof being collectively referred to herein as "Debt");
provided, however, that the following will not constitute Senior Indebtedness
with respect to Senior Subordinated Debt Securities: (1) any Debt as to which,
in the instrument evidencing such Debt or pursuant to which such Debt was
issued, it is expressly provided that such Debt is subordinate in right of
payment to all Debt of the Company not expressly subordinated to such Debt;
(2) any Debt which by its terms refers explicitly to the Senior Subordinated
Debt Securities and states that such Debt shall not be senior in right of
payment; and (3) any Debt of the Company in respect of the Senior Subordinated
Debt Securities or any Subordinated Debt Securities. The Company will not
issue Debt which is subordinated in right of payment to any other Debt of the
Company and which is not expressly made pari passu with, or subordinate and
junior in right of payment to, the Senior Subordinated Debt Securities.
The obligations of the Company pursuant to Subordinated Debt Securities will
be subordinate in right of payment to all Senior Indebtedness of the Company
and to any Senior Subordinated Debt Securities; provided, however, that the
following will not constitute Senior Indebtedness with respect to Subordinated
Debt Securities: (1) any Debt as to which, in the instrument evidencing such
Debt or pursuant to which such Debt was issued, it is expressly provided that
such Debt is subordinate in right of payment to all Debt of the Company not
expressly subordinated to such Debt; and (2) any Debt of the Company in
respect of Subordinated Debt Securities and any Debt which by its terms refers
explicitly to the Subordinated Debt Securities and states that such Debt shall
not be senior in right of payment.
No payment pursuant to the Senior Subordinated Debt Securities or the
Subordinated Debt Securities, as the case may be, may be made unless all
amounts of principal, premium, if any, and interest then due on all applicable
Senior Indebtedness of the Company shall have been paid in full or if there
shall have occurred and be continuing beyond any applicable grace period a
default in any payment with respect to any such Senior Indebtedness, or if
there shall have occurred any event of default with respect to any such Senior
Indebtedness permitting the holders thereof to accelerate the maturity
thereof, or if any judicial proceeding shall be pending with respect to any
such default. However, the Company may make payments pursuant to the Senior
Subordinated Debt Securities or the Subordinated Debt Securities, as the case
may be, if a default in payment or an event of default with respect to the
Senior Indebtedness permitting the holder thereof to accelerate the maturity
thereof has occurred and is continuing and judicial proceedings with respect
thereto have not been commenced within a certain number of days of such
default in payment or event of default. Upon any distribution of the assets of
the Company upon dissolution, winding-up, liquidation or reorganization, the
holders of Senior Indebtedness of the Company will be entitled to receive
payment in full of principal, premium, if any, and interest (including
interest accruing subsequent to the commencement of any proceeding for the
bankruptcy or reorganization of the Company under any applicable bankruptcy,
insolvency or similar law now or hereafter in effect) before any payment is
made on the Senior Subordinated Debt Securities or Subordinated Debt
Securities, as applicable. By reason of such subordination, in the event of
insolvency of the Company, holders of Senior
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<PAGE>
Indebtedness of the Company may receive more, ratably, and holders of the
Senior Subordinated Debt Securities or Subordinated Debt Securities, as
applicable, having a claim pursuant to the Senior Subordinated Debt Securities
or Subordinated Debt Securities, as applicable, may receive less, ratably,
than the other creditors of the Company. Such subordination will not prevent
the occurrence of any Event of Default (as defined below) in respect of the
Senior Subordinated Debt Securities or the Subordinated Debt Securities.
If the Company offers Debt Securities, the applicable Prospectus Supplement
will set forth the aggregate amount of outstanding indebtedness, if any, as of
the most recent practicable date that by the terms of such Debt Securities
would be senior to such Debt Securities. There does not currently exist any
absolute limitation on the amount of Senior Indebtedness that may be issued in
the future. However, the applicable Prospectus Supplement will also set forth
any limitation on the issuance by the Company of any additional Senior
Indebtedness.
CONVERSION RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock or Preferred Stock will be set forth
in the Prospectus Supplement relating thereto. Such terms will include whether
such Debt Securities are convertible into Common Stock or Preferred Stock, the
conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders or
the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities.
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in the applicable Prospectus Supplement, payment
of principal, premium, if any, and any interest on the Debt Securities will be
payable, and the exchange of and the transfer of Debt Securities will be
registerable, at the office of the Trustee or at any other office or agency
maintained by the Company for such purpose subject to the limitations of the
Indenture. Unless otherwise indicated in the applicable Prospectus Supplement,
the Debt Securities will be issued in denominations of U.S. $1,000 or integral
multiples thereof. No service charge will be made for any registration of
transfer or exchange of the Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities (the "Global Securities") that will be deposited with a
Depositary or its nominee identified in the applicable Prospectus Supplement.
In such a case, one or more Global Securities will be issued in a denomination
or aggregate denominations equal to the portion of the aggregate principal
amount of outstanding Debt Securities of the series to be represented by such
Global Security or Securities. Each Global Security will be deposited with
such Depositary or nominee or a custodian therefor and will bear a legend
regarding the restrictions on exchanges and registration of transfer thereof
referred to below and any such other matters as may be provided for pursuant
to the Indenture.
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be transferred to, or registered or
exchanged for Debt Securities registered in the name of, any person or entity
other than the Depositary for such Global Security or any nominee of such
Depositary, and no such transfer may be registered, unless (i) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or has ceased to be qualified to act as
such as required by the applicable Indenture, (ii) the Company executes and
delivers to the Trustee an order that such Global Security shall be so
transferable, registrable and exchangeable, and such transfers shall be
registrable, (iii) an Event of Default with respect to the Debt Securities
represented by such Global Security shall have happened and be continuing or
(iv) there shall exist such circumstances, if any, as may be described in the
applicable Prospectus Supplement. All Debt Securities issued in exchange for a
Global Security or any portion thereof will be registered in such names as the
Depositary may direct.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement. The Company expects that
the following provisions will apply to depositary arrangements.
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Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary or its nominee. Upon the issuance of
such Global Security, and the deposit of such Global Security with or on
behalf of the Depositary for such Global Security, the Depositary will credit,
on its book-entry registration and transfer system, the respective principal
amounts of the Debt Securities represented by such Global Security to the
accounts of institutions that have accounts with such Depositary or its
nominee ("participants"). The accounts to be credited will be designated by
the underwriters or agents of such Debt Securities or by the Company, if such
Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants
or persons that may hold interests through participants. Ownership of
beneficial interests by participants in such Global Security will be shown on,
and the transfer of that ownership interest will be effected only through,
records maintained by the Depositary or its nominee for such Global Security.
Ownership of beneficial interests in such Global Security by persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
owners of beneficial interests in such Global Security will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in definitive or certificated form
and will not be considered the holders thereof for any purposes under the
Indenture. Accordingly, each person owning a beneficial interest in such
Global Security must rely on the procedures of the Depositary 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. If the Company requests any action of holders or if an owner of
a beneficial interest in such Global Security desires to give any notice or
take any action a holder is entitled to give or take under the Indenture, the
Depositary will authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Notwithstanding any other provisions to the contrary in the Indenture, the
rights of the beneficial owners of the Debt Securities to receive payment of
the principal and premium, if any, of and interest on such Debt Securities, on
or after the respective due dates expressed in such Debt Securities, or to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of the
beneficial owners.
Principal of and any interest on a Global Security will be payable in the
manner described in the applicable Prospectus Supplement.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without any required consent of holders of outstanding Debt
Securities, may not consolidate with or merge into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its property
or assets to any person unless (a) the Company is the surviving corporation or
the entity or the person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia; (b) the entity or person formed by
or surviving any such consolidation or merger (if other than the Company) or
the entity or person to
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which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Debt
Securities and the Indenture; and (c) immediately prior to and after the
transaction no Default (as defined in the Indenture) or Event of Default (as
indicated below) exists.
CERTAIN OTHER COVENANTS
The applicable Prospectus Supplement will describe any material covenants in
respect of a series of Offered Debt Securities. Other than the covenants of
the Company included in the Indenture as described above or as described in
the applicable Prospectus Supplement, the Indenture will not provide holders
of Debt Securities protection in the event of a highly-leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company which could adversely affect holders of Debt Securities.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following will constitute events of default (each an "Event of Default") under
the Indenture with respect to Debt Securities of any series: (a) failure to
pay principal of, premium, if any, any Debt Security of that series when due
and payable at maturity, upon redemption or otherwise; (b) failure to pay any
interest on any Debt Security of that series when due, and the Default
continues for 30 days; (c) an Event of Default, as defined in the Debt
Securities of that series, occurs and is continuing, or the Company fails to
comply with any of its other agreements in the Debt Securities of that series
or in the Indenture with respect to that series and the Default continues for
the period and after the notice provided therein (and described below); and
(d) certain events of bankruptcy, insolvency or reorganization. A Default
under clause (c) above is not an Event of Default with respect to a particular
series of Securities until the Trustee or the holders of at least 50% in
principal amount of the then outstanding Securities of that series notify the
Company of the Default and the Company does not cure the Default within 30
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
If an Event of Default with respect to outstanding Debt Securities of any
series (other than an Event of Default relating to certain events of
bankruptcy, insolvency or reorganization) shall occur and be continuing,
either the Trustee or the holders of at least 50% in principal amount of the
outstanding Debt Securities of that series by notice, as provided in the
Indenture, may declare the unpaid principal amount (or, if the Debt Securities
of that series are Original Issue Discount Securities, such lesser amount as
may be specified in the terms of that series) of, and any accrued and unpaid
interest on, all Debt Securities of that series to be due and payable
immediately. However, at any time after a declaration of acceleration with
respect to Debt Securities of any series has been made, but before a judgment
or decree based on such acceleration has been obtained, the holders of a
majority in principal amount of the outstanding Debt Securities of that series
may, under certain circumstances, rescind and annul such acceleration. For
information as to waiver of defaults, see "Modification and Waiver" below.
The Indenture will provide that, subject to the duty of the Trustee during
an Event of Default to act with the required standard of care, the Trustee
will be under no obligation to exercise any of its rights or powers under the
applicable Indenture at the request or direction of any of the holders, unless
such holders shall have offered to the Trustee reasonable security or
indemnity. Subject to certain provisions, including those requiring security
or indemnification of the Trustee, the holders of a majority in principal
amount of the outstanding Debt Securities of any series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of that series.
The Company will be required to furnish to the Trustee under the Indenture
annually a statement as to the performance by the Company of its obligations
under that Indenture and as to any default in such performance.
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MODIFICATION AND WAIVER
The Company and the Trustee may amend the Indenture or the Debt Securities
with the written consent of the holders of a majority in principal amount of
the then outstanding Debt Securities of each series affected by the amendment
with each series voting as a separate class, except that the right of any
holder to receive payment of principal of, premium, if any, and interest, if
any, on the Debt Securities, on or after the respective due dates expressed in
such securities, or to bring suit for the enforcement of any such payment on
or after such respective dates, may not be impaired or affected without the
consent of the holder. The holders of a majority in principal amount of the
then outstanding Debt Securities of any series may also waive compliance in a
particular instance by the Company with any provision of the Indenture with
respect to the Debt Securities of that series; provided, however, that without
the consent of each holder of Debt Securities affected, an amendment or waiver
may not (i) reduce the percentage of the principal amount of Debt Securities
whose holders must consent to an amendment or waiver; (ii) reduce the rate or
change the time for payment of interest on any Debt Security; (iii) reduce the
principal of or change the fixed maturity of any Debt Security, reduce the
amount of, or postpone the date fixed for redemption or alter the conversion
provisions; (iv) make any Debt Security payable in money other than that
stated in the Debt Security; (v) make any change in the provisions concerning
the matters covered by this sentence with respect to waivers and consents,
waivers of Default or Events of Default by holders or the rights of holders to
recover the principal of, or interest on, any Debt Security; or (vi) waive a
default in the payment of the principal of, or interest on, any Debt Security,
except as otherwise provided in the Indenture. The Company and the Trustee may
amend the Indenture or the Debt Securities without notice to or the consent of
any holder of a Debt Security: (i) to cure any ambiguity, defect or
inconsistency; (ii) to comply with the Indenture's provisions with respect to
successor corporations; (iii) to comply with any requirements of the
Commission in connection with the qualification of the Indenture under the
TIA; (iv) to provide for uncertificated Debt Securities in addition to or in
place of certificated Debt Securities; (v) to add to, change or eliminate any
of the provisions of the Indenture in respect of one of more series of Debt
Securities, provided, however, that any such addition, change or elimination
(A) shall neither (1) apply to any Debt Security of any series created prior
to the execution of such amendment and entitled to the benefit of such
provision, nor (2) modify the rights of a holder of any such Debt Security
with respect to such provision, or (B) shall become effective only when there
is no outstanding Debt Security of any series created prior to such amendment
and entitled to the benefit of such provision; (vi) to make any change that
does not adversely affect in any material respect the interest of any holder
of any series; or (vii) to establish additional series of Debt Securities as
permitted by the Indenture.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series, by notice to the Trustee, may waive an existing
Default or Event of Default and its consequences except a Default or Event of
Default in the payment of the principal of, or any interest on, any Debt
Security with respect to the Debt Securities of that series. However, the
holders of a majority in principal amount of the then outstanding Debt
Securities of an applicable series, by notice to the Trustee, may rescind an
acceleration of the unpaid principal and accrued interest on such series and
the consequences of such acceleration if the rescission would not conflict
with any judgment or decree and if all existing Events of Default with respect
to that series have been cured or waived except nonpayment of principal (or
such lesser amount) or interest that has become due solely because of the
acceleration.
TERMINATION OF THE COMPANY'S OBLIGATIONS UNDER THE DEBT SECURITIES AND THE
INDENTURE
Except as otherwise described below, the Company may terminate its
obligations under the Debt Securities of any series and the Indenture with
respect to that series of Debt Securities if:
(a) all previously authenticated and delivered Debt Securities of that
series (other than destroyed, lost or stolen Debt Securities which have
been replaced or Debt Securities which are paid or Debt Securities for
whose payment money or securities has theretofore been held in trust and
thereafter repaid to the Company) have been delivered to the Trustee for
cancellation and the Company has paid all sums payable by it under the
Indenture; or
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(b)(1) the Debt Securities mature within one year or all such Debt
Securities are to be called for redemption within one year after
arrangements satisfactory to the Trustee for giving the notice of
redemption; and
(2) the Company irrevocably deposits in trust with the Trustee during
such one-year period, under the terms of an irrevocable trust agreement
in form and substance satisfactory to the Trustee, as trust funds
solely for the benefit of the holders of Debt Securities for that
purpose, money or U.S. government obligations, or a combination
thereof, with the U.S. government obligations maturing as to principal
and interest in such amounts and at such times as are sufficient,
without consideration of any reinvestment of such interest, to pay
principal of and interest on the Debt Securities to maturity or
redemption, as the case may be, and to pay all other sums payable by it
under the Indenture; or
(c)(1) the Company irrevocably deposits in trust with the Trustee under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds solely for the benefit of the
holders of Debt Securities for that purpose, money or U.S. government
obligations, or a combination thereof, with the U.S. government obligations
maturing as to principal and interest in such amounts and at such times as
are sufficient, without consideration of any reinvestment of such interest,
to pay principal of and interest on the Debt Securities to maturity or
redemption, as the case may be;
(2) the Company shall have delivered to the Trustee (A) a ruling
directed to the Trustee received from the Internal Revenue Service to
the effect that the holders of the Debt Securities will not recognize
income, gain or loss for federal income tax purposes as a result of the
Company's exercise of its option under this clause (c) and will be
subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such option had
not been exercised, or (B) an opinion of counsel to the same effect as
the ruling described in subclause (A) above accompanied by a ruling to
that effect published by the Internal Revenue Service, unless there has
been a change in the applicable federal income tax law since the date
of the Indenture such that a ruling from the Internal Revenue Service
is no longer required;
(3) the Company has paid or caused to be paid all sums then payable
by the Company under the Indenture; and
(4) the Company has delivered to the Trustee for such series an
officers' certificate and an opinion of counsel, each stating that all
conditions precedent provided for in this clause (c) relating to
termination of obligations of the Company have been complied with.
The Company's obligations under sections of the Indenture relating to the
registrar and the paying agent, their obligations, the maintenance of a list
of holders, transfers of Debt Securities, replacement of securities, payment
(together with payment obligations under the Debt Securities), compensation
and indemnity of the Trustee, replacement of the Trustee and repayment to the
Company of excess money held by the Trustee or the paying agent, shall survive
until the Debt Securities are no longer outstanding. If the ruling from the
Internal Revenue Service or opinion of counsel referred to in clause (c)(2)
above is based on or assumes that the Company's payment obligations under the
Indenture or its payment obligations under the Debt Securities will continue
(or is silent with respect thereto), then such discharge shall constitute only
a "covenant defeasance" and, consequently, the Company shall remain liable for
the payment of the Debt Securities. However, if and when a ruling from the
Internal Revenue Service or opinion of counsel referred to in clause (c)(2)
above is able to be provided specifically without regard to, and not in
reliance upon, the continuance of the Company's payment obligations under the
Indenture and its payment obligations under the Debt Securities, then the
Company's payment obligations under the Indenture and the Debt Securities
shall cease upon delivery to the Trustee of such ruling or opinion of counsel
and compliance with the other conditions precedent provided for in clause (c)
above relating to the satisfaction and discharge of the Indenture. In such a
case (a "legal defeasance") holders would be able to look only to the trust
fund for payment of principal and any interest on the Debt Securities.
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REGARDING THE TRUSTEES
The Trustee with respect to the first series of Debt Securities, if any,
will be identified in the Prospectus Supplement relating to such Debt
Securities. Other Trustees may be designated for any subsequent series of Debt
Securities. The Indenture and provisions of the TIA incorporated by reference
therein, contain certain limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such
claim, as security or otherwise. The Trustee and its affiliates may engage in,
and will be permitted to continue to engage in, other transactions with the
Company and its affiliates; provided, however, that if it acquires any
conflicting interest (as defined), it must eliminate such conflict or resign.
The holders of a majority in principal amount of the then outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee. The TIA and the Indenture provide that in case an Event of Default
shall occur (and be continuing), the Trustee will be required, in the exercise
of its rights and powers, to use the degree of care and skill of a prudent man
in the conduct of his own affairs. Subject to such provision, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any of the holders of the Debt Securities issued
thereunder, unless they have offered to the Trustee indemnity satisfactory to
it.
DESCRIPTION OF WARRANTS
The Company may issue Debt Warrants as well as Equity Warrants. Warrants may
be issued independently or together with any Securities and may be attached to
or separate from such securities. The Warrants are to be issued under warrant
agreements (each a "Warrant Agreement") to be entered into between the Company
and a bank or trust company, as warrant agent (the "Warrant Agent"), all as
shall be set forth in the Prospectus Supplement relating to Warrants being
offered pursuant thereto. As of the date hereof, the Company has no Warrants
outstanding.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the debt warrant certificates representing such Debt Warrants ("Debt
Warrant Certificates"), including the following: (1) the title of such Debt
Warrants; (2) the aggregate number of such Debt Warrants; (3) the price or
prices at which such Debt Warrants will be issued; (4) 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; (5) 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; (6) the
date, if any, on and after which such Debt Warrants and the related Debt
Securities will be separately transferable; (7) the principal amount of Debt
Securities purchasable upon exercise of each Debt Warrant; (8) the date on
which the right to exercise such Debt Warrants will commence, and the date on
which such right will expire; (9) the maximum or minimum number of such Debt
Warrants which may be exercised at any time; (10) a discussion of any material
federal income tax considerations; and (11) any other terms of such Debt
Warrants and terms, procedures and limitations relating to the exercise of
such Debt Warrants.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations, and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated
in the 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
payment of principal of or any premium or interest on the Debt Securities
purchasable upon such exercise.
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EQUITY WARRANTS
The applicable Prospectus Supplement will describe the terms of Equity
Warrants offered thereby, the Warrant Agreement relating to such Equity
Warrants and the equity warrant certificates representing such Equity Warrants
("Equity Warrant Certificates" and together with Debt Warrant Certificates,
"Warrant Certificates"), including the following: (1) the title of such Equity
Warrants; (2) the Securities (i.e. Preferred Stock or Common Stock) for which
such Equity Warrants are exercisable; (3) the price or prices at which such
Equity Warrants will be issued; (4) if applicable, the designation and terms
of the Preferred Stock or Common Stock with which such Equity Warrants are
issued, and the number of such Equity Warrants issued with each such share of
Preferred Stock or Common Stock; (5) if applicable, the date on and after
which such Equity Warrants and the related Preferred Stock or Common Stock
will be separately transferable; (6) if applicable, a discussion of any
material federal income tax considerations; and (7) any other terms of such
Equity Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Equity Warrants.
Equity Warrant Certificates will be exchangeable for new Equity Warrant
Certificates of different denominations, and Equity Warrants may be exercised
at the corporate trust office of the Warrant Agent or any other office
indicated in the Prospectus Supplement. Holders of Equity Warrants will not be
entitled, by virtue of being such holders, to vote, to consent, to receive
dividends, to receive notice as stockholders with respect to any meeting of
stockholders for the election of directors of the Company or any other matter,
or to exercise any rights whatsoever as stockholders of the Company.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such principal
amount of 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 Warrants offered thereby. 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 Warrants offered thereby. After the close of
business on the expiration date, unexercised Warrants will become void.
Warrants may be exercised as set forth in the Prospectus Supplement relating
to the Warrants offered thereby. Upon receipt of payment and the Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Warrant Agent or any other office indicated in the Prospectus
Supplement, the Company will, as soon as practicable, forward the Securities
purchasable upon such exercise. If less than all of the Warrants represented
by such Warrant Certificate are exercised, a new Warrant Certificate will be
issued for the remaining Warrants.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation"), and the certificate of designation (a "Certificate of
Designation") relating to each series of the Preferred Stock which will be
filed with the Commission and incorporated by reference in the Registration
Statement of which this Prospectus is a part at or prior to the time of the
issuance of such series of the Preferred Stock.
GENERAL
The Company has the authority to issue 25,000,000 shares of preferred stock,
$1.00 par value per share ("preferred stock of the Company," which term, as
used herein, includes the Preferred Stock offered hereby).
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The Company has authorized 600,000 shares of Series A Junior Participating
Preferred Stock ("Junior Preferred Stock") in connection with the Company's
dividend distribution of one Preferred Share Purchase Right for each
outstanding share of its Common Stock. Each Right entitles its holder to buy
one one-hundredth of a share of the Junior Preferred Stock at an exercise
price of $60 per share. The Rights only become exercisable if a person or
group acquires or makes an offer to acquire 15 percent or more of the
Company's Common Stock. As of the date hereof, the Company has no Preferred
Stock outstanding.
Under the Certificate of Incorporation, the Board of Directors of the
Company is authorized without further stockholder action to designate and
provide for the issuance of up to 25,000,000 shares of preferred stock of the
Company, in one or more series, with such voting powers, full or limited, and
with such designations, preferences and relative participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
as shall be stated in the resolution or resolutions providing for the issue of
a series of such stock adopted, at any time or from time to time, by the Board
of Directors of the Company (as used herein the term "Board of Directors of
the Company" includes any duly authorized committee thereof).
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference
is made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Stock will be
issued; (iv) the dividend rate (or method of calculation), the dates on which
dividends shall be payable and the dates from which dividends shall commence
to cumulate, if any; (v) any redemption or sinking fund provisions; (vi) any
conversion or exchange rights; and (vii) any additional voting, dividend,
liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations and restrictions.
The Preferred Stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights. The rights of the holders of each series of
the Preferred Stock will be subordinate to those of the Company's general
creditors.
DIVIDEND RIGHTS
Holders of the Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of
funds of the Company legally available therefor, cash dividends on such dates
and at such rates as are set forth in, or as are determined by the method
described in, the Prospectus Supplement relating to such series of the
Preferred Stock. Such rate may be fixed or variable or both. Each such
dividend will be payable to the holders of record as they appear on the stock
books of the Company on such record dates, fixed by the Board of Directors of
the Company, as specified in the Prospectus Supplement relating to such series
of Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Preferred Stock. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and the Company will
have no obligation to pay any dividend for such period, whether or not
dividends on such series are declared payable on any future dividend payment
dates. Dividends on the shares of each series of Preferred Stock for which
dividends are cumulative will accrue from the date on which the Company
initially issues shares of such series.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as the shares of any series of the Preferred Stock are outstanding, unless (i)
full dividends (including if such Preferred Stock is cumulative, dividends for
prior dividend periods) have been paid or declared and set apart for payment
on all outstanding shares of the Preferred Stock of such series and all other
classes and series of preferred stock of the Company
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(other than Junior Stock, as defined below) and (ii) the Company is not in
default or in arrears with respect to the mandatory or optional redemption or
mandatory repurchase or other mandatory retirement of, or with respect to any
sinking or other analogous funds for, any shares of Preferred Stock of such
series or any shares of any other preferred stock of the Company of any class
or series (other than Junior Stock), the Company may not declare any dividends
on any shares of Common Stock of the Company or any other stock of the Company
ranking as to dividends or distributions of assets junior to such series of
Preferred Stock (the Common Stock and any such other stock being herein
referred to as "Junior Stock"), or make any payment on account of, or set
apart money for, the purchase, redemption or other retirement of, or for a
sinking or other analogous fund for, any shares of Junior Stock or make any
distribution in respect thereof, whether in cash or property or in obligations
of stock of the Company, other than in Junior Stock which is neither
convertible into nor exchangeable or exercisable for, any securities of the
Company other than Junior Stock.
LIQUIDATION PREFERENCES
Unless otherwise specified in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, the holders of each series of the Preferred Stock
will be entitled to receive out of the assets of the Company available for
distribution to stockholders, before any distribution of assets is made to the
holders of Common Stock or any other shares of stock of the Company ranking
junior as to such distribution to such series of the Preferred Stock, the
amount set forth in the Prospectus Supplement relating to such series of the
Preferred Stock. If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the amounts payable with respect to
the Preferred Stock of any series and any other shares of preferred stock of
the Company (including any other series of the Preferred Stock) ranking as to
any such distribution on a parity with such series of the Preferred Stock are
not paid in full, the holders of the Preferred Stock of such series and of
such other shares of preferred stock of the Company will share ratably in any
such distribution of assets of the Company in proportion to the full
respective preferential amounts to which they are entitled. After payment to
the holders of the Preferred Stock of each series of the full preferential
amounts of the liquidating distribution to which they are entitled, unless
otherwise provided in the applicable Prospectus Supplement, the holders of
each such series of the Preferred Stock will be entitled to no further
participation in any distribution of assets by the Company.
REDEMPTION
A series of the Preferred Stock may be redeemable, in whole or from time to
time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms,
at the times and at the redemption prices set forth in the Prospectus
Supplement relating to such series. Shares of the Preferred Stock redeemed by
the Company will be restored to the status of authorized but unissued shares
of preferred stock of the Company.
In the event that fewer than all of the outstanding shares of a series of
the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the Company or by any other method as may be determined by the Company in
its sole discretion to be equitable. From and after the redemption date
(unless default is made by the Company in providing for the payment of the
redemption price plus accumulated and unpaid dividends, if any) dividends will
cease to accumulate on the shares of the Preferred Stock called for redemption
and all rights of the holders thereof (except the right to receive the
redemption price plus accumulated and unpaid dividends, if any) will cease.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as any dividends on shares of any series of the Preferred Stock or any other
series of preferred stock of the Company ranking on a parity as to dividends
and distribution of assets with such series of the Preferred Stock are in
arrears, no shares of any such series of the Preferred Stock or such other
series of preferred stock of the Company will be redeemed (whether by
mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company
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will not purchase or otherwise acquire any such shares; provided, however,
that the foregoing will not prevent the purchase or acquisition of shares
pursuant to a purchase or exchange offer made on the same terms to holders of
all such shares outstanding.
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, on which shares of Preferred Stock of any series may be
exchanged for or converted into shares of Common Stock or another series of
Preferred Stock will be set forth in the Prospectus Supplement relating
thereto. Such terms may include provisions for conversion, either mandatory,
at the option of the holder, or at the option of the Company, in which case
the number of shares of Common Stock or the number of shares of another series
of Preferred Stock to be received by the holders of Preferred Stock would be
calculated as of a time and in the manner stated in the Prospectus Supplement.
VOTING RIGHTS
Except as indicated in a Prospectus Supplement relating to a particular
series of the Preferred Stock, or except as required by applicable law, the
holders of the Preferred Stock will not be entitled to vote for any purpose.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale
of Securities will be named in the applicable Prospectus Supplement. The
Company has reserved the right to sell Securities directly to investors on its
own behalf in those jurisdictions where and in such manner as it is authorized
to do so.
Underwriters may offer and sell Securities 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. The Company
also may, from time to time, authorize dealers, acting as the Company's
agents, to offer and sell Securities upon the terms and conditions as are set
forth in the applicable Prospectus Supplement. In connection with the sale of
Securities, underwriters may receive compensation from the Company in the form
of underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers, will be set
forth in the applicable Prospectus Supplement. Dealers and agents
participating in the distribution of Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions. Underwriters, dealers and agents may
be entitled, under agreements entered into with the Company, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act of 1933.
If so indicated in the Prospectus Supplement, the Company will authorize
dealers acting as the Company's agents to solicit offers by certain
institutions to purchase the Securities from the Company at the public
offering price set forth in the applicable Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than the amounts stated in the applicable Prospectus
Supplement. Institutions with whom Contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions but will in all cases be
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subject to the approval of the Company. Contracts will not be subject to any
conditions except (i) the purchase by the institution of the Securities
covered by its Contract shall not at the time of delivery be prohibited under
the laws of any jurisdiction in the United States to which such institution is
subject, and (ii) if the Securities are being sold to underwriters, the
Company shall have sold to such underwriters the total amount specified in the
applicable Prospectus Supplement. A commission indicated in the applicable
Prospectus Supplement will be paid to underwriters and agents soliciting
purchases of Securities pursuant to Contracts accepted by the Company.
LEGAL MATTERS
Certain legal matters with respect to the Securities offered hereby will be
passed upon for the Company by Latham & Watkins, San Francisco, California.
Brown & Wood llp, San Francisco, California, will act as counsel for such
agents or underwriters identified in the applicable Prospectus Supplement.
EXPERTS
The consolidated financial statements of Thiokol Corporation incorporated by
reference in Thiokol Corporation's Annual Report (Form 10-K) for the year
ended June 30, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference
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.
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LOGO
THIOKOL CORPORATION
