<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration No. 33-57671
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 24, 1995)
$200,000,000
LOGO
7 1/4% NOTES DUE APRIL 15, 1998
------------
Interest on the 7 1/4% Notes Due April 15, 1998 (the "Notes") is payable
semiannually on April 15 and October 15 of each year, beginning October 15,
1995. The Notes are not redeemable prior to maturity.
The Notes will be issued in fully registered form only in denominations of
$1,000 or integral multiples thereof. The Notes will be initially represented
by one or more global Notes registered in the name of The Depository Trust
Company (the "Depositary") or its nominee. Beneficial interests in the Notes
will be shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Owners of beneficial
interests in the Notes will be entitled to physical delivery of Notes in
certificated form equal in principal amount to their respective beneficial
interests only under the limited circumstances described herein. Settlement for
the Notes will be made in immediately available funds. The Notes will trade in
the Depositary's Same-Day Funds Settlement System until maturity, and secondary
market trading activity for the Notes will therefore settle in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds.
------------
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 ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- ------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 99.768% .350% 99.418%
- ------------------------------------------------------------------
Total $199,536,000 $700,000 $198,836,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1)Plus accrued interest, if any, from April 13, 1995.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting".
(3)Before deducting expenses which are payable by the Company estimated at
$140,000.
------------
The Notes are offered by the Underwriters, subject to prior sale, when, as
and if accepted by the Underwriters and subject to certain conditions. It is
expected that delivery of the Notes in book-entry form will be made through the
facilities of the Depositary on or about April 13, 1995.
------------
SMITH BARNEY INC.
BA SECURITIES, INC.
MERRILL LYNCH & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
April 6, 1995
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DESCRIPTION OF THE NOTES
The Notes offered hereby are senior debt securities of Comdisco, Inc. (the
"Company") which are described under the caption "Description of Debt
Securities" in the Prospectus. The following description of the terms of the
Notes supplements, and to the extent inconsistent therewith replaces, the
description of the Debt Securities contained in the Prospectus, to which
description reference is hereby made. Capitalized terms not defined herein have
the meanings assigned to such terms in the Prospectus.
The Notes are to be issued under an Indenture, dated as of February 1, 1995,
between the Company and The Fuji Bank and Trust Company, as Trustee, and will
constitute a separate series of Debt Securities for purposes of the Indenture.
The Notes will be limited to $200,000,000 in aggregate principal amount, will
mature on April 15, 1998, and will bear interest at the rate of 7 1/4% per
annum. Interest on the Notes will be calculated on the basis of a 360-day year
of twelve 30-day months, will accrue from the date of issue and will be payable
semiannually on April 15 and October 15 of each year (each an "Interest Payment
Date"), commencing October 15, 1995, and at maturity, to the persons in whose
names the Notes are registered at the close of business on the April 1 or
October 1, as the case may be, immediately preceding such Interest Payment
Date. The Notes will not be redeemable at the option of the Company, or
repayable at the option of the Holder, prior to maturity and will not be
subject to any sinking fund.
The Indenture does not limit the aggregate principal amount of Notes which
may be issued upon authorization of the Company's Board of Directors. The
Company has designated $250 million in Debt Securities as "Medium-Term Note,
Series D" under the Registration Statement of which the accompanying Prospectus
forms a part, but as of the date hereof no Debt Securities have been issued
under the Registration Statement. The Company also has outstanding other
unsecured indebtedness, as well as secured indebtedness. See "Selected
Financial Data" in the Prospectus.
BOOK-ENTRY DELIVERY AND FORM
Upon issuance, all Notes will be represented by one or more fully registered
global securities (the "Global Notes"). Each such Global Note will be deposited
with, or on behalf of, the Depositary, and registered in the name of the
Depositary or a nominee thereof. Unless and until it is exchanged in whole or
in part for Notes in definitive form, no Global Note may be transferred except
as a whole by the Depository to a nominee of such Depository or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor of such Depositary or such
successor.
The Depositary had advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. The Depositary holds securities that its participants
("Direct Participants") deposit with the Depositary. The Depositary also
facilitates the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Direct Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
The Depositary's Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain other
S-2
<PAGE>
organizations, including the Underwriters. The Depositary is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depositary's system is also available to others,
such as securities brokers and dealers, banks, and trust companies that clear
through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants").
Purchases of Notes under the Depositary's system must be made by or through
Direct Participants, which will receive a credit for the Notes on the records
of the Depositary. The ownership interest of each actual purchaser of each Note
(the "Beneficial Owner") is in turn to be recorded on the Direct Participants'
and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the Direct Participant
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Ownership of beneficial interests in Global Notes will be shown
on, and the transfer of such ownership interests will be effected only through,
records maintained by the Depositary (with respect to interests of persons held
through Direct Participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in Global Notes.
So long as the Depositary, or its nominee, is the registered owner of a
Global Note, the Depositary or its nominee, as the case may be, will be
considered the sole owner or Holder of the Notes represented by such Global
Note for all purposes under the Indenture. Except as provided below, Beneficial
Owners of a Global Note will not be entitled to have the Notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of the Notes in definitive form and will not be
considered the owners or Holders thereof under the Indenture. Accordingly, each
Person owning a beneficial interest in a Global Note must rely on the
procedures of the Depositary and, if such Person is not a Direct Participant,
on the procedures of the Direct Participant through which such Person owns its
interest, to exercise any rights of a Holder under the Indenture. The Company
understands that under existing industry practices, in the event that the
Company requests any action of Holders or that a Beneficial Owner desires to
give or take any action which a Holder is entitled to give or take under the
Indenture, the Depositary would authorize the Direct Participants holding the
relevant beneficial interests to give or take such action, and such Direct
Participants would authorize or would otherwise act upon the instructions of
Beneficial Owners. Conveyance of notices and other communications by the
Depositary to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of the principal of, and interest on, Notes registered in the name of
the Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the Holder of the Global Note or Notes representing such
Notes. None of the Company, the Trustee or any other agent of the Company or
agent of the Trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests or for supervising or reviewing any records relating to such
beneficial ownership interests. The Company expects that the Depositary, upon
receipt of any payment of principal or interest in respect of a Global Note,
will credit the accounts of the Direct Participants with payments in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in such Global Note as shown on the record of the Depositary. The
Company also expects that payments by Direct Participants to Beneficial Owners
will be governed by standing customer instructions and customary practices, as
is now the case with securities held for the accounts of customers in bearer
form or registered in "street name", and will be the responsibility of such
Direct Participants.
If (x) the Depositary is at any time unwilling or unable to continue as
Depositary and a successor depository is not appointed by the Company within 60
days or (y) the Company executes and delivers to the Trustee a Company Order to
the effect that the Global Notes shall be exchangeable, or (z) an Event of
Default
S-3
<PAGE>
has occurred and is continuing with respect to the Notes, the Global Note or
Notes will be exchangeable for Notes in definitive form of like tenor and of an
equal aggregate principal amount, in denominations of $1,000 and integral
multiples thereof. Such definitive Notes shall be registered in such name or
names as the Depositary shall instruct the Trustee. It is expected that such
instructions may be based upon directions received by the Depository from
Direct Participants with respect to ownership of beneficial interests in Global
Notes.
The Notes are not secured by any lien but rank on a parity with other
presently outstanding unsecured and unsubordinated indebtedness of the Company.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. All payments of principal and interest on the Notes will be
made by the Company in immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Notes
will trade in the Depositary's Same-Day Funds Settlement System until maturity
and secondary trading activity in the Notes will therefore be required by the
Depositary to settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
USE OF PROCEEDS
The Company intends to use certain of the net proceeds of $198,836,000 (less
certain expenses) from the sale of the Notes to redeem all of its outstanding
8.95% Senior Notes due May 15, 1995, which aggregate $150,000,000 in principal
amount (the "8.95% Senior Notes"). The Company may use the net proceeds
directly to redeem the 8.95% Senior Notes, or may use the net proceeds to first
reduce outstanding short-term debt, which in turn would make short-term debt
available to redeem the 8.95% Senior Notes. As of December 31, 1994, the
Company's outstanding short-term debt had a weighted average interest rate of
7.28%, with maturities ranging from one day to six months. The balance of the
net proceeds will be used for general corporate purposes.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated April 6, 1995 and a related Terms Agreement dated April 6, 1995
(together, the "Underwriting Agreement"), among the Company and Smith Barney
Inc., BA Securities, Inc., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, NationsBanc Capital Markets, Inc. and Salomon Brothers Inc
(the "Underwriters"), the Company has agreed to sell to the Underwriters, and
the Underwriters have severally agreed to purchase from the Company, the
respective principal amounts of Notes set forth opposite their names below. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the Notes if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
NAME AMOUNT
---- ------------
<S> <C>
Smith Barney Inc............................................ $ 40,000,000
BA Securities, Inc.......................................... 40,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................... 40,000,000
NationsBanc Capital Markets, Inc............................ 40,000,000
Salomon Brothers Inc........................................ 40,000,000
------------
Total................................................... $200,000,000
============
</TABLE>
S-4
<PAGE>
The Underwriters have advised the Company that they initially propose to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession not in excess of 0.250% of the principal amount of the Notes.
The Underwriters may allow, and such dealers may reallow, a discount not in
excess of 0.150% of the principal amount of the Notes to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
Thomas H. Patrick, a director of the Company, is an Executive Vice President,
Office of the Chairman, of Merrill Lynch & Co., Inc.
All secondary trading in the Notes will settle in immediately available
funds. See "Description of the Notes--Same-Day Settlement and Payment."
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes, but are not obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to
whether a trading market for the Notes will develop.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended, or contribute to payments the
Underwriters may be required to make in respect thereof.
S-5
<PAGE>
PROSPECTUS
$500,000,000
LOGO
SENIOR DEBT SECURITIES
----------------
Comdisco, Inc. (the "Company") from time to time may issue in one or more
series its senior debt securities (the "Debt Securities"), up to $500,000,000
aggregate principal amount (or gross proceeds in the case of securities issued
at an original issue discount), or its equivalent in such foreign currencies or
units of two or more currencies, based on the applicable exchange rate at the
time of offering, as shall be designated by the Company at the time of
offering. The Debt Securities will be offered to the public on terms determined
by market conditions at the time of sale.
The Debt Securities will be unsecured and will rank equally with all other
unsecured and unsubordinated indebtedness of the Company.
Each issue of Debt Securities may vary, where applicable, as to aggregate
principal amount, maturity date, public offering or purchase price, interest
rate or rates and timing of payments thereof, provision for redemption, sinking
fund requirements, if any, currencies of denomination or currencies otherwise
applicable thereto and any other variable terms and method of distribution. No
Debt Securities may be sold without delivery of a Prospectus Supplement
describing such issue of Debt Securities and the method and terms of offering
thereof.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION, 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 CRIMI-
NAL OFFENSE.
----------------
The Company may sell the Debt Securities to or through one or more
underwriters, dealers or agents, and may also sell Debt Securities directly to
other purchasers. Such dealers may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended. If any agents, dealers or
underwriters are involved in the sale of any Debt Securities in respect of
which this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable commissions or discounts will be set forth in a
Prospectus Supplement. The net proceeds to the Company from such sale will also
be set forth in a Prospectus Supplement. See "Plan of Distribution".
----------------
The date of this Prospectus is March 24, 1995.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the following Regional Offices of the
Commission: Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and New York Regional Office, Seven
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such reports and other information concerning the Company may also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, Room
1102, New York, New York 10005 and the Chicago Stock Exchange, 440 S. LaSalle
Street, Chicago, Illinois 60605.
The Company has filed with the Commission a registration statement on Form S-
3 (File No. 33-57671) (together with all amendments and exhibits, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Debt Securities. This Prospectus does
not contain all the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information pertaining to the Debt Securities
and the Company, reference is made to the Registration Statement.
Statements made in this Prospectus concerning the provisions of any contract,
agreement or other document referred to herein are not necessarily complete.
With respect to each such statement concerning a contract, agreement or other
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission, reference is made to such exhibit or other filing for a
more complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission (File No. 1-7725)
pursuant to Section 13 of the Exchange Act and are hereby incorporated by
reference into this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1994.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1994.
3. The Company's Amendment No. 1 to Quarterly Report on Form 10-Q for the
quarter ended December 31, 1994, filed on Form 10-Q/A on February 17, 1995.
4. The Company's Current Reports on Form 8-K dated November 7, 1994,
January 27, 1995, four reports dated February 15, 1995, and March 20, 1995.
All documents filed by the Company, pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of the Prospectus and prior to the
termination of the offering of the Debt Securities offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or 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 or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on written or oral request of such person, a copy
(without exhibits other than exhibits specifically incorporated by reference)
of any or all documents incorporated by reference into this Prospectus.
Requests for such copies should be directed to Edward A. Pacewicz, Vice
President/Finance, Comdisco, Inc., 6111 North River Road, Rosemont, Illinois
60018; telephone (708) 698-3000.
2
<PAGE>
THE COMPANY
Comdisco, Inc. (with its subsidiaries, the "Company" or "Comdisco") is
primarily engaged in the buying, selling and leasing of new and used computer
and other high technology equipment and in providing disaster recovery services
(also referred to as "business continuity services"). In addition, the Company
provides technology planning and asset management services, integrating leasing
and business continuity services with customized asset acquisition, asset
management software tools and data center moves and/or consolidations,
disposition and migration strategies. These services are designed to provide
integrated, long-term, cost effective asset and technological planning to users
of high technology equipment.
The Company was founded by Kenneth N. Pontikes in 1969 and incorporated in
Delaware in 1971. The executive offices of the Company are located in the
Chicago area at 6111 North River Road, Rosemont, Illinois 60018, and its
telephone number is (708) 698-3000. At September 30, 1994, the Company had
2,118 full-time employees.
The Company's operations are conducted through its principal office in the
Chicago area and approximately fifty offices in the United States, Canada,
Europe, the Pacific Rim and Australia. The Company also operates in South
America, however, it does not maintain local offices. Subsidiaries in Europe
and Canada offer services similar to those offered in the United States,
although the Company's European leasing operations are predominately in the
computer marketplace. The Company's disaster recovery activities include the
domestic, Canadian and European marketplaces.
LEASING
The Company believes it is the world's largest independent leasing company.
In its leasing activities, the Company specializes in central processing units,
desktop equipment, electronics, telecommunications equipment and, through a
subsidiary, medical equipment.
The Company offers its customers alternatives in managing high technology
equipment needs, including the leasing of equipment. The Company works closely
with its customers to develop strategies governing when and where to acquire
equipment, when to upgrade existing equipment and when to order new equipment
to take advantage of current technology. The Company also has the ability to
act as an outlet for the equipment being displaced.
The Company's customers include "Fortune 1000" corporations or companies of a
similar size as well as smaller corporations. A substantial portion of the
Company's transactions are with repeat customers. The Company's business is not
dependent on any single customer or on any single source for the purchasing,
selling or leasing of equipment.
COMPUTER
Central Processing Units: The Company buys or leases, and in turn sells,
leases or subleases International Business Machines ("IBM") computer equipment
as well as equipment manufactured by others. The Company's sale and lease
transactions include the "mainframe" central processing units, midrange, and/or
various peripherals, such as printers, tape and disk drives and other equipment
used with a mainframe.
The mainframe industry has been characterized by rapid and continuous
technological advances permitting broadened user applications. The introduction
of new equipment and/or technology by IBM or other manufacturers does not cause
existing equipment to become technically obsolete, but usually results in
adjustments in the "price/performance ratio" (the number of computations or
relative performance per dollar of cost) of the existing equipment. Users
upgrade equipment as their existing equipment becomes inappropriate for their
needs or as a result of changes in the required amount of data processing
capacity. To the extent equipment replaced by newer models becomes available
for remarketing, a secondary market in used equipment is created. Recent
technological advances in mainframe technology by IBM have focused on
3
<PAGE>
"parallel processing" systems. These systems include transaction processing and
database server models, designed for both "legacy" and newer technologies in
open systems.
The Company believes that in recent years, mainframe acquisition decisions
were being delayed because of concerns about the economy. The Company also
believes customers delayed making hardware decisions pending release of
additional information concerning new IBM product capabilities and delivery
schedules. Furthermore, leasing volume in general has been impacted by
consolidations and cutbacks as companies attempt to streamline operations.
Industry analysts predict a slowing decline in mainframe sales, at least in the
short-term, based on reports from the major mainframe manufacturers.
The focus of the Company's activities with respect to particular models of
computer equipment changes periodically as a result of changes in market
conditions and advances in computer technology. In September, 1994, IBM began
shipping its next-generation mainframes. These new parallel enterprise servers
are expected to be positioned as price-competitive replacement models for pre-
1990 IBM mainframes and the Company expects to include these models in its
activities. Advances in technology, such as these servers, affect the market
for computer products and may also have an impact on the way the Company has
traditionally conducted its leasing activities.
Desktop: The Company leases PC's and workstations manufactured by most of the
leading manufacturers. The company's lease transactions also include high-end
servers, printers and other desktop related equipment. The Company's integrated
asset management software tools let customers order, track and manage their
inventory of desktop equipment. The Company has business partnerships and/or
vendor leasing programs with major workstation manufacturers.
Other services: In fiscal 1994, the Company formed a systems intregation
group to address the needs of the developing open systems market, including
client/server (client/server computing is a type of processing in which a
client requests a service or information from a server that performs the
service and/or returns the requested information to the client). The Company
provides products, services and consultants to assist customers in implementing
or utilizing an open systems platform. Products include high-speed connectivity
systems, which provide access between mainframe and open systems data at
transaction-processing speeds. Services include transitional strategies,
integration planning and implementation, financing (hardware and software), and
business continuity planning. The Company, together with its consultants and
strategic alliances with client/server product providers, provides customers
with solutions based on requirements and goals.
The Company's asset management services assist customers in: planning and
implementing major data center relocations and consolidations; evaluating
information technology needs and system assessments; equipment procurement
strategies and timing.
OTHER HIGH TECHNOLOGY EQUIPMENT
Medical: Through its subsidiaries, the Company leases medical and other high
technology equipment to healthcare providers, including used, reconditioned
medical equipment. The Company's portfolio includes angiography, MRI systems,
CT Scanners and nuclear imaging devices. Additionally, the Company believes
that it has the largest and most comprehensive medical equipment refurbishing
center in the industry and that it was one of the first such centers to receive
ISO 9002 certification, an internationally recognized program for quality
assurance in production and installation.
Electronics: The Company leases new and used electronic manufacturing,
testing and monitoring equipment, including semiconductor production equipment,
automated test equipment, assembly equipment and scientific/analytical
instrumentation. Additionally, the Company maintains a dedicated refurbishing
and sales facility in the Silicon Valley area.
4
<PAGE>
Telecommunications: The Company buys, sells, and leases new and refurbished
telecommunications equipment throughout North America. The Company also
provides its customers with a market for, and a source of, used equipment. The
telecommunications portfolio includes PBX systems, VSATs, voice mail, modems
and bridges, routers and concentrators. The Company also reconditions and
configures used systems.
Other: The Company buys, sells and leases new and used point-of-sale
terminals and leases other office equipment such as fax machines and copiers,
test equipment such as oscillascopes, analyzers and testers and laboratory
equipment such as microscopes and centrifuges.
At September 30, 1994, cost at lease inception of other high technology
equipment was approximately $3.0 billion, or approximately 46% of the Company's
total equipment cost at lease inception of $6.5 billion.
The Company competes in the leasing marketplace as a lessor and as a dealer
of new and used computer and selected other high technology equipment. The
Company competes with different firms in each of its activities. The Company's
competition includes equipment manufacturers such as IBM, Hewlett Packard,
Amdahl, Hitachi Data Systems, AT&T, Rolm, Hitachi Medical Systems, Siemens
Medical Systems and General Electric, other equipment dealers, brokers and
leasing companies (including captive or related leasing companies of IBM, AT&T
and General Electric and others) as well as financial institutions, including
commercial banks and investment banking firms. While its competitive
methodologies will differ, in general, the Company competes mainly on the basis
of its expertise in remarketing equipment, terms offered in its transactions,
its reliability in meeting its commitments, its manufacturers' independence and
its ability to develop and offer alternative solutions and options to high
technology equipment users. The Company believes it is a full service lessor.
In mainframes the Company believes that it competes primarily with the
manufacturers and their captive or related leasing companies, if any, and with
a few other leasing companies. The Company also believes that, aside from IBM
and its captive leasing company, IBM Credit Corporation ("ICC"), it is one of
the largest purchasers, sellers and lessors of IBM equipment. The Company does
not believe that a significant amount of used IBM equipment is sold
independently by owner-users of the equipment to other owner-users. The
Company's continued ability to compete effectively may be affected by policies
of IBM.
In desktop, medical, electronics and telecommunications, the Company believes
it competes with the manufacturers and their captive leasing companies and
approximately five significant leasing companies, as well as banks and other
lessors and financial and lending institutions throughout the United States and
Canada. In its other services, the Company competes with manufactures and other
national and regional consulting and services organizations.
The Company's continued ability to compete is also affected by its ability to
attract and retain well qualified personnel and the availability of financing.
DISASTER RECOVERY SERVICES
These services include emergency data processing backup, principally for
large system users of IBM and IBM-compatible equipment, workarea recovery,
voice recovery, consulting services in business continuity planning as well as
other related data processing services, throughout the United States, Canada
and Europe. These services are designed to help minimize the impact of a
significant interruption of the operations of, or inaccessibility to, the
customer's data processing facility and/or communications network. The Company
also provides backup capabilities for Digital Equipment Corporation, IBM
midrange processors, Unisys, Hewlett Packard, Stratyis, and Tandem System
equipment users.
The Company believes that it competes with approximately five significant
domestic companies, including IBM and SunGard Data Systems, Inc., as well as
other regional firms in the domestic, Canadian and European marketplace, which
provide contract disaster recovery services and that it is one of the largest
international provider of such services.
5
<PAGE>
Through its network and facilities strategy entitled CDRS Net, the Company
offers customers access to its North American facilities, including a range of
data processing recovery services at hot sites, Customer Control Centers
("CCC") and shell sites. Hot sites are equipped computer facilities that
include central processing units, peripherals and communications equipment. A
CCC interfaces customers to geographically separated hot site by means of
telecommunications lines. A shell site contains the power, environmental and
support equipment necessary for the installation of replacement computer
equipment by the customer. Most facilities also include workarea recovery
capability. In September, 1994, the Company completed an expansion and service
enhancement project that included what the Company believes was the industry's
first recovery center dedicated to client/server environments. Enhanced
capabilities include client/server platforms, workareas, open systems networks,
midrange and mainframe computers.
Of the Company's twenty-eight disaster recovery services locations, nine
serve as regional recovery centers providing hot site and/or shell site
services. These nine regional recovery centers serve major commercial centers,
including New York, Chicago, Northern and Southern California, Texas, Georgia,
as well as a location in Southern New Jersey that serves the Mid-Atlantic
region and a center located in Toronto, Canada. Each recovery center has at
least one hot site or CCC and includes telecommunications capabilities,
conference rooms, office space, support areas, and appropriate on-site
technical personnel.
6
<PAGE>
SELECTED FINANCIAL DATA
The following summary of certain financial information is qualified by
reference to the financial statements and other information and data contained
in the documents incorporated herein by reference (see "Incorporation of
Certain Documents by Reference"). The financial data of the Company for the
five years ended September 30, 1994 were derived from audited financial
statements. The data for the periods ended December 31, 1994 and 1993 are
unaudited, but in the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Results for interim periods are not necessarily indicative of
the results which may be expected for the full year. All per share amounts and
common equivalent shares outstanding have been adjusted to reflect a 5% stock
dividend distributed on March 30, 1992 to stockholders of record as of March
12, 1992. This summary should be read in conjunction with the consolidated
financial statements and the notes thereto incorporated herein by reference.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
DECEMBER 31, FISCAL YEAR ENDED SEPTEMBER 30,
-------------- ---------------------------------------
1994 1993 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS EXCEPT FOR
SELECTED RATIOS AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA
Revenue................. $ 524 $ 536 $2,098 $2,153 $2,205 $2,174 $1,920
Earnings from continuing
operations before in-
come taxes, extraordi-
nary items and
cumulative effect of
change in accounting
principle
(1)(2)(3)(4)(5)(6)..... 41 39 89 144 34 136 134
Earnings from continuing
operations before ex-
traordinary items and
cumulative effect of
change in accounting
principle
(1)(2)(3)(4)(5)(6)..... 25 23 53 87 20 83 83
Earnings per common and
common equivalent share
from continuing opera-
tions before extraordi-
nary items and cumula-
tive effect of change
in accounting principle
(1)(2)(3)(4)(5)(6)..... 0.62 0.54 1.16 1.97 0.49 2.03 1.95
Net earnings (loss) per
share to common stock-
holders
(1)(2)(3)(4)(5)(6)..... 23 21 1.16 1.97 (0.21) 1.69 2.23
Net leased assets....... 3,954 3,918 3,840 3,907 4,154 3,982 3,911
Total assets............ 4,995 4,929 4,807 4,960 5,236 5,006 4,785
Equipment purchased for
leasing................ 513 414 1,433 1,547 1,915 1,928 1,825
CASH FLOW DATA
Total expected future
contractual cash re-
ceipts at year end:
From leasing activities
(7).................... $ -- $ -- $3,660 $3,755 $4,086 $3,923 $3,922
From disaster recovery
contracts (7).......... -- -- 525 510 515 440 400
------ ------ ------ ------ ------ ------ ------
Total expected future
contractual cash re-
ceipts................. $ -- $ -- $4,185 $4,265 $4,601 $4,363 $4,322
====== ====== ====== ====== ====== ====== ======
Net cash provided by op-
erating activities..... $ 490 $ 427 $1,639 $1,873 $1,833 $2,020 $1,495
CAPITALIZATION
Discounted lease rentals
(secured nonrecourse).. $1,473 $1,703 $1,548 $1,670 $1,823 $1,900 $2,047
Term notes payable--se-
cured.................. 53 55 54 56 58 60 61
Notes payable........... 525 488 593 655 766 353 589
Term notes payable...... 490 230 237 150 180 266 36
Senior notes............ 1,006 1,141 1,040 1,107 1,062 1,029 792
Subordinated debentures
(net of bond discount). 33 12 33 12 14 147 132
------ ------ ------ ------ ------ ------ ------
Total debt.............. 3,580 3,629 3,505 3,650 3,903 3,755 3,657
------ ------ ------ ------ ------ ------ ------
Preferred Stock......... 95 100 100 100 75 -- --
Common stockholders' eq-
uity................... 650 647 641 639 624 634 589
------ ------ ------ ------ ------ ------ ------
Total capitalization.... $4,325 $4,376 $4,246 $4,389 $4,602 $4,389 $4,246
====== ====== ====== ====== ====== ====== ======
SELECTED RATIOS
Net cash provided by op-
erating
activities/Total debt.. -- -- 46.8% 51.3% 47.0% 53.8% 40.9%
Total expected future
contractual cash
receipts/Total debt.... -- -- 1.2 1.2 1.2 1.2 1.2
Percentage of equipment
purchased for leasing
financed by secured
nonrecourse debt....... 22.4% 62.3% 50.6% 49.3% 42.5% 44.1% 48.0%
Total debt/Stockholders'
equity................. 5.5 5.6 4.7 4.9 5.6 5.9 6.2
Return on average common
stockholders' equity
(8).................... -- -- 6.9% 12.7% (1.4)% 11.3% 16.7%
</TABLE>
- -------
(1) Effective October 1, 1992, the Company adopted FASB Statement No. 109 ("FAS
109"), "Accounting for Income Taxes." As permitted by FAS 109, the Company
has elected not to restate the financial statements of any prior year.
7
<PAGE>
- --------
(2) In fiscal 1991 and 1992, IBM and ICC filed actions against the Company.
Additional costs associated with these lawsuits, including outside legal
counsel and additional in-house personnel, resulted in increased selling,
general and administrative expenses in fiscal years 1991, 1992, 1993 and
1994. During fiscal year 1992, the Company established a $20 million
litigation reserve ($12 million after-tax) to cover estimated costs
associated with the ultimate resolution of these matters, and increased
this reserve by $10 million ($6 million after tax) in fiscal year 1994. On
August 26, 1994, the Company entered into a settlement with IBM and ICC
pursuant to which, among other things, the lawsuits were dismissed, the
parties exchanged mutual releases of claims and the Company paid IBM $70
million. See Notes 8 and 9 of Notes to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1994, incorporated herein by reference for additional
information.
(3) During the quarter ended March 31, 1992, the Company recorded a $25 million
charge for estimated receivables losses ($15 million after-tax), reflecting
continued uncertainty in the U.S. economy and its impact on the Company's
receivables and the credit quality of the Company's lease portfolio.
(4) During the quarter ended March 31, 1992, the Company undertook several
actions to realign its businesses, reduce its overall cost structure and
withdraw from the leasing of certain high technology equipment. These
actions resulted in a restructuring charge of $35 million ($21 million
after-tax) for anticipated employee severance programs, primarily related
to planned reorganizations of the Company's headquarters and U.S. marketing
operations, lease termination costs for excess facilities, and for the
estimated cost to withdraw from leasing of identified product lines. The
restructuring plan is complete and requires no future cash outlays.
(5) On November 11, 1991, the Company's Board of Directors decided to
discontinue the Company's involvement in the oil and gas business. In
fiscal 1991, the Company recorded a non-cash charge of $15 million, net of
income tax benefits of $10 million, related to its interest in an oil and
gas joint venture. The charge was primarily the result of engineering
studies which revealed a net reduction in the estimated net present value
of proved reserves. Based on certain events occurring in fiscal 1993,
management revised its estimate of the net realizable value of the
company's oil and gas investment, resulting in a loss provision of $33
million ($20 million after-tax). In September, 1994, the joint venture
adopted a plan of dissolution and transferred certain assets, specifically
the leases, personal property and incidental rights and the crude oil and
other hydrocarbons, along with the assumption of certain liabilities, for a
minority interest in Consolidated Oil & Gas, Inc. The exchange was based on
the estimated fair market value of the assets, which approximated net book
value. The Company's assets remaining in the joint venture, though
immaterial, are expected to be disposed of during fiscal 1995.
See Note 11 of Notes to Consolidated Financial Statements in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1994,
incorporated herein by reference, for additional information regarding
discontinued oil and gas operations.
(6) In fiscal 1992, the Company purchased $28 million and redeemed the balance
of its outstanding 9.65% Senior Subordinated Debentures at 100.8% of the
principal amount. The difference between the purchase and/or redemption
price and the outstanding principal amount, along with remaining
unamortized bond discount of $41 million, were recorded as an extraordinary
loss of $42 million ($25 million after-tax).
During fiscal 1992, the Company purchased $33 million and redeemed the
balance of its outstanding 10% Senior Notes. The difference between the
purchase and/or redemption price and the outstanding principal amount, along
with remaining deferred issuance costs of $1 million, were recorded as an
extraordinary loss of $6 million ($4 million after-tax).
(7) Expected cash to be provided from existing contracts includes the firm,
noncancellable rents, disaster recovery subscription fees and rents
receivable on equipment leased from others. See Note 5 of Notes to
8
<PAGE>
Consolidated Financial Statements in the Company's Annual Report on Form 10-
K for the fiscal year ended September 30, 1994, incorporated herein by
reference, for additional information. Estimated cash to be provided from
the remarketing of residuals is excluded.
(8) Return on average common stockholders' equity is based on net earnings
(loss) to common stockholders.
LIQUIDITY AND CAPITAL RESOURCES
The Company utilizes a variety of financial instruments, in addition to
internally generated funds, to fund its short and long term needs. The Company
believes that its current financial resources and estimated cash flow from
operations are adequate to fund anticipated future growth and operating
requirements.
Cash payments for equipment acquired for lease in the fiscal year ended
September 30, 1994 were $1.433 billion. This compares to cash payments of
$1.547 billion for equipment acquired for lease in the fiscal year ended
September 30, 1993.
Capital expenditures for equipment are generally financed by cash provided by
operating activities, recourse debt, or by assigning the noncancellable lease
rentals to various financial institutions at fixed interest rates on a
nonrecourse basis. Net cash provided by operating activities for the fiscal
year ended September 30, 1994 was $1.639 billion, compared to $1.873 billion
for the year earlier period. Cash provided by operations has been used to
finance equipment purchases and, accordingly, has had a positive impact on the
level of borrowing required to support the Company's investment in its lease
portfolio.
The Company's external financial resources include the following:
. The Company has historically utilized its lease rentals receivable and
underlying equipment in leasing transactions as collateral to borrow from
financial institutions at fixed rates on a nonrecourse basis. As of
September 30, 1994, such borrowings were $1.5 billion. During the last five
years, these borrowings provided cash totalling $4.0 billion. In fiscal
1994, 51% of equipment purchased for leasing was financed by these secured
nonrecourse borrowings, up from 49% in fiscal 1993. See Note 6 of Notes to
Consolidated Financial Statements in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1994, incorporated herein by
reference, for additional information.
. At September 30, 1994, the Company had $1.1 billion of available
domestic and international borrowing capacity under various lines of credit
from commercial banks and commercial paper facilities, of which $457
million was unused.
. The average daily interest-bearing liabilities outstanding, including
term notes, during fiscal 1994 were approximately $3.6 billion with a
related weighted average interest rate of 7.19%. This compares to average
daily interest-bearing liabilities during fiscal 1993 of approximately $3.7
billion, with a related weighted average interest rate of 7.73%.
. On February 13, 1995, the Company filed a registration statement on
Form S-3 with the Securities and Exchange Commission for a shelf offering
of up to $500 million of senior debt securities (the "1995 Shelf") on terms
to be set at the time of each sale. The Company has designated $250 million
in Debt Securities as "Medium-Term Notes, Series D" under the 1995 Shelf,
but as of the date hereof no Debt Securities have been issued under the
1995 Shelf.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends for the Company for the periods
indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31, FISCAL YEAR ENDED SEPTEMBER 30,
----------------------- ---------------------------------------------------
1994 1993 1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1.52 1.48 1.27 1.42 1.09 1.33 1.35 1.51
</TABLE>
9
<PAGE>
For purposes of calculating the ratio of earnings to fixed charges, earnings
have been calculated by adding fixed charges and income taxes to net earnings
to common stockholders without taking into account earnings and losses
attributed to the discontinued operations and extraordinary items. Fixed
charges consist of interest expense on all indebtedness, amortization of debt
issuance costs, and one-third of rental expense, which is assumed to be the
representative interest portion of rental expense.
USE OF PROCEEDS
Unless otherwise stated in the accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Debt Securities
for general corporate purposes, including equipment purchases, repayment of
short-term debt and redemption or repurchase of senior debt. Pending such
applications, the net proceeds may be temporarily invested in cash equivalents.
Management of the Company expects that it will, on a recurrent basis, engage in
additional financings as the need arises to finance the growth of the Company
or to lengthen the average maturity of its borrowings.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture, dated as of February
1, 1995 (the "Indenture"), between the Company and The Fuji Bank and Trust
Company, as trustee (the "Trustee"). The terms of the Debt Securities include
those stated in the Indenture and those made a part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and the holders of Debt Securities are referred to the Indenture and the
Trust Indenture Act for a statement thereof. The following summary of certain
provisions of the Debt Securities and the Indenture does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Indenture (including the definitions therein of certain terms) and the
Trust Indenture Act. The term "Debt Securities", as used under this caption,
refers to all Securities issued or issuable from time to time under the
Indenture. The particular terms of the Debt Securities offered by a Prospectus
Supplement and the extent, if any, to which such general provisions may apply
to Debt Securities, will be described in the Prospectus Supplement relating to
such Debt Securities.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder. The Indenture provides that Debt
Securities may be issued from time to time in one or more series. The Debt
Securities will be unsecured obligations ranking equally with each other and
with other unsecured and unsubordinated indebtedness of the Company.
The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the Debt Securities: (i) the title of the Debt
Securities; (ii) any limit on the aggregate principal amount of the Debt
Securities; (iii) whether the Debt Securities are to be issuable as Registered
Securities or Bearer Securities or both and whether the Debt Securities may be
represented in temporary or permanent global form, and if so, the initial
Depositary with respect to such temporary or permanent global Debt Security
and, if other than as provided in Section 304 or Section 305 of the Indenture,
as applicable, whether and the circumstances under which beneficial owners of
interests in any such temporary or permanent global Debt Security may exchange
such interests for Debt Securities of such series of like tenor and of any
authorized form and denomination; (iv) the price or prices (expressed as a
percentage of the aggregate principal amount thereof) at which the Debt
Securities will be issued; (v) the date or dates on which the principal of the
Debt Securities is payable or the method of determination thereof; (vi) the
rate or rates at which the Debt Securities will bear interest, if any, and the
date or dates from which such interest, if any, will accrue; (vii) the Interest
Payment Dates for any interest payable on any Debt Securities which are
Registered Securities; (viii) the person to whom any interest will be payable
on any Debt Securities which are Registered Securities, if other than the
person in whose name the Debt Securities are registered at the close of
business on the Regular
10
<PAGE>
Record Date for such interest; (ix) the manner in which, or the person to whom,
any interest on any Debt Securities which are Bearer Securities will be
payable, if other than upon presentation and surrender of the coupons
appertaining thereto, and the extent to which, or the manner in which, any
interest payable on a temporary or permanent global Debt Security on an
Interest Payment Date will be paid; (x) any mandatory or optional sinking fund
or analogous provisions and any provisions for the remarketing of the Debt
Securities; (xi) each office or agency where, subject to the terms of the
Indenture as described below, the principal of and interest, if any, on the
Debt Securities will be payable and each office or agency where, subject to the
terms of the Indenture as described below, the Debt Securities may be presented
for exchange and Debt Securities which are Registered Securities may be
presented for registration of transfer; (xii) the date, if any, after or on
which and the price or prices at which the Debt Securities may, pursuant to any
optional or mandatory redemption provisions, be redeemed, in whole or in part,
and the other detailed terms and provisions of any such optional or mandatory
redemption provisions; (xiii) the denomination in which any Debt Securities
which are Registered Securities will be issuable, if other than the
denomination of $1,000 and integral multiples thereof, and the denominations in
which any Debt Securities which are Bearer Securities will be issuable, if
other than denominations of $5,000 and $100,000; (xiv) the currency or
currencies, including composite currencies, of payment of principal of and
interest, if any, on the Debt Securities, if other than U.S. dollars, and if
other than U.S. dollars, whether the Debt Securities may be satisfied and
discharged other than as provided in Article Four of the Indenture; (xv) if the
amount of payments of principal of and interest, if any, on the Debt Securities
is to be determined by reference to an index, formula or other method, or based
on a coin or currency other than that in which the Debt Securities are stated
to be payable, the manner in which such amounts are to be determined and the
calculation agent, if any, with respect thereto; (xvi) if other than the
principal amount thereof, the portion of the principal amount of the Debt
Securities which will be payable upon declaration of acceleration of the
Maturity thereof pursuant to an Event of Default; (xvii) if other than as
defined in the Indenture, the meaning of "Business Day" when used with respect
to the Debt Securities; (xviii) if the Debt Securities may be issued or
delivered (whether upon original issuance or upon exchange of a temporary
Security of such series or otherwise), or any installment of principal or
interest is payable, only upon request of certain certificates or other
documents or satisfaction of other conditions in addition to those specified in
the Indenture, the forms and terms of such certificates, documents or
conditions; (xix) information with respect to book-entry procedures, if any;
(xx) whether and under what circumstances the Company will pay additional
amounts ("Additional Amounts") in respect of Debt Securities held by a person
who is not a U.S. person (as defined below) in respect of specified taxes,
assessments or other governmental charges and whether the Company has the
option to redeem the affected Debt Securities rather than pay such Additional
Amounts; and (xxi) any other terms of the Debt Securities not inconsistent with
the provisions of the Indenture. Any such Prospectus Supplement will also
describe any special provisions for the payment of additional amounts with
respect to the Debt Securities. The variable terms of the Debt Securities are
subject to change from time to time, but no such change will affect any Debt
Security already issued or as to which an offer to purchase has been accepted
by the Company.
Debt Securities issued under the Indenture may be sold at a discount below
their principal amount. Special United States Federal income tax considerations
applicable to Debt Securities issued at an original issue discount will be
described in any applicable Prospectus Supplement. Special United States
Federal income tax considerations or other restrictions or terms applicable to
any Debt Securities which are (i) issuable in bearer form, (ii) offered
exclusively to United States Aliens (as defined in the Indenture) or (iii)
denominated in a currency other than United States dollars will be set forth in
a Prospectus Supplement relating thereto.
Reference is made to the Prospectus Supplement for the terms of the Debt
Securities being offered thereby.
The Debt Securities may be issued, to the extent provided in the Prospectus
Supplement, in fully registered form without coupons, and/or in bearer form
with or without coupons ("Bearer Securities"), and in denominations set forth
in the Prospectus Supplement.
11
<PAGE>
The provisions of the Indenture described above provide the Company with the
ability, in addition to the ability to issue Debt Securities with terms
different from those of Debt Securities previously issued, to "reopen" a
previous issue of a series of Debt Securities and issue additional Debt
Securities of such series.
The Indenture does not include covenants of the Company restricting its
ability to incur additional debt.
Principal and interest, premium and Additional Amounts, if any, will be
payable in the manner, at the places and subject to the restrictions set forth
in the Indenture, the Debt Securities and the Prospectus Supplement relating
thereto, provided that payment of any interest and any Additional Amounts may
be made at the option of the Company by check mailed to the holders of
registered Debt Securities at their registered addresses.
Debt Securities may be presented for exchange, and registered Debt Securities
may be presented for transfer in the manner, at the places and subject to the
restrictions set forth in the Indenture, the Debt Securities and the Prospectus
Supplement relating thereto. Debt Securities in bearer form and the coupons, if
any, pertaining thereto will be transferable by delivery. No service charge
will be made for any transfer or exchange of Debt Securities, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
LIMITATIONS ON ISSUANCE AND SALE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered, sold or delivered during the "restricted period"
as defined in Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury
regulations (the "D Rules") (in general, the restricted period is the first 40
days after the closing date and, with respect to unsold allotments, until
sold), in the United States or to United States persons (each as defined below)
except to the extent permitted under the D Rules, and any underwriters, agents
and dealers participating in the offering of Debt Securities must agree that
they will not offer any Bearer Securities for sale or resale in the United
States or to United States persons, except to the extent permitted under the D
Rules, nor deliver Bearer Securities within the United States.
Specific requirements of the D Rules and other relevant United States
Treasury regulations affecting Bearer Securities will be described in the
applicable Prospectus Supplement.
As used herein, "United States person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States and an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source, and "United States" means the United States of America (including the
States and the District of Columbia) and its possessions including Puerto Rico,
the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern
Mariana Islands.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or definitive form. A Debt Security in global form may not be
transferred except as a whole by the Depositary for such Debt Security to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
If any Debt Securities of a series are issuable in global form, the applicable
Prospectus Supplement will describe the circumstances, if any, under which the
beneficial owners of interests in any such global Debt Security may exchange
such interests for definitive Debt Securities of such series and of like tenor
and principal amount in any authorized form and denomination, the manner of
payment of principal of and interest, if any, on any such global Debt Security
and the specific terms of the depository arrangement with respect to any such
global Debt Security.
12
<PAGE>
MERGER AND CONSOLIDATION
Under the Indenture, the Company may consolidate or merge with or into any
other corporation, and the Company may sell, lease or convey all or
substantially all of its assets to any corporation, organized and existing
under the laws of the United States of America or a State thereof, provided
that (i) the corporation (if other than the Company) formed by or resulting
from any such consolidation or merger or which shall have received such assets
shall assume payment of the principal of (and premium, if any) and interest on
the Debt Securities and the performance and observance of all of the covenants
and conditions of the Indenture to be performed or observed by the Company, and
(ii) the Company or such successor corporation shall not immediately thereafter
be in default under the Indenture.
MODIFICATION OF THE INDENTURE AND WAIVER
Modification and amendment of the Indenture may be effected by the Company
and the Trustee with the consent of the Holders of a majority in principal
amount of the Outstanding Debt Securities of each series affected thereby,
provided that no such modification or amendment may, without the consent of the
Holder of each of the Outstanding Debt Securities affected thereby, (a) change
the maturity of any installment of principal of, or interest on, or change the
obligation of the Company to pay Additional Amounts (other than as provided in
the Indenture) with respect to, any Debt Security or change the Redemption
Price; or (b) reduce the principal amount of, or interest on, or Additional
Amounts payable with respect to, any Debt Security, or reduce the amount of
principal which could be declared due and payable prior to maturity; (c) change
the place or currency of any payment of principal or interest on any Debt
Security, except as may otherwise be provided in the Indenture; (d) impair the
right to institute suit for the enforcement of any payment on or with respect
to any Debt Security; (e) reduce the percentage in principal amount of the
Outstanding Debt Securities of any series, the consent of whose Holders is
required to modify or amend the Indenture; or (f) modify the foregoing
requirements or reduce the percentage of Outstanding Debt Securities necessary
to waive any past default to less than a majority. Except with respect to
certain fundamental provisions, the Holders of at least a majority in principal
amount of Outstanding Debt Securities of any series may, with respect to such
series, waive past defaults under the Indenture and waive compliance by the
Company with certain provisions of the Indenture. The Indenture also contains
provisions permitting the Company and the Trustee to effect certain
modifications and amendments without the consent of the Holders to cure
ambiguities, correct inconsistencies and make other changes, provided such
modifications and amendments do not adversely affect the interest of the
Holders in any material respect.
EVENTS OF DEFAULT
Unless otherwise described in the applicable Prospectus Supplement, under the
Indenture, the following will be Events of Default with respect to Debt
Securities of any series under the Indenture: (a) default in the payment of any
interest or Additional Amounts upon any of the Debt Securities of that series
when due, continued for 30 days; (b) default in the payment of any principal or
premium, if any, on any of the Debt Securities of that series when due, whether
at maturity, upon declaration of acceleration, notice of redemption, request
for repayment, or otherwise; (c) default in the deposit of any sinking fund
payment, when due, in respect of any of the Debt Securities of that series; (d)
default in the performance of any covenant of the Company, contained in the
Indenture (other than a covenant expressly included in the Indenture for the
benefit of a series of Debt Securities other than such series or otherwise
expressly dealt with in the Indenture or the Debt Securities) continued for 60
days after written notice as provided in the Indenture; (e) default in the
payment when due (subject to any applicable grace period), whether at stated
maturity or otherwise, of any principal of or interest on (however designated)
any indebtedness for borrowed money of, or guaranteed by, the Company (other
than the Debt Securities of any series and other than non-recourse
indebtedness) in an aggregate principal amount exceeding 5% of the consolidated
net worth of the Company and its subsidiaries (determined as of the most recent
fiscal quarter for which a balance sheet is available), whether such
indebtedness now exists or shall hereafter be created, which default shall
result in such indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable and the Trustee
receives written notice from a Holder or the Company of such declaration;
provided,
13
<PAGE>
however, that if any such acceleration shall subsequently be rescinded or
annulled (including through the discharge of the accelerated indebtedness)
prior to the obtaining of any judgment or decree for the payment of any money
due on such indebtedness or the actual payment of money due on such
indebtedness, any acceleration with respect to Debt Securities of any series
consequent solely on such other acceleration shall likewise be deemed rescinded
or annulled without further action on the part of any Holders; provided,
further, that for a default other than a default in payment, so long as the
Company is contesting in good faith such event of default and the Company
delivers to the Trustee a certificate that the Company is contesting in good
faith the existence of such event of default, then no Event of Default shall be
deemed to exist under this clause; (f) certain events in bankruptcy, insolvency
or reorganization; and (g) any other Event of Default established with respect
to Debt Securities of that series. The Trustee may withhold notice to the
Holders of any series of Debt Securities issued under the Indenture of any
default (except in the payment of principal, premium, if any, or interest, if
any, on any of the Debt Securities of such series or in the making of any
sinking fund installment) if it considers it in the interest of such Holders to
do so. No Event of Default with respect to a particular series of Debt
Securities necessarily constitutes an Event of Default with respect to any
other series of Debt Securities issued under the Indenture.
If an Event of Default with respect to Outstanding Debt Securities of any
series occurs and is continuing, the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Debt Securities of that series may
declare the principal amount of all Outstanding Debt Securities of that series
(or such lesser amount as may be provided for in the Debt Securities of that
series) and the interest accrued thereon and Additional Amounts payable in
respect thereof, if any, to be due and payable immediately. At any time after a
declaration of acceleration has been made with respect to Debt Securities of
any series, but before a judgment or decree for payment of money due has been
obtained by the Trustee, the Holders of a majority in principal amount of the
Outstanding Debt Securities of that series may rescind any declaration of
acceleration and its consequences, if all payments due (other than those due as
a result of acceleration) have been made and all Events of Default have been
remedied or waived.
Any default with respect to Debt Securities of any series may be waived by
the Holders of a majority in principal amount of all Outstanding Debt
Securities of that series, except a default in the payment of principal or
premium, if any, or interest or Additional Amounts, if any, on any of the Debt
Securities of that series or a default in respect of a covenant or provisions
which cannot be modified or amended without the consent of the Holder of each
of the Outstanding Debt Securities of such series affected. Upon any such
waiver, such default shall cease to exist and any Event of Default arising from
it shall be deemed to be cured.
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee with respect to Debt Securities of such
series, provided that such direction shall not be in conflict with any rule of
law or the Indenture and the Trustee determines that the action so directed is
not unduly prejudicial to the rights of other Holders of such series. Before
proceeding to exercise any right or power under the Indenture at the direction
of such Holders, the Trustee shall be entitled to receive from such Holders
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in complying with any such direction.
The Company is required to file with the Trustee annually a written statement
as to the presence or absence of certain defaults under the Indenture and
compliance by the Company with all conditions and covenants under the
Indenture.
CONCERNING THE TRUSTEE
The Trustee has its principal office at Two World Trade Center, New York, New
York 10048. The Trustee's offices for the purpose of presenting Securities for
payment or registration of transfer or exchange are located at the same
address. The Company has leased equipment to the Trustee and provides it with
business continuity services through its subsidiaries. The Trustee is one of
several core relationship banks which provide credit and banking services to
the Company and its subsidiaries, both domestically and internationally.
14
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell any of the Debt Securities directly to purchasers, or
through agents, dealers, or underwriters.
The Prospectus Supplement and Pricing Supplement, if any, set forth the terms
of the offering of the particular series of Debt Securities to which such
Prospectus Supplement and any such Pricing Supplement relate, including (i) the
name or names of any underwriters or agents with whom the Company has entered
into arrangements with respect to the sale of such series of Debt Securities,
(ii) the initial public offering or purchase price of such series of Debt
Securities, (iii) any underwriting discounts, commissions and other items
constituting underwriters' compensation from the Company and any other
discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to the Company, and (vi) the securities exchanges, if any, on
which such series of Debt Securities will be listed.
If underwriters are used in the sale, the Debt Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase such Debt Securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all the Debt Securities offered by the Prospectus Supplement
relating to such series if any are purchased. Any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Offers to purchase the Debt Securities may be solicited directly by the
Company or by agents designated by the Company from time to time. Any agent
involved in the offering and sale thereof in respect of which this Prospectus
is delivered is named and any commissions payable by the Company to such agent
are set forth in the Prospectus Supplement relating to such series. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
If the sale is accomplished through an underwriter or underwriters, the
Company will enter into an underwriting agreement with such underwriters at the
time of sale to them, and the names of the underwriters (including
identification of any managing underwriter or underwriters) and the terms of
the transaction will be set forth in the Prospectus Supplement, which, together
with this Prospectus, will be used by the underwriters to make resales of the
Debt Securities in respect of which the Prospectus Supplement and this
Prospectus is delivered to the public.
If so indicated in an applicable Prospectus Supplement, the Company will
authorize underwriters, agents or dealers to solicit offers by certain
institutions to purchase Debt Securities to which such Prospectus Supplement
relates pursuant to Delayed Delivery Contracts ("Contracts") providing for
payment and delivery on the date or dates stated in the Prospectus Supplement.
Each of the Contracts will be for an amount not less than, and, unless the
Company otherwise agrees, the aggregate principal amount of Debt Securities
sold pursuant to such Contracts shall not be less or more than, the respective
amounts stated in the Prospectus Supplement. Institutions with whom Contracts,
when authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but will in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions except
that (i) the purchase by an institution of Debt Securities covered thereby
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 particular Debt Securities are being sold to underwriters,
15
<PAGE>
the Company shall have sold to such underwriters the total amount of such Debt
Securities less the amount thereof covered by such arrangements. Underwriters,
agents or dealers will not have any responsibility in respect of the validity
of such arrangements or the performance of the Company or such institutional
investors thereunder.
Underwriters, agents and dealers may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters or agents may be required to
make in respect thereof. Underwriters, agents and dealers may engage in
transactions with, or perform services for, the Company in the ordinary course
of business.
Underwriters, agents and dealers participating in the distribution of the
Debt Securities may be deemed to be underwriters under the Securities Act, and
any discounts and commissions received by them and any profit realized by them
on resale of Debt Securities may be deemed to be underwriting discounts and
commissions under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Debt Securities
will be passed upon for the Company by Jeremiah M. Fitzgerald, Esq., Vice
President and General Counsel of the Company and for the underwriters, agents
and dealers by Brown & Wood, New York, New York. Certain other legal matters
will be passed upon for the Company by McBride Baker & Coles, Chicago,
Illinois. Mr. Fitzgerald beneficially owns 10,102 shares of the Company's
Common Stock and holds options, granted under the Company's stock option plans,
to purchase an additional 29,143 shares of Common Stock.
EXPERTS
The consolidated financial statements and schedules of Comdisco, Inc. and
subsidiaries as of September 30, 1994 and 1993 and for each of the years in the
three-year period ended September 30, 1994 incorporated herein by reference to
the Annual Report on Form 10-K of the Company for the year ended September 30,
1994 have been audited by KPMG Peat Marwick LLP, independent certified public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in auditing and accounting.
16
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN CONNECTION WITH THE OFFER MADE BY
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS ARE NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE NOTES OFFERED HEREBY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of the
Notes.................. S-2
Use of Proceeds......... S-4
Underwriting............ S-4
PROSPECTUS
Available Information... 2
Incorporation of Certain
Documents by Reference. 2
The Company............. 3
Selected Financial Data. 7
Ratio of Earnings to
Combined Fixed Charges
and Preferred Stock
Dividends.............. 9
Use of Proceeds......... 10
Description of Debt
Securities............. 10
Plan of Distribution.... 15
Legal Matters........... 16
Experts................. 16
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$200,000,000
LOGO
7 1/4% NOTES
DUE APRIL 15, 1998
--------
PROSPECTUS SUPPLEMENT
APRIL 6, 1995
--------
SMITH BARNEY INC.
BA SECURITIES, INC.
MERRILL LYNCH & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
