<PAGE>
Filed pursuant to Rule 424(b)(5)
Registration No. 333-18441
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 10, 1997
$435,000,000
[LOGO OF MICRON]
7% CONVERTIBLE SUBORDINATED NOTES DUE JULY 1, 2004
--------------
The Notes are convertible at any time prior to maturity, unless previously
redeemed or repurchased, into shares of Common Stock, par value $0.10 per
share ("Common Stock"), of Micron Technology, Inc. (the "Company") at a
conversion rate of 14.8272 shares per each $1,000 principal amount of Notes
(equivalent to a conversion price of approximately $67.44 per share), subject
to adjustment in certain circumstances. On June 18, 1997, the last reported
sale price of the Common Stock, which is traded under the symbol "MU" on the
New York Stock Exchange, was $40 7/8 per share.
Interest on the Notes is payable on January 1 and July 1 of each year,
commencing January 1, 1998. The Company has the right to defer payment of
interest on the Notes at any time or from time to time for a period not
exceeding 4 consecutive semi-annual interest payment periods with respect to
each deferral period (each, an "Extension Period"), provided that no Extension
Period may extend beyond the stated maturity of the Notes. Upon the
termination of any such Extension Period and the payment of all amounts then
due on any Interest Payment Date (as defined), the Company may elect to begin
a new Extension Period subject to the requirements set forth herein. During an
Extension Period, interest on the Notes will continue to accrue and holders of
Notes will be required to accrue interest income for United States federal
income tax purposes. See "Description of Notes--Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Considerations--Interest
Income and Original Issue Discount". The Notes will not be subject to
redemption prior to July 2, 1999 and will be redeemable on and after such date
at the option of the Company, in whole or in part, upon not less than 20 nor
more than 60 days' notice to each Holder, at the prices set forth herein plus
accrued and unpaid interest, if any, to the redemption date; provided that the
Notes will not be redeemable following July 2, 1999 and before July 3, 2001
unless the last reported sale price for the Company's Common Stock is at least
130% of the conversion price for at least 20 trading days within a period of
30 consecutive trading days ending within five trading days of the call for
redemption. See "Description of Notes--Optional Redemption". The Notes are not
entitled to any sinking fund. The Notes will mature on July 1, 2004.
In the event of a Change of Control, each Holder of Notes may require the
Company to repurchase its Notes, in whole or in part, for cash or, at the
Company's option, Common Stock (valued at 95% of the average closing prices
for the five trading days immediately preceding the second trading day prior
to the repurchase date) at a repurchase price of 100% of the principal amount
of Notes to be repurchased, plus accrued interest to the repurchase date. See
"Description of Notes--Repurchase at Option of Holders Upon a Change in
Control".
The Notes are unsecured obligations subordinated in right of payment to all
existing and future Senior Debt of the Company and will be effectively
subordinated in right of payment to all indebtedness and other liabilities of
the Company's subsidiaries. As of May 29, 1997, the Company had approximately
$441 million outstanding indebtedness that would have constituted Senior Debt.
As of the same date, the Company's subsidiaries had approximately $275 million
outstanding indebtedness and other liabilities. See "Description of Notes--
Subordination".
SEE "RISK FACTORS" COMMENCING ON PAGE S-7 FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE NOTES.
--------------
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.
--------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Note........................... 100% 2.5% 97.5%
Total(4)........................... $435,000,000 $10,875,000 $424,125,000
</TABLE>
- -------
(1) Plus accrued interest, if any, from June 24, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting estimated expenses of $500,000 payable by the Company.
(4) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional $65,000,000 principal amount of Notes at the initial
public offering price shown above, less the underwriting discount, solely
to cover over-allotments, if any. If such option is exercised in full, the
total initial public offering price, underwriting discount and proceeds to
Company will be approximately $500,000,000, $12,500,000, and $487,500,000,
respectively. See "Underwriting".
--------------
The Notes offered hereby are offered by the Underwriters as specified
herein, subject to receipt and acceptance by them and subject to their right
to reject any order in whole or in part. It is expected that the Notes will be
ready for delivery in book-entry form only through the facilities of The
Depository Trust Company ("DTC") in New York, New York, on or about June 24,
1997 against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
ROBERTSON, STEPHENS & COMPANY
MONTGOMERY SECURITIES
--------------
The date of this Prospectus Supplement is June 19, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES AND THE
COMMON STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID IN
CONNECTION WITH THE OFFERING. FOR A DISCUSSION OF THESE ACTIVITIES, SEE
"UNDERWRITING".
S-2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and related notes appearing
elsewhere in this Prospectus Supplement, including information incorporated by
reference herein. Unless otherwise indicated, all information in this
Prospectus Supplement assumes that the Underwriters' over-allotment option is
not exercised. As used in this Prospectus Supplement, unless otherwise
indicated, references to "MTI" and the "Company" are to Micron Technology, Inc.
and its consolidated subsidiaries.
This Prospectus Supplement contains forward-looking statements that involve
risks and uncertainties. The Company's actual results of operations could
differ materially from those anticipated in such forward-looking statements as
a result of certain factors set forth under "Risk Factors" and elsewhere in
this Prospectus Supplement.
THE COMPANY
MTI and its subsidiaries principally design, develop, manufacture and market
semiconductor memory products, PCs and custom complex printed circuit board,
memory module and system level assemblies.
MTI's semiconductor operations focus on the design, development, manufacture
and marketing of semiconductor memory components primarily for use in PCs. The
Company's primary semiconductor memory products are DRAM components.
The manufacturing of the Company's semiconductor products is a complex
process and involves a number of precise steps, including wafer fabrication,
assembly, burn-in and final test. Efficient production of the Company's
semiconductor memory products requires utilization of advanced semiconductor
manufacturing techniques, and the Company is engaged in ongoing efforts to
enhance its production processes to reduce the die size of existing products
and increase capacity utilization. The success of the Company's manufacturing
operation will be largely dependent on its ability to minimize impurities and
to maximize its yield of acceptable, high-quality circuits. In this regard, the
Company employs rigorous quality controls throughout the manufacturing,
screening and testing processes.
Rapid technology change and intense price competition place a premium on both
new product and new process development efforts. Research and development
efforts are continually devoted to developing leading process technology, which
is the primary determinant in the Company's ability to transition to next
generation products. It is currently anticipated that process technology will
move from .35 micron (^) to .30^ in the next 12 months and to .25^ and .18^ in
the next several years as needed for development of future generation
semiconductor products. Application of current developments in advanced process
technology is focused on shrink versions of the Company's 16 Meg DRAM and
development of the 16 Meg SDRAM (synchronous DRAM) and the 64 Meg DRAM and
SDRAM. The PC industry is in the process of transitioning from EDO (extended
data out) to SDRAM. The Company expects this transition to accelerate through
1998 and expects its development efforts in SDRAM will enable it to meet volume
customer demand when this transition occurs. Other research and development
efforts are devoted to the design and development of DRAM, FLASH, SRAM and
remote intelligent communications (RIC) products.
The Company markets its semiconductor memory products worldwide through
independent sales representatives, distributors and its own direct sales force.
The Company also maintains semiconductor sales offices in the United Kingdom,
Germany, Japan, Singapore and Taiwan.
Micron Electronics, Inc. ("MEI") is a majority-owned, publicly traded
subsidiary of MTI. MEI's businesses include the Company's PC, contract
manufacturing and component recovery operations.
S-3
<PAGE>
THE OFFERING
SECURITIES OFFERED...... $435,000,000 aggregate principal amount of 7%
Convertible Subordinated Notes due July 1, 2004 (not
including $65,000,000 aggregate principal amount of
Notes subject to the Underwriters' over-allotment
option).
ISSUER.................. Micron Technology, Inc., a Delaware corporation.
OFFERING PRICE.......... 100% of the principal amount plus accrued interest,
if any, from June 24,1997.
INTEREST................ Interest on the Notes is payable semi-annually on
January 1 and July 1 of each year, commencing January
1, 1998. Interest payments on the Notes may be
deferred from time to time by the Company.
INTEREST DEFERRAL
PROVISIONS............. The Company has the right to defer payment of
interest on the Notes at any time or from time to
time for a period not exceeding 4 consecutive semi-
annual interest payment periods with respect to each
deferral period (each, an "Extension Period") so long
as no Event of Default (as defined) has occurred and
is continuing. During any such deferral period,
interest on the Notes will continue to accrue and
holders of Notes will be required to accrue interest
income for United States federal income tax purposes.
No Extension Period may extend beyond the stated
maturity of the Notes. Upon the termination of any
such Extension Period and the payment of all amounts
then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to
the requirements set forth herein. If interest
payments on the Notes are so deferred, the Company
will not be permitted, subject to certain exceptions
set forth herein, to declare or pay any cash
distributions with respect to the Company's capital
stock or debt securities (including guarantees of
indebtedness for borrowed money) that rank pari passu
with or junior to the Notes. See "Description of
Notes--Option to Extend Interest Payment Period" and
"Certain Federal Income Tax Consequences--Interest
Income and Original Issue Discount."
CONVERSION RATE......... 14.8272 shares per $1,000 principal amount of Notes
(equivalent to approximately $67.44 per share),
subject to adjustment.
CONVERSION RIGHTS....... The Notes are convertible at any time on or after
issuance and prior to the close of business on the
maturity date, unless previously redeemed or
otherwise repurchased, at the conversion rate set
forth above. Holders of Notes called for redemption
or repurchase will be entitled to convert the Notes
up to, but not including or after, the date fixed for
redemption or repurchase, as the case may be. See
"Description of Notes--Conversion Rights."
S-4
<PAGE>
SUBORDINATION........... The Notes are subordinated in right of payment to all
existing and future Senior Debt of the Company. As of
May 29, 1997, the Company had approximately $441
million outstanding indebtedness that would have
constituted Senior Debt. The Notes are also
effectively subordinated in right of payment to all
indebtedness and other liabilities (including trade
payables and excluding intercompany liabilities) of
the Company's subsidiaries. As of May 29, 1997, the
Company's subsidiaries had approximately $275 million
outstanding indebtedness and other liabilities. The
Subordinated Indenture will not restrict the
incurrence of Senior Debt or other indebtedness by
the Company or any subsidiary. See "Description of
Notes--Subordination."
OPTIONAL REDEMPTION..... The Notes will not be subject to redemption prior to
July 2, 1999 and will be redeemable on and after such
date at the option of the Company, in whole or in
part, upon not less than 20 nor more than 60 days'
notice to each Holder, at the prices set forth herein
plus accrued and unpaid interest, if any, to the
redemption date; provided that the Notes will not be
redeemable following July 2, 1999 and before July 3,
2001 unless the last reported sale price for the
Company's Common Stock is at least 130% of the
conversion price for at least 20 trading days within
a period of 30 consecutive trading days ending within
five trading days of the call for redemption. See
"Description of Notes--Optional Redemption."
REPURCHASE AT OPTION OF
HOLDERS UPON A CHANGE
OF CONTROL.............. Upon a Change in Control (as defined), Holders of
Notes will have the right, subject to certain
conditions and restrictions, to require the Company
to purchase all or part of their Notes at 100% of the
principal amount thereof, plus accrued interest to
the repurchase date. The repurchase price is payable
in cash or, at the option of the Company but subject
to the satisfaction of certain conditions on the part
of the Company, in shares of Common Stock (valued at
95% of the average closing prices of the Common Stock
for the five trading days immediately preceding the
second trading day prior to the repurchase date). See
"Description of Notes--Repurchase at Option of
Holders Upon a Change in Control."
USE OF PROCEEDS......... The Company plans to use the net proceeds for general
corporate purposes, including working capital and
capital expenditures, research and development and
any potential acquisitions. See "Use of Proceeds."
GOVERNING LAW........... The Subordinated Indenture, the Supplemental
Indenture and the Notes are governed by the laws of
the State of New York.
LISTING................. The Notes will not be listed on any securities
exchange or quoted on the Nasdaq National Market. The
Underwriters have advised the Company that they
currently intend to make a market in the Notes. The
Underwriters are not obligated, however, to make a
S-5
<PAGE>
market in the Notes, and any such market making may
be discontinued at any time at the sole discretion of
the Underwriters without notice.
COMMON STOCK............ The Common Stock is listed on the New York Stock
Exchange under the symbol "MU".
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT RATIO AND PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
---------------------------------------------- -----------------
SEPT. 3 SEPT. 2 SEPT. 1 AUG. 31 AUG. 29 MAY 30 MAY 29
1992 1993 1994 1995 1996 1996 1997
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net sales............... $506.3 $823.3 $1,628.6 $2,952.7 $3,653.8 $2,953.3 $2,569.3
Operating income........ 13.9 167.1 625.1 1,308.0 944.5 917.2 278.2
Net income.............. 6.6 104.1 400.5 844.1 593.5 574.9 260.2
Earnings per share:
Primary............... 0.03 0.52 1.92 3.95 2.76 2.66 1.21
Fully diluted......... 0.03 0.51 1.90 3.90 2.76 2.66 1.20
Ratio of earnings to
fixed charges(1)....... 2.0x 20.1x 69.9x 104.1x 53.3x -- 19.5x
</TABLE>
<TABLE>
<CAPTION>
AS OF MAY 29, 1997
----------------------
ACTUAL AS ADJUSTED(2)
------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.......................................... $ 690.9 $1,114.5
Total assets............................................. 4,154.5 4,578.1
Convertible subordinated notes........................... -- 435.0
Shareholders' equity..................................... 2,789.1 2,789.1
</TABLE>
- --------
(1) For the purpose of calculating such ratios, "earnings" consist of income
from continuing operations before income taxes plus fixed charges and
"fixed charges" consist of interest expense (net of capitalized portion),
capitalized interest, amortization of debt discount and the portion of
rental expense deemed representative of interest expense.
(2) Adjusted to reflect the issuance and sale of the $435 million principal
amount of the Notes offered hereby. See "Use of Proceeds."
S-6
<PAGE>
RISK FACTORS
An investment in the Notes being offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information contained in this Prospectus
Supplement, before purchasing the Notes offered hereby. This Prospectus
Supplement contains forward-looking statements that involve risks and
uncertainties made by or on behalf of the Company. The actual results of the
Company may differ materially from the results discussed in the forward-
looking statements. Factors that might cause such a difference include, but
are not limited to, those discussed in "Risk Factors," as well as elsewhere in
this Prospectus Supplement.
VOLATILITY OF THE SEMICONDUCTOR MEMORY INDUSTRY; RECENT MARKET CONDITIONS
The semiconductor memory industry is characterized by rapid technological
change, frequent product introductions and enhancements, difficult product
transitions, relatively short product life cycles, and volatile market
conditions. These characteristics historically have made the semiconductor
industry highly cyclical, particularly in the market for DRAMs, which are the
Company's primary products. The semiconductor industry has a history of
declining average sales prices as products mature. Long-term average decreases
in sales prices for semiconductor memory products approximate 30% on an
annualized basis, however, significant fluctuations from this rate have
occurred from time to time.
Although the Company experienced a degree of pricing stability for its
semiconductor memory products in the first calendar quarter of 1997, the
selling prices for the Company's semiconductor memory products fluctuate
significantly with real and perceived changes in the balance of supply and
demand for these commodity products. The Company is unable to ascertain
whether the stabilization of DRAM prices in early calendar 1997 was indicative
of a change in industry supply and demand, capacity or inventory levels.
Growth in world-wide supply has outpaced growth in world-wide demand in recent
periods, resulting in a significant decrease in average selling prices for the
Company's semiconductor memory products. In 1996, the rate of decline in
average selling prices for semiconductor memory products surpassed the rate at
which the Company was able to decrease per unit manufacturing costs, and, as a
result, the Company's cash flows were significantly adversely affected,
particularly in the second half of 1996. In the first quarter of 1997, the
rate of decline in average selling prices for semiconductor memory products
was commensurate with the rate of decline in the Company's per unit
manufacturing costs and in the second and third quarters the rate of decline
in the Company's per unit manufacturing costs for semiconductor memory
products exceeded the rate of decline in average selling prices. In the event
that average selling prices decline at a faster rate than that at which the
Company is able to decrease per unit manufacturing costs, the Company could be
materially adversely affected in its operations, cash flows and financial
condition. Additionally, although some of the Company's competitors have
announced adjustments to the rate at which they will implement capacity
expansion programs, many of the Company's competitors have already added
significant capacity for the production of semiconductor memory products. The
amount of capacity to be placed into production and future yield improvements
by the Company's competitors could dramatically increase world-wide supply of
semiconductor memory and increase downward pressure on pricing. Further, the
Company has no firm information with which to determine inventory levels of
its competitors, or to determine the likelihood that substantial inventory
liquidation may occur and cause further downward pressure on pricing. In
addition, as a result of the Company's efforts to enhance its production
processes, the Company has experienced a significant increase in megabit
production in recent quarters. Accordingly, the Company expects it will need
to increase its market share of semiconductor memory products to sell its
increased production.
S-7
<PAGE>
DEPENDENCE ON PERSONAL COMPUTER INDUSTRY; CUSTOMER CONCENTRATION
Approximately 78% of the Company's sales of semiconductor memory products
during the first nine months of 1997 were directly into the PC or peripheral
markets. DRAMs are the most widely used semiconductor memory component in most
PC systems. The Company believes that the rate of growth in average world-wide
sales of PC systems has declined and may remain below prior periods' growth
rates for the foreseeable future. In addition, the growth rate in the amount
of semiconductor memory per PC system may decrease in the future. Should the
rate of growth of sales of PC systems or the amount of memory per PC system
decrease, the growth rate for sales of semiconductor memory could also
decrease, placing further downward pressure on selling prices for the
Company's semiconductor memory products. The Company is unable to predict
changes in industry supply, major customer inventory management strategies, or
end user demand, which are significant factors influencing pricing for the
Company's semiconductor memory products.
Approximately 22% and 17% of the Company's net sales for fiscal 1996 and the
first nine months of fiscal 1997, respectively, were to the Company's top five
customers. As a result of this concentration of the Company's customer base,
loss or cancellation of business from any of these major PC system customers,
significant changes in scheduled deliveries to any of these customers or
decreases in the prices of products sold to any of these customers could have
a material adverse effect on the Company's business and results of operations.
Certain of MTI's key semiconductor memory customers compete directly with MEI
in the sale of PC systems, and there can be no assurance that in the future
such customers will, as a result of this competition with MEI, continue to
purchase the Company's semiconductor memory products. A loss of any of these
customers could have a material adverse effect on the Company's business and
results of operations.
FLUCTUATIONS IN OPERATING RESULTS
The Company's past operating results have been, and its future operating
results may be, subject to annual and quarterly fluctuations as a result of a
wide variety of factors, including, without limitation, the cyclical nature of
the semiconductor memory industry, the introduction and announcement of new
products and process technologies by the Company or its competitors, pricing
pressures, the speed with which the Company reduces costs for any particular
new product, fluctuations in manufacturing yields, changes in product mix, the
cost and availability of raw materials and general worldwide economic
conditions. During the three fiscal quarters ended May 29, 1997, DRAM market
conditions were generally characterized by excess supply over demand,
resulting in declining prices. Any additional price declines for memory
products in the future, either due to increased supply or decreased demand,
could have an adverse effect on the Company's business and results of
operations.
The Company's operating results are significantly impacted by the operating
results of its consolidated subsidiaries. MTI's consolidated results of
operations are particularly affected by MEI's results of operations. MEI's
past operating results have been, and its future operating results may be,
subject to fluctuations, on a quarterly and an annual basis, as a result of a
wide variety of factors, including, but not limited to, industry competition,
fluctuating market pricing for computer and semiconductor memory products,
fluctuating component costs, changes in product mix, seasonal cycles common in
the PC industry, the timing of new product introductions by the Company and
its competitors, seasonal government purchasing cycles, inventory
obsolescence, the effects of product reviews and industry awards, critical
component availability, manufacturing and production constraints and the
timing of orders from and shipments to OEM customers. The Company's net income
is affected by its ownership percentage of its subsidiaries. Changing
circumstances, including but not limited to, changes in the Company's core
operations, alternative uses of capital, and market conditions, could result
in the Company changing its ownership interest in its subsidiaries.
S-8
<PAGE>
MANUFACTURING RISKS AND VOLUME PRODUCTION
The manufacturing of the Company's semiconductor memory products is a
complex process and involves a number of precise steps, including wafer
fabrication, assembly in a variety of packages, burn-in and final test.
Efficient production of the Company's semiconductor memory products requires
utilization of advanced semiconductor manufacturing techniques. The Company is
engaged in ongoing efforts to enhance its production processes to reduce the
die size of existing products and increase capacity. The Company has completed
the conversion of its Fabs to process 8-inch wafers. Wafer fabrication occurs
in a highly controlled, clean environment to minimize dust and other yield-
and quality-limiting contaminants. Despite stringent manufacturing controls,
equipment does not consistently perform flawlessly and minute impurities,
defects in the photo masks, or other difficulties in the process may cause a
substantial percentage of the wafers to be rejected or individual circuits to
be nonfunctional. The success of the Company's manufacturing operation will be
largely dependent on its ability to minimize such impurities and to maximize
its yield of acceptable high-quality circuits. In addition, the Company's
manufacturing yields could be adversely affected in the event of future power
outages similar to the power outages that affected the Pacific Northwest
during calendar year 1996. There can be no assurance that the Company will not
experience decreases in manufacturing yields as a result of any such
manufacturing problems.
While additional test capacity for the Company's Boise production facility
is anticipated to be provided at its Lehi, Utah facility, completion of the
remainder of the Lehi production facility is dependent upon market conditions.
Market conditions that the Company expects to evaluate include, but are not
limited to, world-wide market supply and demand of semiconductor products and
the Company's operations, cash flows and alternative uses of capital. The cost
to complete the remainder of the Lehi facility is estimated to approximate
$1.0 billion. There can be no assurance that MTI will be able to fund the
completion of the remainder of the Lehi facility. The failure by MTI to
complete the remainder of the facility would likely result in MTI being
required to write off all or a portion of the facility's cost, which, if
required, could have a material adverse effect on the Company's business and
results of operations. In addition, in the event that market conditions
improve, there can be no assurance that MTI will successfully commence
manufacturing at the Lehi facility in a manner that enables it to take
advantage of the improved market conditions. Any such failure to respond to
improved market conditions could have a material adverse effect on MTI's
business and results of operations.
As a result of the significant investment in facilities and equipment
associated with the production of DRAM products and the industry's history of
declining average sales prices as products mature, the Company must produce
and sell its DRAM products in significant volume and continue to reduce per
megabit manufacturing costs in order to achieve profitability. There can be no
assurance that revenues derived from sales of MTI's products will be
sufficient to cover current fixed costs. In order to achieve profitability,
the Company must continue to significantly increase its output of
semiconductor memory.
LIQUIDITY AND FUTURE CAPITAL NEEDS
DRAM manufacturers generally have substantial ongoing capital requirements
to maintain or increase manufacturing capacity. Historically, the Company has
reinvested substantially all of its cash flow from operations in capacity
expansion and improvement programs. The Company's cash flows from operations
depend primarily on average selling prices and the per unit cost of the
Company's semiconductor memory products. In the future, to the extent that the
Company's level of production increases, similar price decreases may have an
even more significant impact. In 1996, the rate of decline in average selling
prices for semiconductor memory products surpassed the rate at which the
Company was able to decrease costs per megabit, and as a result the Company's
cash flows were significantly adversely affected, particularly in the second
half of fiscal 1996. In the event that average selling prices decline faster
than the rate at which the Company is able to decrease per unit manufacturing
costs, the Company may not be able to generate sufficient cash flows from
operations
S-9
<PAGE>
to sustain operations. The Company has a $500 million revolving credit
agreement expiring in May 2000. As of May 29, 1997, the Company was in
compliance with its covenants and conditions under the revolving credit
agreement. There can be no assurance that the Company will continue to be able
to meet the terms of the covenants and conditions or be able to borrow the
full amount of the credit facility. The issuance of the Notes would result in
an event of default under the revolving credit agreement unless an effective
consent is obtained from the banks prior to the closing. Based on preliminary
discussions with the lead bank under the revolving credit agreement, the
Company believes that such consent will be obtained. However, there can be no
assurance that the Company will obtain such consent on a timely basis. In
addition, cash generated from operations by MEI is not readily available or
anticipated to be available to finance operations or other expenditures of
MTI. There can be no assurance that external sources of liquidity will be
available to fund the Company's operations or its capacity and product and
process technology enhancement programs. Failure to obtain financing would
hinder the Company's ability to make continued investments in such programs,
which could materially adversely affect the Company's business, results of
operations and financial condition.
PRODUCT DEVELOPMENT
From time to time, the Company has experienced volatility in its
manufacturing yields, as it has encountered difficulties in ramping shrink
versions of existing devices or new generation devices to commercial volumes.
The Company has completed the transition of its primary semiconductor memory
products from the relatively mature 4 Meg DRAM to the 16 Meg DRAM. The Company
is developing various SDRAM products which are expected to be ready for volume
production in fiscal 1998, as the Company expects a gradual transition by
computer manufacturers to faster types of DRAM-based main memory, including
but not limited to SDRAM, over the next several years. During periods of
transition to new generation products, the Company's gross margins have been
adversely affected and there can be no assurance that they will not continue
to be adversely affected as a result of such transitions. Rapid technological
change and intense price competition place a premium on both new product and
new process development efforts. The Company's continued ability to compete in
the semiconductor memory market will depend in part on its ability to continue
to develop technologically advanced products and processes, of which there can
be no assurance.
Research and development expenses vary primarily with the number of wafers
processed, personnel costs, and the cost of advanced equipment dedicated to
new product and process development. Research and development efforts are
continually devoted to developing leading process technology, which is the
primary determinant in the Company's ability to transition to next generation
products. It is currently anticipated that process technology will move from
.35^ to .30^ in the next 12 months and to .25^ and .18^ in the next several
years as needed for development of future generation semiconductor products.
Application of current developments in advanced process technology is focused
on shrink versions of the Company's 16 Meg DRAM and development of the 16 Meg
SDRAM (synchronous DRAM) and the 64 Meg DRAM and SDRAM. The PC industry is in
the process of transitioning from EDO to SDRAM. The Company expects this
transition to accelerate through 1998 and expects its development efforts in
SDRAM will enable it to meet volume customer demand when this transition
occurs. Other research and development efforts are devoted to the design and
development of DRAM, FLASH, SRAM and remote intelligent communications (RIC)
products. There can be no assurance the Company will be successful in such
research and development efforts.
There can be no assurance that the Company's competitors will not be able to
develop and offer future generation products before the Company is able to
bring comparable products to market. The Company's ability to reduce costs per
megabit of its semiconductor memory products is largely dependent on its
ability to design and develop new generation products and shrink versions of
existing products and its ability to ramp such products at acceptable rates to
acceptable yields, of
S-10
<PAGE>
which there can be no assurance. In the event that the Company is unable to
decrease costs per megabit for semiconductor memory products at a rate equal
to the rate of decline in selling prices for such products, the Company's
business and results of operations will be adversely impacted.
COMPETITION
The Company's semiconductor memory operations experience intense competition
from a number of substantially larger foreign and domestic companies,
including Fujitsu, Ltd., Hitachi, Ltd., Hyundai Electronics, Co., Ltd.,
Mitsubishi Electronic Corp., Motorola, Inc., NEC Corp., Samsung Semiconductor,
Inc., LG Semicon, Texas Instruments Incorporated and Toshiba Corporation. The
Company may be at a disadvantage in competing against larger manufacturers
with significantly greater capital resources or manufacturing capacities,
larger engineer and employee bases, larger portfolios of intellectual
property, and more diverse product lines that provide cash flows counter
cyclical to fluctuations in semiconductor memory operations. The Company's
larger competitors also have long-term advantages over MTI in research and new
product development and in their ability to withstand periodic downturns in
the semiconductor memory market. The Company believes that its competition has
sufficient resources and manufacturing capacity to influence market pricing.
Many of the Company's competitors have recently added new wafer fabrication
facilities, significantly increasing worldwide capacity for the production of
semiconductor memory products, resulting in downward price pressures on
semiconductor memory products.
INTELLECTUAL PROPERTY MATTERS
The semiconductor and PC industries have experienced a substantial amount of
litigation regarding patent and other intellectual property rights. In the
future, litigation may be necessary to enforce patents issued to the Company,
to protect trade secrets or know-how owned by the Company, or to defend the
Company against claimed infringement of the rights of others. The Company has
from time to time received, and may in the future receive, communications
alleging that its products or its processes may infringe on product or process
technology rights held by others. The Company has entered into a number of
patent and intellectual property license agreements with third parties, some
of which require one-time or periodic royalty payments. It may be necessary or
advantageous in the future for the Company to obtain additional patent
licenses or to renew existing license agreements. The Company is unable to
predict whether these license agreements can be obtained or renewed on terms
acceptable to the Company. Failure to obtain or renew such licenses could
result in litigation. Further, adverse determinations that the Company's
manufacturing processes or products have infringed on the product or process
rights held by others could result in the Company's loss of proprietary
rights, subject the Company to significant liabilities to third parties,
require the Company to seek licenses from third parties or require material
changes in production processes or products, any of which could have a
material adverse effect on the Company's business, results of operations and
financial condition.
The Company intends to continue to pursue patent, trade secret and mask work
protection for its semiconductor process technologies and designs and patent
and trade secret protection for its PC technologies and designs. To that end,
the Company has obtained certain patents and patent licenses and intends to
continue to seek patents on its inventions and manufacturing processes, as
appropriate. The process of seeking patent protection can be long and
expensive, and there is no assurance that patents will be issued from
currently pending or future applications or that, if patents are issued, they
will be of sufficient scope or strength to provide meaningful protection or
any commercial advantage to the Company. In particular, there can be no
assurance that any patents held by the Company will not be challenged,
invalidated or circumvented. The Company also relies on trade secret
protection for its technology, in part through confidentiality agreements with
its employees, consultants and third parties. There can be no assurance that
these agreements will not be breached, that the Company will have adequate
remedies for any breach or that the Company's trade secrets will not otherwise
become
S-11
<PAGE>
known to or independently developed by others. In addition, the laws of
certain territories in which the Company's products are or may be developed,
manufactured or sold may not protect the Company's products and intellectual
property rights to the same extent as do the laws of the United States.
DEPENDENCE ON LIMITED SOURCES OF SUPPLY
Raw materials utilized by the Company's semiconductor manufacturing
operation generally must meet exacting product specifications. The Company
generally uses multiple sources of supply, but there are only a limited number
of suppliers capable of delivering certain raw materials that meet the
Company's specifications. Additionally, the availability of raw materials may
decline due to the overall increase in world-wide semiconductor manufacturing.
Although shortages have occurred from time to time and lead times in the
industry have been extended on occasion, to date the Company has not
experienced any significant interruption in operations as a result of a
difficulty in obtaining raw materials for its semiconductor manufacturing
operations. Interruption of any one raw material source could have a material
adverse effect on the Company's business and results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon a limited number of key management and
technical personnel. In addition, the Company's future success will depend in
part upon its ability to attract and retain highly qualified personnel,
particularly as the Company adds different product types to its product line,
which require parallel design efforts and significantly increase the need for
highly skilled technical personnel. The Company competes for such personnel
with other companies, academic institutions, government entities and other
organizations. In recent periods, the Company has experienced increased
recruitment of its existing personnel by other employers. There can be no
assurance that the Company will be successful in hiring or retaining qualified
personnel, or that any of MTI's personnel will remain employed by MTI. Any
loss of key personnel or the inability to hire or retain qualified personnel
could have a material adverse effect on the Company's business and results of
operations.
ENVIRONMENTAL REGULATIONS
The Company is subject to a variety of federal, state and local governmental
regulations related to the storage, use, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in its manufacturing process.
Increasing public attention has been focused on the environmental impact of
semiconductor manufacturing operations. There can be no assurance that changes
in environmental regulations will not impose the need for additional capital
equipment or other requirements. Any failure by the Company to control the use
of, or adequately to restrict the discharge of, hazardous substances under
present or future regulations could subject MTI to substantial liability or
could cause its manufacturing operations to be suspended. Such liability or
suspension of manufacturing operations could have a material adverse effect on
the Company's business and results of operations.
SUBORDINATION
The Notes will be unsecured and subordinated in right of payment in full to
all existing and future Senior Debt of the Company, including the Company's
existing revolving credit facility. As a result of such subordination, in the
event of the Company's liquidation or insolvency, payment default with respect
to Senior Debt, a covenant default with respect to Designated Senior Debt (as
defined), or upon acceleration of the Notes due to an event of default, the
assets of the Company will be available to pay obligations on the Notes only
after all Senior Debt has been paid in full, and there may not be sufficient
assets remaining to pay amounts due on any or all of the Notes then
outstanding.
The Notes are obligations exclusively of the Company. Since the operations
of the Company are partially conducted through subsidiaries, the cash flow and
the consequent ability to service debt, including the Notes, of the Company,
are partially dependent upon the earnings of its subsidiaries and
S-12
<PAGE>
the distribution of those earnings to, or upon loans or other payments of
funds by those subsidiaries to, the Company. The payment of dividends and the
making of loans and advances to the Company by its subsidiaries are subject to
statutory or contractual restrictions, are dependent upon the earnings of
those subsidiaries and are subject to various business considerations. Any
right of the Company to receive assets of any of its subsidiaries upon their
liquidation or reorganization (and the consequent right of the holders of the
Notes to participate in those assets) will be effectively subordinated to the
claims of that subsidiary's creditors (including trade creditors), except to
the extent that the Company is itself recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be subordinate
to any security interests in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company.
As of May 29, 1997, the Company had approximately $441 million of
indebtedness and other liabilities that would have constituted Senior Debt. As
of May 29, 1997, the Company's subsidiaries had approximately $275 million of
indebtedness and other liabilities (including trade payables and excluding
intercompany liabilities) as to which the Notes would have been effectively
subordinated. The Indenture does not prohibit or limit the incurrence of
Senior Debt or the incurrence of other indebtedness and other liabilities by
the Company or its subsidiaries. The incurrence of additional indebtedness and
other liabilities by the Company or its subsidiaries could adversely affect
the Company's ability to pay its obligations on the Notes. The Company expects
from time to time to incur additional indebtedness and other liabilities,
including Senior Debt, and also expects that its subsidiaries will from time
to time incur additional indebtedness and other liabilities. See "Description
of Notes--Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
The Company has the right under the Indenture to defer the payment of
interest on the Notes at any time or from time to time for a period not
exceeding 4 consecutive semi-annual interest payment periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
stated maturity of the Notes. Upon the termination of any Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to the requirements
described herein.
Should an Extension Period occur, a holder of Notes will accrue income (in
the form of original issue discount ("OID")) for United States federal income
tax purposes in advance of the payment of interest. See "Certain Federal
Income Tax Consequences--Interest Income and Original Issue Discount."
A holder will not receive deferred interest with respect to an Extension
Period if the holder disposes of the Note prior to the record date for the
payment of interest. Moreover, if a holder of Notes converts its Notes into
Common Stock during an Extension Period (other than conversion of any Note
called for redemption), the holder will not receive any cash related to the
deferred interest. Additionally, during the pendency of any Extension Period,
the Company will not be permitted, subject to certain exceptions set forth
herein, to declare or pay any cash distribution with respect to its capital
stock or debt securities (including guarantees of indebtedness for money
borrowed) that rank pari passu with or junior to the Notes. See "Description
of Notes--Option to Extend Interest Payment Period."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Notes.
However, should the Company elect to exercise such right in the future, the
market price of the Notes is likely to be affected. A holder that disposes of
its Notes during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Notes. In
addition, as a result of the existence of the Company's right to defer
interest payments, the market price of the Notes may be more volatile than the
market prices of other securities that are not subject to such deferrals.
S-13
<PAGE>
LIMITATIONS ON REPURCHASE OF NOTES
The Company's ability to repurchase Notes upon the occurrence of a Change in
Control is subject to limitations. There can be no assurance that the Company
would have the financial resources, or would be able to arrange financing, to
pay the repurchase price for all the Notes that might be delivered by Holders
of Notes seeking to exercise the repurchase right. Moreover, although under
the Indenture the Company may elect, subject to satisfaction of certain
conditions, to pay the repurchase price for the Notes using shares of Common
Stock, the terms of the Company's existing revolving credit agreement prohibit
the repurchase of Notes by the Company or its subsidiaries in cash or any
other form of payment including shares of Common Stock, and the Company's
ability to repurchase Notes may be limited or prohibited by the terms of any
future borrowing arrangements, including Senior Debt existing at the time of a
Change in Control. The Company's ability to repurchase Notes may also be
limited by the terms of its subsidiaries' then-existing borrowing arrangements
due to dividend restrictions. Any failure by the Company to repurchase the
Notes when required following a Change in Control would result in an Event of
Default under the Indenture whether or not such repurchase is permitted by the
subordination provisions of the Indenture. Any such default may, in turn,
cause a default under Senior Debt of the Company. Moreover, the occurrence of
a Change in Control would result in an Event of Default under the Company's
existing revolving credit agreement and may cause an event of default under
the terms of other Senior Debt of the Company. As a result, in each case, any
repurchase of the Notes would, absent a waiver, be prohibited under the
subordination provisions of the Indenture until the Senior Debt is paid in
full. In addition, the Company's repurchase of the Notes as a result of the
occurrence of a Change in Control may be prohibited or limited by, or create
an event of default under, the terms of agreements related to borrowings which
the Company may enter into from time to time, including agreements relating to
Senior Debt. See "Description of Notes--Repurchase at Option of Holders Upon a
Change in Control."
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The Notes will be a new issue of securities with no established trading
market. The Underwriters have advised the Company that they currently intend
to make a market in the Notes. The Underwriters are not obligated, however, to
make a market in the Notes, and any such market making may be discontinued at
any time at the sole discretion of the Underwriters without notice. There can
be no assurance that an active market for the Notes will develop and continue
upon completion of the offering or that the market price of the Notes will not
decline. Various factors such as changes in prevailing interest rates or
changes in perceptions of the Company's creditworthiness could cause the
market price of the Notes to fluctuate significantly. The trading price of the
Notes will also be significantly affected by the market price of the Common
Stock, which could be subject to wide fluctuations in response to a variety of
factors, including those described in the "Risk Factors." The Notes will not
be listed on any securities exchange or quoted on the Nasdaq National Market
and will only be traded on the over-the-counter market.
S-14
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
offered hereby, after deducting underwriting discount and other expenses of
the offering, are estimated to be $423.6 million ($487.0 million if the
Underwriters' over-allotment option is exercised in full). The Company intends
to use the net proceeds from this offering for general corporate purposes,
including working capital, capital expenditures and research and development.
An additional purpose of the offering is to strengthen the Company's financial
position and give the Company flexibility to take advantage of business
opportunities as they arise. Accordingly, a portion of the proceeds of the
offering may be used for investment in or acquisition of complementary
businesses, products and technologies, although there are no current
agreements, negotiations or understandings with respect to any such
transactions material to the Company. Pending such uses, the Company will
invest the proceeds of the offering in short-term, income producing
investments.
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
as of May 29, 1997 and as adjusted to give effect to the issuance and sale by
the Company of $435 million in aggregate principal amount of Notes offered
hereby:
<TABLE>
<CAPTION>
MAY 29, 1997
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN MILLIONS)
<S> <C> <C>
Current portion of long-term debt and capital lease obli-
gations................................................. $ 113.0 $ 113.0
-------- --------
Long-term debt and capital lease obligations, excluding
current portion......................................... 281.2 281.2
7% convertible subordinated notes........................ -- 435.0
Shareholders' equity:
Common Stock, par value $.10 per share, 1,000,000,000
shares authorized; 210,533,505 shares issued and
outstanding(1)........................................ 21.1 21.1
Additional paid-in capital............................. 461.6 461.6
Retained earnings...................................... 2,306.6 2,306.6
Cumulative translation adjustment...................... (.2) (.2)
Total shareholders' equity........................... 2,789.1 2,789.1
-------- --------
Total capitalization............................... $3,183.3 $3,618.3
======== ========
</TABLE>
- --------
(1) Outstanding Common Stock does not include (i) 6,449,832 shares of Common
Stock issuable upon conversion of the Notes offered hereby; (ii)
44,801,292 shares of Common Stock reserved for issuance under the
Company's stock option plans, under which options to purchase 16,457,302
shares were outstanding as of May 29, 1997, at a weighted average exercise
price of $22.242 per share; and (iii) 718,578 shares reserved for issuance
under the Company's Employee Stock Purchase Plan.
S-15
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed and traded on the New York Stock
Exchange under the symbol "MU". The following table shows, for the periods
indicated, the high and low sales prices for the Common Stock as reported on
the NYSE Composite Transactions Tape. All stock prices have been restated to
reflect a two for one stock split effected in the form of a 100% stock
dividend to shareholders of record as of May 4, 1995.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
FISCAL YEAR ENDED AUGUST 31, 1995
First quarter................................................ $21.625 $15.250
Second quarter............................................... 33.125 19.938
Third quarter................................................ 50.750 32.563
Fourth quarter............................................... 78.000 44.750
FISCAL YEAR ENDED AUGUST 29, 1996
First quarter................................................ $94.750 $46.625
Second quarter............................................... 55.750 29.750
Third quarter................................................ 39.750 27.500
Fourth quarter............................................... 33.375 16.625
FISCAL YEAR ENDING AUGUST 28, 1997
First quarter................................................ $34.750 $20.375
Second quarter............................................... 39.125 29.000
Third quarter................................................ 45.250 33.250
Fourth quarter (through June 18, 1997)....................... 44.375 38.375
</TABLE>
On June 18, 1997, the last sale price of the Common Stock as reported on the
NYSE Composite Transactions Tape was $40 7/8 per share. As of May 29, 1997,
there were approximately 8,176 holders of record of the Company's Common
Stock.
The Company declared and paid cash dividends totaling $0.15 during fiscal
year 1995 and $0.15 in fiscal year 1996. Future dividends, if any, will vary
depending on the Company's profitability and anticipated capital requirements.
Payment of cash dividends by the Company to its shareholders is currently
limited by the terms of the Company's revolving credit facility.
S-16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated statement of operations data below for the fiscal
years ended September 1, 1994, August 31, 1995 and August 29, 1996 and the
selected consolidated balance sheet data as of August 31, 1995 and August 29,
1996 are derived from the consolidated financial statements of the Company
audited by Coopers & Lybrand L.L.P., independent accountants, that are
incorporated by reference herein, and are qualified by reference to such
financial statements. The selected consolidated statement of operations data
below for the nine month periods ended May 30, 1996 and May 29, 1997 and the
selected consolidated balance sheet data as of May 30, 1996 and May 29, 1997
are derived from unaudited consolidated financial statements of the Company
that are incorporated by reference herein. The selected consolidated statement
of operations data for the fiscal years ended September 3, 1992 and September
2, 1993, and the selected consolidated balance sheet data as of September 3,
1992, September 2, 1993 and September 1, 1994, are derived from audited
consolidated financial statements of the Company that are not included herein.
Operating results for the nine months ended May 29, 1997 are not necessarily
indicative of results that may be expected for future periods. The data should
be read in conjunction with the consolidated financial statements, related
notes and other financial information included herein or incorporated herein
by reference.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
---------------------------------------------- ------------------
SEPT. 3, SEPT. 2, SEPT. 1, AUG. 31, AUG. 29, MAY 30, MAY 29,
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS EXCEPT RATIO AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA:
Net sales............... $506.3 $828.3 $1,628.6 $2,952.7 $3,653.8 $2,953.3 $2,569.3
Cost of goods sold...... 390.3 517.2 789.4 1,328.7 2,198.4 1,648.2 1,880.3
------ ------ -------- -------- -------- -------- --------
Gross margin............ 116.0 311.1 839.2 1,624.0 1,455.4 1,305.1 689.0
Selling, general and
administrative......... 54.9 86.1 130.1 187.4 293.4 212.2 264.2
Research and develop-
ment................... 47.6 57.3 83.4 128.8 191.9 145.8 146.6
Restructuring charge(1). -- -- -- -- 29.6 29.9 --
------ ------ -------- -------- -------- -------- --------
Operating income........ 13.5 167.7 625.7 1,307.8 940.5 917.2 278.2
Gain (loss) on sale of
investments and subsid-
iary stock, net........ 0.4 (0.6) (0.6) 0.2 4.0 2.0 214.3
Gain from merger trans-
action................. -- -- -- 29.0 -- -- --
Interest income (ex-
pense), net............ (4.1) (3.3) 5.7 25.0 14.3 14.9 (2.4)
------ ------ -------- -------- -------- -------- --------
Income before income
taxes and minority in-
terests................ 9.8 163.8 630.8 1,362.0 958.8 934.1 490.1
Income tax provision.... (3.0) (58.5) (225.3) (506.4) (357.0) (355.5) (214.5)
Minority interests...... (0.2) (1.2) (5.0) (11.5) (8.3) (3.7) (15.4)
------ ------ -------- -------- -------- -------- --------
Net income.............. $ 6.6 $104.1 $ 400.5 $ 844.1 $ 593.5 $ 574.9 $ 260.2
====== ====== ======== ======== ======== ======== ========
Earnings per share:
Primary............... $ 0.03 $ 0.52 $ 1.92 $ 3.95 $ 2.76 $ 2.66 $ 1.21
Fully diluted......... 0.03 0.51 1.90 3.90 2.76 2.66 1.20
Number of shares used in
per share calculation:
Primary............... 194.6 200.3 208.9 213.9 215.0 215.9 215.6
Fully diluted......... 194.6 202.6 210.4 216.2 215.0 215.9 216.7
Cash dividends declared
per share.............. 0.01 0.01 0.06 0.15 0.15 0.15 --
Ratio of earnings to
fixed charges(2)....... 2.0x 20.1x 69.9x 104.1x 53.3x -- 19.5x
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
SEPT. 3, SEPT. 2, SEPT. 1, AUG. 31, AUG. 29, MAY 29,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Working capital......... $120.9 $229.3 $ 519.0 $ 669.3 $ 299.5 $ 690.9
Total assets............ 724.5 965.7 1,529.7 2,774.9 3,751.5 4,154.5
Total debt(3)........... 88.8 79.8 154.5 155.9 479.8 394.2
Total shareholders' eq-
uity................... 511.2 639.5 1,049.3 1,896.2 2,502.0 2,789.1
</TABLE>
- --------
(1) In February 1996, the Company adopted a plan to restructure its PC
manufacturing operations by discontinuing sales of its ZEOS brand PC
systems and closing the related manufacturing operations in Minneapolis,
Minnesota. As a result, the Company recorded a restructuring charge of
$29.9 million in the second quarter of fiscal 1996. The Company reduced
the restructuring charge by $0.3 million in the fourth quarter of fiscal
1996 after concluding that its restructuring activities had been completed
or were adequately provided for in the remaining restructuring accrual.
(2) For the purpose of calculating such ratios, "earnings" consist of income
from continuing operations before income taxes plus fixed charges and
"fixed charges" consist of interest expense (net of capitalized portion),
capitalized interest, amortization of debt discount and the portion of
rental expense deemed representative of interest expense.
(3) Total debt includes all interest-bearing debt and capitalized leases of
the Company and its subsidiaries.
S-18
<PAGE>
DESCRIPTION OF NOTES
The Notes will be issued under the Subordinated Indenture, as supplemented
by the Supplemental Indenture (the "Supplemental Indenture" and the
Subordinated Indenture, as supplemented by the Supplemental Indenture, is
hereinafter referred to as the "Indenture"). The following discussion includes
a summary description of material terms of the Supplemental Indenture and the
Notes (which represent a series of, and are referred to in the accompanying
Prospectus as, "Debt Securities"). The following description of the terms of
the Notes offered hereby supplements, and should be read in conjunction with,
the statements under "Description of Debt Securities" in the accompanying
Prospectus. The following summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the Subordinated Indenture and the Supplemental Indenture.
Capitalized terms not defined herein have the meanings given to them in the
Subordinated Indenture and the Supplemental Indenture.
GENERAL
The Notes will be unsecured subordinated obligations of the Company, will be
limited to $435,000,000 aggregate principal amount (plus up to an additional
$65,000,000 aggregate principal amount to cover over-allotments, if any) and
will mature on July 1, 2004 and be payable at a price of 100% of the principal
amount thereof. The Notes will bear interest at the rate per annum shown on
the front cover of this Prospectus Supplement from June 24, 1997, payable
semiannually on January 1 and July 1 of each year, commencing on January 1,
1998, subject to certain exceptions set forth under "--Option to Extend
Interest Payment Period."
The Notes will be unsecured obligations of the Company and will be
subordinated in right of payment to all present and future Senior Debt (as
defined below) of the Company. Neither the Notes nor the Indenture limit or
restrict the amount or terms of other indebtedness which may be incurred or
issued by the Company or its subsidiaries or contain any financial or similar
covenants of, or restrictions on, the Company or its subsidiaries. The Notes
will be effectively subordinated in right of payment to all indebtedness and
liabilities of the Company's subsidiaries.
The Notes will be convertible into Common Stock initially at the Conversion
Rate (as defined) stated on the cover page hereof, subject to adjustment upon
the occurrence of certain events described under "--Conversion Rights," at any
time on or after issuance of the Notes and prior to the close of business on
the maturity date, unless previously redeemed or repurchased.
BOOK-ENTRY SYSTEM
The Notes will initially be issued in the form of a Global Security held in
book-entry form. Accordingly, The Depository Trust Company ("DTC") or its
nominee will be the sole registered Holder of the Notes for all purposes under
the Indenture. Owners of beneficial interests in the Notes represented by the
Global Security will hold such interests pursuant to the procedures and
practices of DTC and must exercise any rights in respect of their interests
(including any right to convert or require repurchase of their interests) in
accordance with those procedures and practices. Such beneficial owners will
not be Holders, and will not be entitled to any rights under the Global
Security or the Indenture, with respect to the Global Security, and the
Company and the Trustee, and any of their respective agents, may treat DTC as
the sole Holder and owner of the Global Security.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Event of Default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture to defer the payment
of interest on the Notes at any time or from time to time for a period not
exceeding 4 consecutive semi-annual interest payment periods with respect to
each Extension Period, provided that no Extension Period may extend beyond the
stated
S-19
<PAGE>
maturity of the Notes. At the end of such Extension Period, the Company must
pay all interest then accrued and unpaid (together with interest thereon at
the stated annual rate, compounded semi-annually, to the extent permitted by
applicable law) on all then outstanding Notes. During an Extension Period,
interest will continue to accrue and holders of Notes will be required to
accrue interest income for United States federal income tax purposes. See
"Certain Federal Income Tax Consequences--Interest Income and Original Issue
Discount."
The Company has no current intention to exercise its right to defer payments
of interest by extending the interest payment period on the Notes.
During any such Extension Period, the Company may not, and may not cause any
subsidiary to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Company's capital stock or (ii) make any payment of principal, interest
or premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of the Company that
rank pari passu with or junior to the Notes (other than (a) any dividend,
redemption, liquidation, interest, principal or guarantee payment by the
Company where the payment is made by way of securities (including capital
stock) that rank pari passu with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made,
(b) purchases of the Company's Common Stock related to the issuance of the
Company's Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (c) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class
of the Company's capital stock for another series or class of the Company's
capital stock, and (d) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged). Prior to the
termination of any such Extension Period, the Company may further extend the
interest payment period, provided that no Extension Period may exceed 4
consecutive semi-annual interest payment periods or extend beyond the stated
maturity of the Notes. Upon the termination of any such Extension Period and
the payment of all amounts then due on any Interest Payment Date, the Company
may elect to begin a new Extension Period subject to the above requirements.
No interest shall be due and payable during an Extension Period, except at the
end thereof. The Company shall give the Trustee notice of its election to
begin any Extension Period at least one Business Day prior to the earlier of
(i) the record date for the interest payment date on the Notes would have been
payable except for the election to begin such Extension Period and (ii) the
date the Trustee is required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization or to holders of such Notes.
CONVERSION RIGHTS
The Holder of any Note will have the right, at the Holder's option, to
convert any portion of the principal amount of any Note that is an integral
multiple of $1,000 into shares of Common Stock at any time on or prior to the
close of business on the maturity date, unless previously redeemed or
repurchased, at a conversion rate of 14.8272 shares of Common Stock per $1,000
principal amount of Notes (the "Conversion Rate") (equivalent to a conversion
price of approximately $67.44 per share of Common Stock), subject to
adjustment as described below. The right to convert a Note called for
redemption or submitted for repurchase will terminate at the close of business
on the last Business Day prior to the Redemption Date or Repurchase Date for
such Note, as the case may be.
Beneficial owners of interests in a Global Security may exercise their right
of conversion by delivering to DTC the appropriate instruction form for
conversion pursuant to DTC's conversion program. Such notice of conversion can
be obtained at the office of any conversion agent. The conversion date will be
the date on which the Note and the duly signed and completed notice of
conversion are so delivered. As promptly as practicable on or after the
conversion date, the Company will issue and deliver to the Trustee a
certificate or certificates for the number of full shares of Common
S-20
<PAGE>
Stock issuable upon conversion, together with payment in lieu of any fraction
of a share; such certificate will be sent by the Trustee to the conversion
agent for delivery to the Holder. Such shares of Common Stock issuable upon
conversion of the Notes, in accordance with the provisions of the Indenture,
will be fully paid and nonassessable and will rank pari passu with the other
shares of Common Stock of the Company outstanding from time to time. Any Note
surrendered for conversion (other than during an Extension Period) during the
period from the close of business on any Regular Record Date to the opening of
business on the next succeeding Interest Payment Date (except Notes (or
portions thereof) called for redemption on a Redemption Date during the period
beginning at the close of business on a Regular Record Date and ending on the
opening of business on the first Business Day after the next succeeding
Interest Payment Date, or if such Interest Payment Date is not a Business Day,
the second such Business Day) must be accompanied by payment of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of Notes being surrendered for conversion. If, during any Extension
Period, a Note called for redemption is surrendered for conversion, any
accrued and unpaid interest on such Note as of the Interest Payment Date
occurring on or immediately preceding the conversion date for such Note shall
be paid in cash to the Holder surrendering such Note for conversion. No other
payment or adjustment for interest, or for any dividends in respect of Common
Stock, will be made upon conversion. Holders of Common Stock issued upon
conversion will not be entitled to receive any dividends payable to holders of
Common Stock as of any record time or date before the close of business on the
conversion date. No fractional shares will be issued upon conversion but, in
lieu thereof, an appropriate amount will be paid in cash by the Company based
on the market bid price of Common Stock at the close of business on the day of
conversion.
A Holder delivering a Note for conversion will not be required to pay any
taxes or duties in respect of the issue or delivery of Common Stock on
conversion but will be required to pay any tax or duty which may be payable in
respect of any transfer involved in the issue or delivery of the Common Stock
in a name other than that of the Holder of the Note. Certificates representing
shares of Common Stock will not be issued or delivered unless all taxes and
duties, if any, payable by the Holder have been paid.
The Conversion Rate is subject to adjustment in certain events, including,
without duplication: (a) dividends (and other distributions) payable in Common
Stock on shares of Common Stock, (b) the issuance to all holders of Common
Stock of rights, options or warrants entitling them to subscribe for or
purchase Common Stock at less than the then Current Market Price of such
Common Stock (determined as provided in the Indenture) as of the record date
for shareholders entitled to receive such rights, options or warrants
(provided that the Conversion Rate will be readjusted to the extent any such
rights, options or warrants are not exercised prior to the expiration
thereof), (c) subdivisions, combinations and reclassifications of Common
Stock, (d) distributions to all holders of Common Stock of evidences of
indebtedness of the Company, shares of capital stock, cash or assets
(including securities (but excluding those dividends, rights, options,
warrants and distributions referred to above) dividends and distributions paid
exclusively in cash), (e) distributions consisting exclusively of cash
(excluding any cash portion of distributions referred to in (d) above) to all
holders of Common Stock in an aggregate amount that, combined together with
(i) other such all-cash distributions made within the preceding 12 months in
respect of which no adjustment has been made and (ii) any cash and the fair
market value of other consideration payable in respect of any tender offer by
the Company or any of its subsidiaries for Common Stock concluded within the
preceding 12 months in respect of which no adjustment has been made, exceeds
12.5% of the Company's market capitalization (for this purpose being the
product of the Current Market Price per share of the Common Stock on the
record date for such distribution times the number of shares of Common Stock
outstanding) on such date, and (f) the successful completion of a tender offer
made by the Company or any of its subsidiaries for Common Stock which involves
an aggregate consideration that, together with (i) any cash and other
consideration payable in a tender offer by the Company or any of its
subsidiaries for Common Stock expiring within the 12 months preceding the
expiration of such tender offer in respect of which no adjustment has been
made and (ii) the aggregate amount of any such all-cash distributions referred
to in (e) above to all holders of Common Stock within the 12 months preceding
the expiration of such
S-21
<PAGE>
tender offer in respect of which no adjustments have been made, exceeds 12.5%
of the Company's market capitalization on the expiration of such tender offer.
The Company reserves the right to make such reductions in the Conversion Rate
in addition to those required in the foregoing provisions as it considers to
be advisable in order that any event treated for United States federal income
tax purposes as a dividend of stock or stock rights will not be taxable to the
recipients. No adjustment of the Conversion Rate will be required to be made
until the cumulative adjustments amount to 1.0% or more of the Conversion
Rate. The Company will compute any adjustments to the Conversion Rate pursuant
to this paragraph and will give notice by mail to Holders of the Notes of any
adjustments.
In case of any consolidation or merger of the Company with or into another
Person or any merger of another Person into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale, transfer or lease
of all or substantially all of the assets of the Company, each Note then
outstanding will, without the consent of the Holder of any Note, become
convertible only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale, transfer or lease
by a holder of the number of shares of Common Stock into which such Note was
convertible immediately prior thereto (assuming such holder of Common Stock
failed to exercise any rights of election and that such Note was then
convertible).
The Company from time to time may increase the Conversion Rate by any amount
for any period of at least 20 days, in which case the Company shall give at
least 15 days' notice of such increase, if the Board of Directors has made a
determination that such increase would be in the best interests of the
Company, which determination shall be conclusive. No such increase shall be
taken into account for purposes of determining whether the closing price of
the Common Stock exceeds the Conversion Price by 105% in connection with an
event which otherwise would be a Change in Control.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
United States federal income tax purposes (e.g., distributions of evidences of
indebtedness or assets of the Company, but generally not stock dividends on
common stock or rights to subscribe for common stock) and, pursuant to the
antidilution provisions of the Supplemental Indenture, the number of shares
into which Notes are convertible is increased, such increase may be deemed for
federal income tax purposes to be the payment of a taxable dividend to Holders
of Notes. See "Certain Federal Income Tax Considerations."
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the Notes
and any amounts payable upon the redemption or the repurchase of the Notes
will be subordinated in right of payment to the extent set forth in the
Indenture to the prior payment in full of the principal of, premium, if any,
interest and other amounts in respect of all Senior Debt of the Company. See
"Description of Debt Securities--Subordination of Subordinated Debt
Securities" in the accompanying Prospectus.
The Notes will be structurally subordinated to all indebtedness and other
liabilities (including trade payables) of the Company's subsidiaries, as any
right of the Company to receive any assets of its subsidiaries upon their
liquidation or reorganization (and the consequent right of the Holders of the
Notes to participate in those assets) will be effectively subordinated to the
claims of the subsidiary's creditors (including trade creditors), except to
the extent that the Company itself is recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be subordinate
to any security interest in the assets of such subsidiary and any indebtedness
of such subsidiary senior to that held by the Company.
As of May 29, 1997, the Company had approximately $441 million of
indebtedness and other liabilities that would have constituted Senior Debt. As
of May 29, 1997, the Company's subsidiaries had approximately $275 million of
indebtedness and other liabilities (including trade payables and excluding
intercompany liabilities) as to which the Notes would have been effectively
subordinated.
S-22
<PAGE>
The Indenture does not limit the Company's or its subsidiaries' ability to
incur Senior Debt or any other indebtedness or liabilities. The Company
expects from time to time to incur additional indebtedness and other
liabilities, including Senior Debt, and also expects that its subsidiaries
will from time to time incur additional indebtedness and other liabilities.
See "Risk Factors--Subordination."
OPTIONAL REDEMPTION
The Notes will not be subject to redemption prior to July 2, 1999 and will
be redeemable on and after such date at the option of the Company, in whole or
in part, upon not less than 20 nor more than 60 days' notice to each Holder,
at the prices set forth below; provided, however, that the Notes will not be
redeemable following July 2, 1999 and before July 3, 2001 unless the last
reported sale price for the Company's Common Stock is at least 130% of the
Conversion Price for at least 20 trading days within a period of 30
consecutive trading days ending within five trading days of the call for
redemption.
The redemption price (expressed as a percentage of principal amount) is as
follows for the 12-month periods beginning on July 1 of the following years
(beginning July 2, 1999, and ending on June 30, 2000, in the case of the first
such period):
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
1999........................................ 105.0%
2000........................................ 104.0
2001........................................ 103.0
2002........................................ 102.0
2003........................................ 101.0
</TABLE>
and thereafter is equal to 100% of the principal amount, in each case together
with accrued interest (including any unpaid interest that has accrued during
any Extension Period) to, but excluding, the date of redemption.
If fewer than all the Notes are to be redeemed, the Trustee will select the
Notes to be redeemed in principal amounts of $1,000 or multiples thereof by
lot or, in its discretion, on a pro rata basis. If any Note is to be redeemed
in part only, a new Note or Notes in principal amount equal to the unredeemed
principal portion thereof will be issued. If a portion of a Holder's Notes is
selected for partial redemption and such Holder converts a portion of such
Note, such converted portion shall be deemed to be taken from the portion
selected for redemption.
No sinking fund is provided for the Notes.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a Change in Control (as defined) occurs, each Holder of Notes shall have
the right, at the Holder's option, to require the Company to repurchase all of
such Holder's Notes not theretofore called for redemption, or any portion of
the principal amount thereof that is $1,000 or an integral multiple of $1,000
in excess thereof, on the date (the "Repurchase Date") that is 45 days after
the date of the Company Notice (as defined), at a price equal to 100% of the
principal amount of the Notes to be repurchased, together with interest
accrued to, but excluding, the Repurchase Date (including any unpaid interest
that has accrued during any Extension Period) (the "Repurchase Price").
The Company may, at its option, in lieu of paying the Repurchase Price in
cash, pay the Repurchase Price in Common Stock valued at 95% of the average of
the closing bid prices of the Common Stock for the five trading days
immediately preceding the second trading day prior to the Repurchase Date;
provided that payment may not be made in Common Stock unless the Company
satisfies certain conditions with respect to such payment prior to the
Repurchase Date as provided in the Indenture.
S-23
<PAGE>
Within 30 days after the occurrence of a Change in Control, the Company is
obligated to give to all Holders of the Notes notice, as provided in the
Indenture (the "Company Notice"), of the occurrence of such Change in Control
and of the repurchase right arising as a result thereof, or, at the request of
the Company on or before the 15th day after the occurrence, the Trustee shall
give the Company Notice. The Company must also deliver a copy of the Company
Notice to the Trustee. To exercise the repurchase right, a Holder of Notes
must deliver on or before the 30th day after the date of the Company Notice
irrevocable written notice to the Trustee of the Holder's exercise of such
right, together with the Notes with respect to which the right is being
exercised.
A "Change in Control" shall be deemed to have occurred at such time after
the original issuance of the Notes as there shall occur:
(i) the acquisition by any Person (including any syndicate or group
deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of
capital stock of the Company entitling such Person to exercise 50% or more
of the total voting power of all shares of capital stock of the Company
entitled to vote generally in elections of directors, other than any such
acquisition by the Company, any subsidiary of the Company or any employee
benefit plan of the Company; or
(ii) any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company, or
any sale or transfer of all or substantially all of the assets (other than
to a wholly-owned subsidiary of the Company) of the Company to any other
Person (other than (a) any such transaction pursuant to which the holders
of 50% or more of the total voting power of all shares of capital stock of
the Company entitled to vote generally in elections of directors
immediately prior to such transaction have, directly or indirectly, at
least 50% or more of the total voting power of all shares of capital stock
of the continuing or surviving corporation entitled to vote generally in
elections of directors of the continuing or surviving corporation
immediately after such transaction and (b) a merger (x) which does not
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock of the Company or (y) which is effected
solely to change the jurisdiction of incorporation of the Company and
results in a reclassification, conversion or exchange of outstanding shares
of Common Stock into solely shares of common stock);
provided, however, that a Change in Control shall not be deemed to have
occurred if either (a) the closing price per share of the Common Stock for any
five trading days within the period of 10 consecutive trading days ending
immediately after the later of a Change in Control or the public announcement
of the Change in Control (in the case of a Change in Control under clause (i)
above) or the period of 10 consecutive trading days ending immediately before
the Change in Control (in the case of a Change in Control under clause (ii)
above) shall equal or exceed 105% of the Conversion Price of the Notes in
effect on each such trading day, or (b) all of the consideration (excluding
cash payments for fractional shares and cash payments made pursuant to
dissenters' appraisal rights) in a merger or consolidation constituting a
Change in Control described in clause (i) and/or clause (ii) above consists of
shares of common stock traded on a national securities exchange or quoted on
the Nasdaq National Market (or will be so traded or quoted immediately
following the Change in Control) and as a result of such transaction or
transactions the Notes become convertible solely into such common stock. The
"Conversion Price" is equal to $1,000 divided by the Conversion Rate.
"Beneficial Owner" shall be determined in accordance with Rule 13d-3
promulgated by the Commission under the Exchange Act, as in effect on the date
of execution of the Supplemental Indenture. "Person" includes any syndicate or
group which would be deemed to be a "person" under Section 13 (d)(3) of the
Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option
S-24
<PAGE>
becomes available to Holders of the Notes. The Company will comply with this
rule to the extent applicable at that time.
The Company may, to the extent permitted by applicable law, at any time
purchase Notes in the open market or by tender at any price or by private
agreement. Any Note so purchased by the Company may, to the extent permitted
by applicable law, be reissued or resold or may, at the Company's option, be
surrendered to the Trustee for cancellation. Any Notes surrendered as
aforesaid may not be reissued or resold and will be canceled promptly.
The foregoing provisions would not necessarily afford Holders of the Notes
protection in the event of highly leveraged or other transactions involving
the Company that may adversely affect Holders.
The Company's ability to repurchase Notes upon the occurrence of a Change in
Control is subject to limitations. There can be no assurance that the Company
would have the financial resources, or would be able to arrange financing, to
pay the Repurchase Price for all the Notes that might be delivered by Holders
of Notes seeking to exercise the repurchase right. Moreover, although under
the Indenture the Company may elect, subject to satisfaction of certain
conditions, to pay the Repurchase Price for the Notes using shares of Common
Stock, the terms of the Company's existing revolving credit agreement prohibit
the repurchase of Notes by the Company or its subsidiaries in cash or any
other form of payment including shares of Common Stock, and the Company's
ability to repurchase Notes may be limited or prohibited by the terms of any
future borrowing arrangements, including Senior Debt existing at the time of a
Change in Control. The Company's ability to repurchase Notes may also be
limited by the terms of its subsidiaries' then-existing borrowing arrangements
due to dividend restrictions. Any failure by the Company to repurchase the
Notes when required following a Change in Control would result in an Event of
Default under the Indenture whether or not such repurchase is permitted by the
subordination provisions of the Indenture. Any such default may, in turn,
cause a default under Senior Debt of the Company. Moreover, the occurrence of
a Change in Control would result in an event of default under the Company's
existing revolving credit agreement and may cause an event of default under
the terms of other Senior Debt of the Company. As a result, in each case, any
repurchase of the Notes would, absent a waiver, be prohibited under the
subordination provisions of the Indenture until the Senior Debt is paid in
full. In addition, the Company's repurchase of the Notes as a result of the
occurrence of a Change in Control may be prohibited or limited by, or create
an event of default under, the terms of agreements related to borrowings which
the Company may enter into from time to time, including agreements relating to
Senior Debt. See "--Subordination" and "Risk Factors--Subordination."
DEFEASANCE AND COVENANT DEFEASANCE
The provisions described under "Description of Debt Securities--Defeasance
and Covenant Defeasance" in the accompanying Prospectus shall apply to the
Notes.
EVENTS OF DEFAULT
In addition to the Events of Default described under "Description of Debt
Securities--Events of Default" in the accompanying Prospectus, the following
will constitute an Event of Default under the Indenture with respect to the
Notes: any indebtedness under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company in a principal amount then
outstanding in excess of $50,000,000 is not paid at final maturity thereof
(either at its stated maturity or upon acceleration thereof), and such
indebtedness is not discharged, or such acceleration is not rescinded or
annulled, within a period of 30 days after notice as provided in the
Indenture.
S-25
<PAGE>
TRANSFER AND EXCHANGE
The Company has initially appointed the Trustee as security registrar,
transfer agent and conversion agent, acting through its Corporate Trust
Office. The Company reserves the right to vary or terminate the appointment of
the security registrar or of any transfer agent or conversion agent or to
appoint additional or other transfer agents or conversion agents or to approve
any change in the office through which any security registrar or any transfer
agent or conversion agent acts.
PURCHASE AND CANCELLATION
The Company or any subsidiary may at any time and from time to time purchase
Notes at any price in the open market or otherwise.
All Notes surrendered for payment, redemption, repurchase, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee. All Notes so delivered to the
Trustee shall be canceled promptly by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
the Indenture.
REPLACEMENT OF NOTES
Notes that become mutilated, destroyed, stolen or lost will be replaced by
the Company at the expense of the Holder upon delivery to the Trustee of the
mutilated Notes or evidence of the loss, theft or destruction thereof
satisfactory to the Company and the Trustee. In the case of a lost, stolen or
destroyed Note, indemnity satisfactory to the Trustee and the Company may be
required at the expense of the Holder of such Note before a replacement Note
will be issued.
GOVERNING LAW
The Subordinated Indenture, the Supplemental Indenture and the Notes will be
governed by and construed in accordance with the laws of the State of New
York.
THE TRUSTEE
In case an Event of Default shall occur (and shall not be cured), the
Trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, 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
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity.
S-26
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations relating to the purchase, ownership and disposition of the
Notes and of Common Stock into which Notes may be converted, but does not
purport to be a complete analysis of all the potential tax considerations
relating thereto. This summary is based on laws, regulations, rulings and
decisions now in effect, all of which are subject to change. This summary
deals only with holders that will hold Notes and Common Stock into which Notes
may be converted as "capital assets" (within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code")) and does not
address tax considerations applicable to investors that may be subject to
special tax rules, such as banks, tax-exempt organizations, insurance
companies, dealers in securities or currencies, or persons that will hold
Notes as a position in a hedging transaction, "straddle" or "conversion
transaction" for tax purposes. This summary discusses the tax considerations
applicable to the initial purchasers of the Notes who purchase the Notes at
their "issue price" as defined in Section 1273 of the Code and does not
discuss the tax considerations applicable to subsequent purchasers of the
Notes. The Company has not sought any ruling from the Internal Revenue Service
(the "IRS") with respect to the statements made and the conclusions reached in
the following summary, and there can be no assurance that the IRS will agree
with such statements and conclusions. In addition, the IRS is not precluded
from successfully adoping a contrary position. This summary does not consider
the effect of any applicable foreign, state, local or other tax laws.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME
AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
PAYMENT OF INTEREST
Interest on a Note generally will be includable in the income of a holder as
ordinary income at the time such interest is received or accrued, in
accordance with such holder's method of accounting for United States federal
income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under applicable Treasury regulations, a debt instrument will be considered
to be issued with original issued discount ("OID") if there is more than a
remote contingency that periodic stated interest payments due on the
instrument will not be timely paid. The Company intends to treat the Notes as
not being issued with OID. Accordingly, based upon this position and except as
set forth below, stated interest on the Notes generally will be taxable to a
holder as ordinary income at the time it is paid or accrued in accordance with
such holder's regular method of tax accounting.
If the Company exercises its right to defer payments of interest on the
Notes, the Notes will become OID instruments at that time and, consequently, a
holder will be required to include such OID in income on an economic accrual
basis before the receipt of cash attributable to the interest, regardless of
such holder's regular method of tax accounting, and actual distributions of
stated interest will not be separately reported as taxable income. Thereafter,
the Notes will be taxed as OID instruments for as long as they remain
outstanding. The amount of OID that will accrue in any month will
approximately equal the amount of the interest that accrues on the Notes in
that month at the stated interest rate. Any amount of OID included in a
holder's gross income (whether or not during an Extension Period) with respect
to a Note will increase such holder's tax basis in such Note, and the amount
of actual distributions received by a holder in respect of such accrued OID
will reduce the tax basis of such Note.
S-27
<PAGE>
The Company intends to treat the Notes as not being (and this discussion
assumes that the Notes are not) "contingent debt instruments" under applicable
Treasury regulations. The Company's treatment of the Notes is binding on the
holders, unless the holder explicitly discloses a contrary position on its
return.
The Treasury regulations described above have not yet been addressed in any
rulings or other interpretations by the IRS, and it is possible that the IRS
could take a contrary position. If the IRS were to assert successfully a
contrary position, adverse tax consequences to the holders could result.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the sale, exchange or redemption of a Note, a holder generally will
recognize capital gain or loss equal to the difference between (i) the amount
of cash proceeds and the fair market value of any property received on the
sale, exchange or redemption (except to the extent such amount is attributable
to accrued interest income not previously included in income which is taxable
as ordinary income) and (ii) such holder's adjusted tax basis in the Note. A
holder's adjusted tax basis in a Note generally will equal the cost of the
Note to such holder. Such capital gain or loss will be long-term capital gain
or loss if the holder's holding period in the Note is more than one year at
the time of sale, exchange or redemption.
CONVERSION OF THE NOTES
A holder generally will not recognize any income, gain or loss upon
conversion of a Note into Common Stock except with respect to cash received in
lieu of a fractional Share of Common Stock. A holder's tax basis in the Common
Stock received on conversion of a Note will be the same as such holder's
adjusted tax basis in the Note at the time of conversion (reduced by any basis
allocable to a fractional share interest), and the holding period for the
Common Stock received on conversion will generally include the holding period
of the Note converted.
Cash received in lieu of a fractional share of Common Stock upon conversion
will be treated as a payment in exchange for the fractional share of Common
Stock. Accordingly, the receipt of cash in lieu of a fractional share of
Common Stock generally will result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the holder's
adjusted tax basis in the fractional share).
DIVIDENDS
Dividends paid on the Common Stock generally will be includable in the
income of a Holder as ordinary income to the extent of the Company's current
or accumulated earnings and profits.
If at any time (i) the Company makes a distribution of cash or property to
its stockholders or purchases Common Stock and such distribution or purchase
would be taxable to such stockholders as a dividend for United States federal
income tax purposes (e.g., distributions of evidence of indebtedness or assets
of the Company, but generally not stock dividends or rights to subscribe for
Common Stock) and, pursuant to the antidilution provisions of the Indenture,
the conversion rate of the Notes is increased, or (ii) the conversion rate of
the Notes is increased at the discretion of the Company, such increase in
conversion rate may be deemed to be the payment of a taxable dividend to
holders of Notes (pursuant to Section 305 of the Code). Holders of Notes could
therefore have taxable income as a result of an event pursuant to which they
received no cash or property.
SALE OF COMMON STOCK
Upon the sale or exchange of Common Stock, a holder generally will recognize
capital gain or loss equal to the difference between (i) the amount of cash
and the fair market value of any property received upon the sale or exchange
and (ii) such holder's adjusted tax basis in the Common Stock.
S-28
<PAGE>
Such capital gain or loss will be long-term capital gain or loss if the
holder's holding period in Common Stock is more than one year at the time of
the sale or exchange. A holder's basis and holding period in Common Stock
received upon conversion of a Note are determined as discussed above under "--
Conversion of the Notes."
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a Note, payments of dividends on
Common Stock, payments of the proceeds of the sale of a Note and payments of
the proceeds of the sale of Common Stock to certain noncorporate holders, and
a 31% backup withholding tax may apply to such payments if the holder (i)
fails to furnish or certify his correct taxpayer identification number to the
payor in the manner required, (ii) is notified by the IRS that he has failed
to report payments of interest and dividends properly, or (iii) under certain
circumstances, fails to certify that he has not been notified by the IRS that
he is subject to backup withholding for failure to report interest and
dividend payments. Any amounts withheld under the backup withholding rules
from a payment to a holder will be allowed as a credit against such holder's
United States federal income tax and may entitle the holder to a refund,
provided that the required information is furnished to the IRS.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the Underwriters named below, and
each of the Underwriters has severally agreed to purchase, the principal
amount of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
<S> <C>
Goldman, Sachs & Co...................................... $348,000,000
Robertson, Stephens & Company LLC........................ $ 52,200,000
Montgomery Securities.................................... $ 34,800,000
------------
Total................................................. $435,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Notes, if any are
taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of 2.5% of the principal amount of the Notes. After the
Notes are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Underwriters.
The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus Supplement to purchase up to an aggregate of
$65,000,000 additional principal amount of Notes solely to cover over-
allotments, if any. If the Underwriters exercise their over-allotment option,
the Underwriters have severally agreed, subject to certain conditions, to
purchase approximately the same proportion thereof that the principal amount
of Notes to be purchased by each of them, as shown in the foregoing table,
bears to the $435,000,000 aggregate principal amount of Notes offered hereby.
S-29
<PAGE>
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend
to make a market in the Notes but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Notes.
The Company has agreed that it will not offer, sell, contract to sell or
otherwise dispose of any securities of the Company which are substantially
similar to the Notes or the Common Stock, including but not limited to any
securities that are exchangeable or exercisable for or convertible into Common
Stock or Notes or substantially similar securities, without the prior written
consent of Goldman, Sachs & Co., for a period of 90 days after the date of
this Prospectus Supplement (other than the issuance of Common Stock upon
conversion of the Notes, or pursuant to stock option or purchase plans
existing on, or upon the conversion of convertible or exchangeable securities
outstanding as of, the date hereof, or in connection with the acquisition of
another corporation or entity (including any subsidiary of the Company)). In
addition, certain officers and directors of the Company have agreed to enter
into lockup agreements with respect to the Notes and Common Stock for a period
of 30 days after the date of this Prospectus Supplement.
In connection with the offering, the Underwriters may purchase and sell the
Notes and the Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created by the Underwriters in connection with the offering.
Stabilizing transactions consist of certain bids or purchases for the purpose
of preventing or retarding a decline in the market price of the Notes and the
Common Stock; and short positions created by the Underwriters involve the sale
by the Underwriters of a greater number of Notes than they are required to
purchase from the Company in the offering. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to broker-dealers in respect
of the Notes sold in the offering may be reclaimed by the Underwriters if such
Notes are repurchased by the Underwriters in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Notes and the Common Stock, which may be higher than the
price that might otherwise prevail in the open market; and these activities,
if commenced, may be discontinued at any time. These transactions may be
effected on the New York Stock Exchange, in the over-the-counter market or
otherwise.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California and for the Underwriters by Shearman & Sterling, San
Francisco, California.
S-30
<PAGE>
PROSPECTUS $1,000,000,000
MICRON TECHNOLOGY, INC.
DEBT SECURITIES AND COMMON STOCK
---------------
Micron Technology, Inc. ("MTI" or the "Company") may from time to time
offer, together or separately, (1) its debt securities (the "Debt
Securities"), which may be either senior debt securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities") and (2) shares of its common stock, par value $0.10 per share
(the "Common Stock"). The Debt Securities and the Common Stock are
collectively referred to herein as the "Securities".
The Securities offered pursuant to this Prospectus may be issued in one or
more series or issuances and will be limited to $1,000,000,000 aggregate
public offering price (or its equivalent (based on the applicable exchange
rate at the time of the sale) in one or more foreign currencies, currency
units or composite currencies as shall be designated by the Company). Certain
specific terms of the particular Securities in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement"), including, where applicable, (i) in
the case of Debt Securities, the specific title, aggregate principal amount,
the denomination, whether such Debt Securities are secured or unsecured
obligations, whether such Debt Securities are senior or subordinated,
maturity, premium, if any, the interest rate or rates (which may be fixed,
floating or adjustable), the time and method of calculating payment of
interest, if any, the place or places where principal of (and premium, if any)
and interest, if any, on such Debt Securities will be payable, the currency in
which principal of (and premium, if any) and interest, if any, on such Debt
Securities will be payable, any terms of redemption at the option of the
Company or the Holder, any sinking fund provisions, terms for any conversion
into other Securities, the initial public offering price and other special
terms and (ii) in the case of Common Stock, the number of shares offered for
sale by the Company and the initial public offering price or method of
determining the initial public offering price. If so specified in the
applicable Prospectus Supplement, Debt Securities of a series may be issued in
whole or in part in the form of one or more temporary or permanent global
securities. The Company's Common Stock is listed on the New York Stock
Exchange under the symbol "MU". Any Common Stock sold pursuant to a Prospectus
Supplement will be listed on such exchange, subject to official notice of
issuance.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities, when issued, will be unsecured and will rank equally with all
other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Debt Securities, when issued, will be subordinated in right of
payment to all Senior Debt (as defined) of the Company, including any
outstanding Senior Debt Securities. See "Description of Debt Securities--
Subordination of Subordinated Debt Securities".
The Prospectus Supplement may contain information concerning U.S. federal
income tax considerations, if applicable to the Securities offered.
The Securities may be sold directly, through agents, underwriters or dealers
as designated from time to time, or through a combination of such methods. See
"Plan of Distribution". If agents of the Company or any dealers or
underwriters are involved in the sale of the Securities in respect of which
the Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable commissions or discounts, if any, are set
forth in or may be calculated from the Prospectus Supplement with respect to
such Securities.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
---------------
SEE "RISK FACTORS" ON PAGE 3 OF THIS PROSPECTUS FOR A DESCRIPTION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
SECURITIES.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
THE DATE OF THIS PROSPECTUS IS JUNE 10, 1997.
<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, proxy statements 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 Room
1024, 450 Fifth Street, NW, Washington, D.C. 20549, and at the Commission's
Regional Offices located at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, NW, Washington, D.C.
20549, at prescribed rates. The Commission maintains a World Wide Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
address of the World Wide Web site is http://www.sec.gov. The Common Stock is
listed on the New York Stock Exchange. Reports and other information
concerning the Company may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Securities. This Prospectus, which
constitutes part of the Registration Statement, does not contain all of 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 with respect to the Company and the Securities offered
hereby, reference is made to the Registration Statement and the exhibits and
the financial statements, notes and schedules filed as part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission at the addresses set forth above or
through the Commission's World Wide Web site.
Statements contained in this Prospectus as to the contents of any contract
or other document are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such contract or
document filed as an exhibit to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K, as amended by Form 10-K/A,
for the fiscal year ended August 29, 1996;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
November 28, 1996 and February 27, 1997; and
(c) The Company's Registration Statement on Form 8-A (No. 1-10658),
declared effective by the Commission on November 28, 1990.
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 this Registration Statement of
which this Prospectus forms a part and prior to the termination of the
offering of the Securities offered hereby shall be deemed to be incorporated
by reference into this Prospectus and be a part hereof from the date of filing
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 the Registration Statement or this Prospectus to the extent
that a statement contained herein, in a Prospectus Supplement or in any other
document subsequently filed with the Commission 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 the Registration Statement or
this Prospectus.
2
<PAGE>
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to Roderic W. Lewis, Vice President of Legal Affairs, General
Counsel and Corporate Secretary, Micron Technology, Inc., 8000 South Federal
Way, P.O. Box 6 Boise, ID 83707-0006, telephone (208) 368-4000.
THE COMPANY
Micron Technology, Inc. ("MTI" or the "Company") and its subsidiaries
principally design, develop, manufacture and market semiconductor memory
products, personal computers and custom complex printed circuit board, memory
module and system level assemblies. MTI was incorporated in Idaho in 1978 and
reincorporated in Delaware in 1984. The Company's executive offices and
principal manufacturing operations are located at 8000 South Federal Way,
Boise, Idaho, 83707-0006 and its telephone number is (208) 368-4000.
RISK FACTORS
Prior to making an investment decision with respect to the Securities
offered hereby, prospective investors should carefully consider the specific
factors set forth under the caption "Risk Factors" in the applicable
Prospectus Supplement pertaining thereto, together with all of the other
information appearing herein or therein or incorporated by reference herein,
in light of their particular investment objectives and financial
circumstances.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the net
proceeds to be received by the Company from the sale of the Securities will be
used for general corporate purposes, including capital expenditures and to
meet working capital needs. Pending such uses, the Company will invest the net
proceeds in interest-bearing securities.
RATIO OF EARNINGS TO FIXED CHARGES
Set forth below is the ratio of earnings to fixed charges for each of the
years in the five-year period ended August 29, 1996 and for the six-month
period ended February 27, 1997. For the purpose of calculating such ratios,
"earnings" consist of income from continuing operations before income taxes
plus fixed charges and "fixed charges" consist of interest expense (net of
capitalized portion), capitalized interest, amortization of debt discount and
the portion of rental expense deemed representative of interest expense.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------------------
SIX MONTHS
ENDED
SEPT. 3, SEPT. 2, SEPT. 1, AUG. 31, AUG. 29, FEB. 27,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges.......... 2.0x 20.1x 69.9x 104.1x 53.3x 19.8x
</TABLE>
3
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture (the "Senior
Indenture"), between the Company, as issuer, and Norwest Bank Minnesota,
National Association, as Trustee (the "Trustee"). The Subordinated Debt
Securities are to be issued under a separate Indenture (the "Subordinated
Indenture"), also between the Company, as issuer, and Norwest Bank Minnesota,
National Association, as Trustee. The Senior Indenture and Subordinated
Indenture are sometimes referred to collectively as the "Indentures". A copy
of the form of each Indenture is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Debt Securities may be
issued from time to time in one or more series. The particular terms of each
series, or of Debt Securities forming a part of a series, which are offered by
a Prospectus Supplement will be described in such Prospectus Supplement.
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indentures, including the definitions
therein of certain terms, and, with respect to any particular Debt Securities,
to the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the
Indentures are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated by reference herein or therein, as the case
may be.
GENERAL
The Indentures will provide that Debt Securities in separate series may be
issued thereunder from time to time without limitation as to aggregate
principal amount. The Company may specify a maximum aggregate principal amount
for the Debt Securities of any series. (Section 301) The Debt Securities are
to have such terms and provisions which are not inconsistent with the
Indentures, including as to maturity, principal and interest, as the Company
may determine. Unless otherwise specified in the applicable Prospectus
Supplement, the Senior Debt Securities when issued will be unsecured and
unsubordinated obligations of the Company and will rank on a parity with all
other unsecured and unsubordinated indebtedness of the Company. The
Subordinated Debt Securities when issued will be subordinated in right of
payment to the prior payment in full of all Senior Debt of the Company,
including any outstanding Senior Debt Securities, as described under
"Subordination of Subordinated Debt Securities" and in the applicable
Prospectus Supplement.
The applicable Prospectus Supplement will set forth whether the Debt
Securities offered shall be Senior Debt Securities or Subordinated Debt
Securities, the price or prices at which the Debt Securities to be offered
will be issued and will describe the following terms of such Debt Securities:
(1) the title of such Debt Securities; (2) any limit on the aggregate
principal amount of such Debt Securities or the series of which they are a
part; (3) the Person to whom any interest on a Debt Security of the series
shall be payable, if other than the Person in whose name that Debt Security
(or one or more predecessor Debt Securities) is registered at the close of
business on the Regular Record Date for such interest; (4) the date or dates
on which the principal of any of such Debt Securities will be payable; (5) the
rate or rates at which any of such Debt Securities will bear interest, if any,
the date or dates from which any such interest will accrue, the Interest
Payment Dates on which any such interest will be payable and the Regular
Record Date for any such interest payable on any Interest Payment Date; (6)
the place or places where the principal of and any premium and interest on any
of such Debt Securities will be payable; (7) the period or periods within
which, the price or prices at which and the terms and conditions on which any
of such Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (8) the obligation, if any, of the Company to redeem or purchase
any of such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of the Holder thereof, and the period or periods
within which, the price or prices at which and the terms and
4
<PAGE>
conditions on which any of such Debt Securities will be redeemed or purchased,
in whole or in part, pursuant to any such obligation; (9) the denominations in
which any of such Debt Securities will be issuable, if other than
denominations of $1,000 and any integral multiple thereof; (10) if the amount
of principal of or any premium or interest on any of such Debt Securities may
be determined with reference to an index or pursuant to a formula, the manner
in which such amounts will be determined; (11) if other than the currency of
the United States of America, the currency, currencies or currency units in
which the principal of or any premium or interest on any of such Debt
Securities will be payable (and the manner in which the equivalent of the
principal amount thereof in the currency of the United States of America is to
be determined for any purpose, including for the purpose of determining the
principal amount deemed to be Outstanding at any time); (12) if the principal
of or any premium or interest on any of such Debt Securities is to be payable,
at the election of the Company or the Holder thereof, in one or more
currencies or currency units other than those in which such Debt Securities
are stated to be payable, the currency, currencies or currency units in which
payment of any such amount as to which such election is made will be payable,
the periods within which and the terms and conditions upon which such election
is to be made and the amount so payable (or the manner in which such amount is
to be determined); (13) if other than the entire principal amount thereof, the
portion of the principal amount of any of such Debt Securities which will be
payable upon declaration of acceleration of the Maturity thereof; (14) if the
principal amount payable at the Stated Maturity of any of such Debt Securities
will not be determinable as of any one or more dates prior to the Stated
Maturity, the amount which will be deemed to be such principal amount as of
any such date for any purpose, including the principal amount thereof which
will be due and payable upon any Maturity other than the Stated Maturity or
which will be deemed to be Outstanding as of any such date (or, in any such
case, the manner in which such deemed principal amount is to be determined);
(15) if applicable, that such Debt Securities, in whole or any specified part,
are defeasible pursuant to the provisions of the Indentures described under
"Defeasance and Covenant Defeasance--Defeasance and Discharge" or "Defeasance
and Covenant Defeasance--Defeasance of Certain Covenants," or under both such
captions; (16) if applicable, the terms of any right to convert Debt
Securities into shares of Common Stock of the Company or other securities or
property; (17) whether any of such Debt Securities will be issuable in whole
or in part in the form of one or more Global Securities and, if so, the
respective Depositaries for such Global Securities, the form of any legend or
legends to be borne by any such Global Security in addition to or in lieu of
the legends referred to under "Form, Exchange and Transfer" or "Global
Securities" and, if different from those described under such captions, any
circumstances under which any such Global Security may be exchanged in whole
or in part for Securities registered, and any transfer of such Global Security
in whole or in part may be registered, in the names of Persons other than the
Depositary for such Global Security or its nominee; (18) any addition to or
change in the Events of Default applicable to any of such Debt Securities and
any change in the right of the Trustee or the Holders to declare the principal
amount of any of such Debt Securities due and payable; (19) any addition to or
change in the covenants in the Indentures described under "Restrictive
Covenants" applicable to any of such Debt Securities; and (20) any other terms
of such Debt Securities not inconsistent with the provisions of the relevant
Indenture. (Section 301)
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt
Securities sold at an original issue discount will be described in the
applicable Prospectus Supplement under "United States Taxation". In addition,
certain special United States
federal income tax or other considerations (if any) applicable to any Debt
Securities which are denominated in a currency or currency unit other than
United States dollars will be described in the applicable Prospectus
Supplement.
CONVERSION RIGHTS
The terms on which Debt Securities of any series are convertible into Common
Stock or other securities or property will be set forth in the Prospectus
Supplement relating thereto. Such terms shall
5
<PAGE>
include provisions as to whether conversion is mandatory or at the option of
the Holder and may include provisions pursuant to which the number of shares
of Common Stock or other securities or property to be received by the Holders
of Debt Securities upon conversion would be calculated according to the market
price of Common Stock or other securities or property as of a time stated in
the applicable Prospectus Supplement. (Article Fourteen)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior
payment in full of all Senior Debt, including the Senior Debt Securities. In
the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization, debt restructuring or other similar
case or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or any liquidation, dissolution or other
winding up of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or any assignment for the benefit of
creditors or any other marshaling of assets and liabilities of the Company,
the holders of Senior Debt will be entitled to receive payment in full of all
amounts due or to become due on or in respect of all Senior Debt in cash or
other payment satisfactory to the holders of Senior Debt before the Holders of
the Subordinated Debt Securities are entitled to receive any payment on
account of principal of or any premium or interest on the Subordinated Debt
Securities or on account of the purchase, redemption or other acquisition of
Subordinated Debt Securities or before the Company may make any sinking fund
or defeasance payment to the Trustee or any Paying Agent in accordance with
the Subordinated Indenture. Notwithstanding the foregoing, any amounts
previously deposited by the Company with the Trustee or Paying Agent in
accordance with the subordination provisions of Article Fifteen of the
Subordinated Indenture at the time of such deposit may be paid to the Holders
of Subordinated Debt Securities ("Defeased Payments"). (Section 1502)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are not holders of Senior Debt may recover less,
ratably, than holders of Senior Debt and may recover more, ratably, than the
Holders of the Subordinated Debt Securities.
In the event that any Subordinated Debt Securities are declared due and
payable before their Stated Maturity as a result of an Event of Default, the
holders of the Senior Debt outstanding at the time such Subordinated Debt
Securities so become due and payable will be entitled to receive payment in
full of all amounts due or to become due on or in respect of all Senior Debt
in cash or other payment satisfactory to the holders of Senior Debt before the
Holders of the Subordinated Debt Securities are entitled to receive any
payment by the Company on account of the principal of or any premium or
interest on the Subordinated Debt Securities or on account of the purchase,
redemption or other acquisition of Subordinated Debt Securities or before the
Company may make any sinking fund or defeasance payment to the Trustee or any
Payment Agent in accordance with the Subordinate Indenture (other than
Defeased Payments). If the payment of Subordinated Debt Securities is
accelerated because of an Event of Default, the Company and the Trustee are
required under the Subordinated Indenture to promptly notify holders of Senior
Debt of the acceleration. (Section 1503)
The Company may not make any payment of principal (or premium, if any) or
interest, if any, in respect of the Subordinated Debt Securities or on account
of the purchase, redemption or other acquisition of Subordinated Debt
Securities or any payment constituting a sinking fund or defeasance payment to
the Trustee or Paying Agent in accordance with the Subordinated Indenture
(other than Defeased Payments) if (i) a default in the payment of principal,
premium, if any, or interest (including a default under any repurchase or
redemption obligation) or other amounts with respect to any Senior Debt occurs
and is continuing beyond the applicable grace period or (ii) any other event
of default
6
<PAGE>
occurs and is continuing with respect to Designated Senior Debt (as defined)
that permits the holders thereof or their representatives to accelerate the
maturity thereof, and the Trustee under the Subordinated Indenture receives a
notice of such default (a "Payment Blockage Notice") from the Company, a
holder of such Designated Senior Debt or other person permitted to give such
notice under the Subordinated Indenture. The Company may and shall resume
payments on the Subordinated Debt Securities and may purchase, redeem or
otherwise acquire the Subordinated Debt Securities and may make a sinking fund
or defeasance payment to the Trustee or Paying Agent in accordance with the
Subordinated Indenture (a) in the case of a payment default, upon the date on
which such default is cured or waived or ceases to exist and (b) in the case
of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived or ceases to exist or 179 days after the date on
which the applicable Payment Blockage Notice is received (unless the
subordination provisions of Article Fifteen of the Indenture prohibit the
payment, distribution purchase, redemption, acquisition, sinking fund payment
or defeasance payment at the time of such payment or distribution (including,
without limitation, in the case of a nonpayment referred to in clause (ii)
above, as a result of a payment default with respect to applicable Senior Debt
as a consequence of the acceleration of the maturity thereof or otherwise)).
No new period of payment blockage may be commenced unless and until 365 days
have elapsed since the effectiveness of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee under the Subordinated
Indenture shall be, or be made, the basis for a subsequent Payment Blockage
Notice. (Section 1502) In the case of Subordinated Debt Securities that are
convertible at the option of the Holder, the payment, issuance and delivery of
cash, property or securities (other than stock and certain subordinated
securities of the Company) upon conversion of a Subordinated Debt Security
will be deemed to constitute payment on account of the principal of such
Subordinated Debt Security. (Section 1515)
"Senior Debt" is defined in the Indenture to mean: the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not such claim for post-petition interest is allowed in
such proceeding), on, rent with respect to, and all fees and other amounts
payable in connection with, the following, whether absolute or contingent,
secured or unsecured, due or to become due, outstanding on the date of the
Subordinated Indenture or thereafter created, incurred or assumed:
(a) indebtedness of the Company evidenced by a credit or loan agreement, note,
bond, debenture or other written obligation, (b) all obligations of the
Company for money borrowed, (c) all obligations of the Company evidenced by a
note or similar instrument given in connection with the acquisition of any
businesses, properties or assets of any kind, (d) obligations of the Company
(i) as lessee under leases required to be capitalized on the balance sheet of
the lessee under generally accepted accounting principles, (ii) as lessee
under other leases for facilities, equipment or related assets, whether or not
capitalized, entered into or leased after the date of the Subordinated
Indenture for financing purposes (as determined by the Company) or (iii) under
any lease or related document (including a purchase agreement) that provides
that the Company is contractually obligated to purchase or cause a third party
to purchase the leased property and the obligations of the Company under such
lease or related document to purchase or to cause a third party to purchase
such leased property, (e) all obligations of the Company under interest rate
and currency swaps, caps, floors, collars, hedge agreements, forward
contracts, or similar agreements or arrangements, (f) all obligations of the
Company with respect to letters of credit, bankers' acceptances or similar
facilities (including reimbursement obligations with respect to any of the
foregoing), (g) all obligations of the Company issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable arising in the ordinary course of business), (h) all obligations of
the type referred to in clauses (a) through (g) above of another Person and
all dividends of another Person, the payment of which, in either case, the
Company has assumed or guaranteed (or in effect guaranteed through an
agreement to purchase or otherwise (including, without limitation, "take or
pay" and similar arrangements)), or for which the Company is responsible or
liable, directly or indirectly, jointly or severally, as obligor, guarantor or
7
<PAGE>
otherwise, or which is secured by a lien on property of the Company, and all
obligations of the Company with respect thereto, and (i) renewals, extensions,
modifications, replacements, restatements and refundings of, or any
indebtedness or obligation issued in exchange for, any such indebtedness or
obligation described in clauses (a) through (h) of this paragraph; provided,
however, that Senior Debt shall not include the Subordinated Debt Securities
or any such indebtedness or obligation if the terms of such indebtedness or
obligation (or the terms of the instrument under which, or pursuant to which
it is issued) expressly provide that such indebtedness or obligation is not
superior in right of payment to the Subordinated Debt Securities.
"Designated Senior Debt" means certain existing Senior Debt (including the
Company's existing bank revolving credit agreement) and the Company's
obligations under any other particular Senior Debt in which the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which the Company is a party) expressly
provides that such Senior Debt shall be "Designated Senior Debt" for purposes
of the Subordinated Indenture and any Senior Debt so designated as Designated
Senior Debt by the Company in the applicable Prospectus Supplement (provided
that such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Debt to exercise the rights of
Designated Senior Debt).
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Debt, which may include indebtedness that is senior to the
Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities, when issued, will constitute Senior Debt.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
FORM, EXCHANGE AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form, without coupons, and, unless otherwise specified in the applicable
Prospectus Supplement, only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indentures and the
limitations applicable to Global Securities, Debt Securities of each series
will be exchangeable for other Debt Securities of the same series of any
authorized denomination and of a like tenor and aggregate principal amount.
(Section 305)
Subject to the terms of the Indentures and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of 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. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in
addition to the Security Registrar) initially designated by the Company for
any Debt Securities will be named in the applicable Prospectus Supplement.
(Section 305) The Company may at any time designate additional transfer agents
or rescind the designation of any transfer agent or approve a change in the
office through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for the Debt
Securities of each series. (Section 1002)
If the Debt Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of or exchange any Debt
8
<PAGE>
Security of that series (or of that series and specified tenor, as the case
may be) during a period beginning at the opening of business 15 days before
the day of mailing of a notice of redemption of any such Debt Security that
may be selected for redemption and ending at the close of business on the day
of such mailing or (ii) register the transfer of or exchange any Debt Security
so selected for redemption, in whole or in part, except the unredeemed portion
of any such Debt Security being redeemed in part. (Section 305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more global securities which will have an
aggregate principal amount equal to that of the Debt Securities represented
thereby (a "Global Security"). Each Global Security will be registered in the
name of a depositary (the "Depositary") or a nominee thereof identified in the
applicable Prospectus Supplement, 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
Indentures.
Notwithstanding any provision of the Indentures or any Debt Security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or
in part may be registered, in the name of any Person other than the Depositary
for such Global Security or any nominee of such Depositary 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 Indentures, (ii) there shall have occurred and be
continuing an Event of Default with respect to the Debt Securities represented
by such Global Security or (iii) there shall exist such circumstances, if any,
in addition to or in lieu of those described above as may be described in the
applicable Prospectus Supplement. All securities issued in exchange for a
Global Security or any portion thereof will be registered in such names as the
Depositary may direct. (Sections 204 and 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indentures. Except in the limited circumstances referred to above, owners
of beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered
to be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the
Indentures. All payments of principal of and any premium and interest on a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depositary (with respect to participants' interests) or any such
participant (with respect to interests of persons held by such participants on
their behalf). Payments, transfers, exchanges and others matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the
9
<PAGE>
Depositary from time to time. None of the Company, the Trustee or any agent of
the Company or the Trustee will have any responsibility or liability for any
aspect of the Depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in a Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to
the Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears
in the Security Register. Unless otherwise indicated in the applicable
Prospectus Supplement, the Corporate Trust Office of the Trustee will be
designated as the Company's sole Paying Agent for payments with respect to
Debt Securities of each series. Any other Paying Agents initially designated
by the Company for the Debt Securities of a particular series will be named in
the applicable Prospectus Supplement. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except
that the Company will be required to maintain a Paying Agent in each Place of
Payment for the Debt Securities of a particular series. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed for a period ending the earlier of 10 business days prior to the
date such money would escheat to the State or at the end of two years after
such principal, premium or interest has become due and payable will be repaid
to the Company, and the Holder of such Debt Security thereafter may look only
to the Company for payment thereof. (Section 1003)
RESTRICTIVE COVENANTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions will apply to the Senior Debt Securities.
Limitations on Liens
The Senior Indenture will provide that the Company will not issue, incur,
create, assume or guarantee, and will not permit any Restricted Subsidiary (as
defined below) to issue, incur, create, assume or guarantee, any debt for
borrowed money secured by a mortgage, security interest, pledge, lien, charge
or other encumbrance ("mortgages") upon any Principal Property (as defined
below) of the Company or any Restricted Subsidiary or upon any shares of stock
or indebtedness of any Restricted Subsidiary (whether such Principal Property,
shares or indebtedness are now existing or owned or hereafter created or
acquired) without in any such case effectively providing concurrently with the
issuance, incurrence, creation, assumption or guarantee of any such secured
debt, or the grant of a mortgage with respect to any such indebtedness, that
the Senior Debt Securities (together with, if the Company shall so determine,
any other indebtedness of or guarantee by the Company or such Restricted
Subsidiary ranking equally with the Senior Debt Securities) shall be secured
equally and ratably with (or, at the option of the Company, prior to) such
secured debt. The foregoing restriction, however, will not apply to: (a)
mortgages on property existing at the time of acquisition
10
<PAGE>
thereof by the Company or any Subsidiary, provided that such mortgages were in
existence prior to the contemplation of such acquisition; (b) mortgages on
property, shares of stock or indebtedness or other assets of any corporation
existing at the time such corporation becomes a Restricted Subsidiary,
provided that such mortgages are not incurred in anticipation of such
corporation becoming a Restricted Subsidiary; (c) mortgages on property,
shares of stock or indebtedness existing at the time of acquisition thereof by
the Company or a Restricted Subsidiary or mortgages thereon to secure the
payment of all or any part of the purchase price thereof, or mortgages on
property, shares of stock or indebtedness to secure any indebtedness for
borrowed money incurred prior to, at the time of, or within 270 days after,
the latest of the acquisition thereof, or, in the case of property, the
completion of construction, the completion of improvements, or the
commencement of substantial commercial operation of such property for the
purpose of financing all or any part of the purchase price thereof, such
construction, or the making of such improvements; (d) mortgages to secure
indebtedness owing to the Company or to a Restricted Subsidiary; (e) mortgages
existing at the date of the Senior Indenture; (f) mortgages on property of a
corporation existing at the time such corporation is merged into or
consolidated with the Company or a Restricted Subsidiary or at the time of a
sale, lease or other disposition of the properties of a corporation as an
entirety or substantially as an entirety to the Company or a Restricted
Subsidiary, provided that such mortgage was not incurred in anticipation of
such merger or consolidation or sale, lease or other disposition; (g)
mortgages in favor of the United States or any State, territory or possession
thereof (or the District of Columbia), or any department, agency,
instrumentality or political subdivision of the United States or any State,
territory or possession thereof (or the District of Columbia), to secure
partial, progress, advance or other payments pursuant to any contract or
statute or to secure any indebtedness incurred for the purpose of financing
all or any part of the purchase price or the cost of constructing or improving
the property subject to such mortgages; (h) mortgages created in connection
with the acquisition of assets or a project financed with, and created to
secure, a Nonrecourse Obligation (as defined below); and (i) extensions,
renewals, refinancings or replacements of any mortgage referred to in the
foregoing clauses (a), (b), (c), (d), (e), (f), (g), and (h) provided,
however, that any mortgages permitted by any of the foregoing clauses (a),
(b), (c), (d), (e), (f), (g), and (h) shall not extend to or cover any
property of the Company or such Restricted Subsidiary, as the case may be,
other than the property, if any, specified in such clauses and improvements
thereto, and provided further that any refinancing or replacement of any
mortgages permitted by the foregoing clauses (g) and (h) shall be of the type
referred to in such clauses (g) or (h), as the case may be.
Notwithstanding the restrictions described in the preceding paragraph, the
Company or any Restricted Subsidiary will be permitted to issue, incur,
create, assume or guarantee debt secured by a mortgage which would otherwise
be subject to such restrictions, without equally and ratably securing the
Senior Debt Securities, provided that after giving effect thereto, the
aggregate amount of all debt so secured by mortgages (not including mortgages
permitted under clauses (a) through (i) above) does not exceed 15% of the
Consolidated Net Tangible Assets (as defined below) of the Company as most
recently determined on or prior to such date.
Limitations on Sale and Lease-Back Transactions
The Senior Indenture will provide that the Company will not, nor will it
permit any Restricted Subsidiary to, enter into any Sale and Lease-Back
Transaction (as defined below) with respect to any Principal Property, other
than any such transaction involving a lease for a term of not more than three
years or any such transaction between the Company and a Restricted Subsidiary
or between Restricted Subsidiaries, unless (a) the Company or such Restricted
Subsidiary would be entitled to incur indebtedness secured by a mortgage on
the Principal Property involved in such transaction at least equal in amount
to the Attributable Debt (as defined below) with respect to such Sale and
Lease-Back Transaction, without equally and ratably securing the Senior Debt
Securities, pursuant to the limitation on liens in the Senior Indenture; or
(b) the Company shall apply an amount equal to the greater of the net proceeds
of such sale or the
11
<PAGE>
Attributable Debt with respect to such Sale and Lease-Back Transaction within
180 days of such sale to either (or a combination of) the retirement (other
than any mandatory retirement, mandatory prepayment or sinking fund payment or
by payment at maturity) of debt for borrowed money of the Company or a
Restricted Subsidiary that matures more than 12 months after the creation of
such indebtedness or the purchase, construction or development of other
comparable property.
Certain Definitions Applicable to Covenants
The term "Attributable Debt" when used in connection with a Sale and Lease-
Back Transaction involving a Principal Property shall mean, at the time of
determination, the lesser of: (a) the fair value of such property (as
determined in good faith by the Board of Directors of the Company); or (b) the
present value of the total net amount of rent required to be paid under such
lease during the remaining term thereof (including any renewal term or period
for which such lease has been extended), discounted at the rate of interest
set forth or implicit in the terms of such lease or if not practicable to
determine such rate, the weighted average interest rate per annum (in the case
of Original Issue Discount Securities, the imputed interest rate) borne by the
Senior Debt Securities of each series outstanding pursuant to the Indenture
compounded semi-annually. For purposes of the foregoing definition, rent shall
not include amounts required to be paid by the lessee, whether or not
designated as rent or additional rent, on account of or contingent upon
maintenance and repairs, insurance, taxes, assessments, water rates and
similar charges. In the case of any lease which is terminable by the lessee
upon the payment of a penalty, such net amount shall be the lesser of the net
amount determined assuming termination upon the first date such lease may be
terminated (in which case the net amount shall also include the amount of the
penalty, but no rent shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so terminated) and the
net amount determined assuming no such termination.
The term "Consolidated Net Tangible Assets" shall mean, as of any particular
time, total assets (excluding applicable reserves and other properly
deductible items) less: (a) total current liabilities, except for (1) notes
and loans payable; (2) current maturities of long-term debt and (3) current
maturities of obligations under capital leases; and (b) goodwill, patents and
trademarks, to the extent included in total assets; all as set forth on the
most recent consolidated balance sheet of the Company and its Restricted
Subsidiaries and computed in accordance with generally accepted accounting
principles.
The term "Nonrecourse Obligation" means indebtedness or other obligations
substantially related to (i) the acquisition of assets not previously owned by
the Company or any Restricted Subsidiary or (ii) the financing of a project
involving the development or expansion of properties of the Company or any
Restricted Subsidiary, as to which the obligee with respect to such
indebtedness or obligation has no recourse to the Company or any Restricted
Subsidiary or any assets of the Company or any Restricted Subsidiary other
than the assets which were acquired with the proceeds of such transaction or
the project financed with the proceeds of such transaction (and the proceeds
thereof).
The term "Principal Property" shall mean the land, land improvements,
buildings and fixtures (to the extent they constitute real property interests,
including any leasehold interest therein) constituting the principal corporate
office, any manufacturing facility or any distribution center (whether now
owned or hereafter acquired) which: (a) is owned by the Company or any
Subsidiary; (b) is located within any of the present 50 states of the United
States (or the District of Columbia); (c) has not been determined in good
faith by the Board of Directors of the Company not to be materially important
to the total business conducted by the Company and its Subsidiaries taken as a
whole; and (d) has a market value on the date as of which the determination is
being made in excess of 2.0% of Consolidated Net Tangible Assets of the
Company as most recently determined on or prior to such date.
The term "Restricted Subsidiary" shall mean any Subsidiary that owns any
Principal Property; provided, however, that the term "Restricted Subsidiary"
shall not include (a) any Subsidiary which is
12
<PAGE>
principally engaged in financing receivables, or which is principally engaged
in financing the Company's operations outside the United States of America or
(b) any Subsidiary less than 80% of the voting stock of which is owned,
directly or indirectly, by the Company or by one or more other Subsidiaries,
or by the Company and one or more other Subsidiaries if the common stock of
such Subsidiary is traded on any national securities exchange or quoted on the
Nasdaq National Market or in the over-the-counter market.
The term "Sale and Lease-Back Transaction" shall mean any arrangement with
any person providing for the leasing by the Company or any Restricted
Subsidiary of any Principal Property which property has been or is to be sold
or transferred by the Company or such Restricted Subsidiary to such person.
The term "Subsidiary" shall mean any corporation of which at least a
majority of the outstanding voting stock having the power to elect a majority
of the board of directors of such corporation is at the time owned, directly
or indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries, and the accounts of which are
consolidated with those of the Company in its most recent consolidated
financial statements in accordance with generally accepted accounting
principles. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at
all times or only so long as no senior class of stock has such voting power by
reason of any contingency.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures will provide that the Company may not consolidate with or
merge into any other Person (in a transaction in which the Company is not the
surviving corporation), or convey, transfer or lease its properties and assets
substantially as an entirety to, any Person (a "successor Person"), unless (i)
the successor Person (if any) is a corporation, limited liability company,
partnership, trust or other entity organized and existing under the laws of
any domestic jurisdiction and assumes the Company's obligations on the Debt
Securities and under the Indentures, (ii) immediately after giving effect to
the transaction, and treating any indebtedness which becomes an obligation of
the Company or any Subsidiary as a result of the transaction as having been
incurred by it at the time of the transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing and (iii) certain other
conditions are met. (Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indentures with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due,
whether or not such payment is prohibited by the subordination provisions of
the Subordinated Indenture; (b) failure to pay any interest on any Debt
Securities of that series when due, continued for 30 days, whether or not such
payment is prohibited by the subordination provisions of the Subordinated
Indenture; (c) failure to deposit any sinking fund payment, when due, in
respect of any Debt Security of that series, whether or not such deposit is
prohibited by the subordination provisions of the Subordinated Indenture; (d)
failure to perform any other covenant of the Company in the Indentures (other
than a covenant included in the Indentures solely for the benefit of a series
other than that series), continued for 60 days after written notice has been
given by the Trustee, or the Holders of at least 25% in aggregate principal
amount of the Outstanding Securities of that series, as provided in the
Indentures; (e) certain events in bankruptcy, insolvency or reorganization
with respect to the Company; and (f) any other Event of Default specified in
the applicable Prospectus Supplement. (Section 501)
The Indentures will provide that, if an Event of Default (other than an
Event of Default described in clause (e) above) with respect to the Debt
Securities of any series at the time Outstanding shall
13
<PAGE>
occur and be continuing, either the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series by
notice as provided in the Indentures may declare the principal amount of the
Debt Securities of that series (or, in the case of any Debt Security that is
an Original Issue Discount Security or the principal amount of which is not
then determinable, such portion of the principal amount of such Debt Security,
or such other amount in lieu of such principal amount, as may be specified in
the terms of such Debt Security) to be due and payable immediately. If an
Event of Default described in clause (e) above with respect to the Debt
Securities of any series at the time Outstanding shall occur, the principal
amount of all the Debt Securities of that series (or, in the case of any such
Original Issue Discount Security or other Debt Security, such specified
amount) will automatically, and without any action by the Trustee or any
Holder, become immediately due and payable. Any payment by the Company on the
Subordinated Debt Securities following any such acceleration will be subject
to the subordination provisions of Article Fifteen of the Subordinated
Indenture. After any such acceleration, but before a judgment or decree based
on acceleration, the Holders of a majority in aggregate principal amount of
the Outstanding Securities of that series may, under certain circumstances,
rescind and annul such acceleration if all Events of Default, other than the
non-payment of accelerated principal (or other specified amount), have been
cured or waived as provided in the Indentures. (Section 502) For information
as to waiver of defaults, see "Modification and Waiver".
Subject to the provisions of the Indentures relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indentures at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Section 603)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding 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. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indentures, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the Debt Securities of that series, (ii) the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series have made a written request, and such Holder or
Holders have offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee and (iii) the Trustee has failed to institute such
proceeding, and has not received from the Holders of a majority in aggregate
principal amount of the Outstanding Securities of that series a direction
inconsistent with such request, within 60 days after such notice, request and
offer. (Section 507) However, such limitations do not apply to a suit
instituted by a Holder of a Debt Security for the enforcement of payment of
the principal of or any premium or interest on such Debt Security on or after
the applicable due date specified in such Debt Security. (Section 508)
The Indentures will include a covenant requiring the Company to furnish to
the Trustee annually a statement by certain of its officers as to whether or
not the Company, to their knowledge, is in default in the performance or
observance of any of the terms, provisions and conditions of the Indentures
and, if so, specifying all such known defaults. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of principal of or
14
<PAGE>
interest on, any Debt Security, (b) reduce the principal amount of, or any
premium or interest on, any Debt Security, (c) reduce the amount of principal
of an Original Issue Discount Security or any other Debt Security payable upon
acceleration of the Maturity thereof, (d) change the place or currency of
payment of principal of, or any premium or interest on, any Debt Security, (e)
impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security, (f) in the case of Subordinated Debt
Securities, modify the subordination provisions in a manner adverse to the
Holders of the Subordinated Debt Securities, (g) reduce the percentage in
principal amount of Outstanding Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indentures, (h)
reduce the percentage in principal amount of Outstanding Securities of any
series necessary for waiver of compliance with certain provisions of the
Indentures or for waiver of certain defaults or (i) modify such provisions
with respect to modification and waiver. (Section 902)
The Indentures will provide that the Holders of a majority in aggregate
principal amount of the Outstanding Securities of any series may waive, on
behalf of the Holders of all Debt Securities of such series, compliance by the
Company with certain restrictive provisions of the Indentures. (Sections 1010
and 1008 of the Senior Indenture and the Subordinated Indenture, respectively)
The Holders of a majority in principal amount of the Outstanding Securities of
any series may waive any past default under the Indentures, except a default
in the payment of principal, premium or interest and certain covenants and
provisions of the Indentures which cannot be amended without the consent of
the Holder of each Outstanding Security of such series affected. (Section 513)
The Indentures will provide that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given or taken
any direction, notice, consent, waiver or other action under the Indentures as
of any date, (i) the principal amount of an Original Issue Discount Security
that will be deemed to be Outstanding will be the amount of the principal
thereof that would be due and payable as of such date upon acceleration of the
Maturity thereof to such date, (ii) if, as of such date, the principal amount
payable at the Stated Maturity of a Debt Security is not determinable (for
example, because it is based on an index), the principal amount of such Debt
Security deemed to be Outstanding as of such date will be an amount determined
in the manner prescribed for such Debt Security and (iii) the principal amount
of a Debt Security denominated in one or more foreign currencies or currency
units that will be deemed to be Outstanding will be the U.S. dollar
equivalent, determined as of such date in the manner prescribed for such Debt
Security, of the principal amount of such Debt Security (or, in the case of a
Debt Security described in clause (i) or (ii) above, of the amount described
in such clause). Certain Debt Securities, including those for whose payment or
redemption money has been deposited or set aside in trust for the Holders and
those that have been fully defeased pursuant to Section 1302, will not be
deemed to be Outstanding. (Section 101)
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give or take any direction,
notice, consent, waiver or other action under the Indentures, in the manner
and subject to the limitations provided in the Indentures. In certain limited
circumstances, the Trustee will be entitled to set a record date for action by
Holders. If a record date is set for any action to be taken by Holders of a
particular series, such action may be taken only by persons who are Holders of
Outstanding Securities of that series on the record date. To be effective,
such action must be taken by Holders of the requisite principal amount of such
Debt Securities within a specified period following the record date. For any
particular record date, this period will be 180 days or such other shorter
period as may be specified by the Company (or the Trustee, if it set the
record date), and may be shortened or lengthened (but not beyond 180 days)
from time to time. (Section 104)
15
<PAGE>
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, and
subject to such other conditions and limitations as may be set forth in the
applicable Prospectus Supplement, the Company may elect, at its option at any
time, to have the provisions of Section 1302, relating to defeasance and
discharge of indebtedness, or Section 1303, relating to defeasance of certain
restrictive covenants in the Indentures, applied to the Debt Securities of any
series, or to any specified part of a series. (Section 1301)
Defeasance and Discharge. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1302 applied to any
Subordinated Debt Securities, the provisions of Article Fifteen of the
Subordinated Indenture relating to subordination will cease to be effective
and, with respect to any Debt Securities, the Company will be discharged from
all its obligations with respect thereto (except for certain obligations to
exchange or register the transfer of Debt Securities, to replace stolen, lost
or mutilated Debt Securities, to maintain paying agencies, to hold moneys for
payment in trust and, if applicable, to effect conversions of Debt Securities)
upon the deposit in trust for the benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through
the payment of principal and interest in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay the principal
of and any premium and interest on such Debt Securities on the respective
Stated Maturities in accordance with the terms of the Indentures and such Debt
Securities. Such defeasance or discharge may occur only if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Company has received from, or there has been published by, the
United States Internal Revenue Service a ruling, or there has been a change in
tax law, in either case to the effect that Holders of such Debt Securities
will not recognize gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge were not to occur.
(Sections 1302 and 1304)
Defeasance of Certain Covenants. The Indentures will provide that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants, including those described under "Restrictive Covenants" and any
that may be described in the applicable Prospectus Supplement, and the
occurrence of certain Events of Default, which are described above in clause
(d) (with respect to such restrictive covenants) under "Events of Default" and
any that may be described in the applicable Prospectus Supplement, will be
deemed not to be or result in an Event of Default, in each case with respect
to such Debt Securities, and, in the case of the Subordinated Indenture, the
provisions of Article Fifteen relating to subordination will cease to be
effective with respect to any Subordinated Debt Securities. The Company, in
order to exercise such option, will be required to deposit, in trust for the
benefit of the Holders of such Debt Securities, money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an
amount sufficient to pay the principal of and any premium and interest on such
Debt Securities on the respective Stated Maturities in accordance with the
terms of the Indentures and such Debt Securities. The Company will also be
required, among other things, to deliver to the Trustee an Opinion of Counsel
to the effect that Holders of such Debt Securities will not recognize gain or
loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance were not to occur. In the event the
Company exercised this option with respect to any Debt Securities and such
Debt Securities were declared due and payable because of the occurrence of any
Event of Default, the amount of money and U.S. Government Obligations so
deposited in trust would be sufficient to pay amounts due on such Debt
Securities at the time of their respective Stated Maturities but may not be
sufficient to pay
16
<PAGE>
amounts due on such Debt Securities upon any acceleration resulting from such
Event of Default. In such case, the Company would remain liable for such
payments. (Sections 1303 and 1304)
The Company may, at its option, satisfy and discharge each of the Indentures
(except for certain obligations of the Company and the Trustee, including,
among others the obligations to apply money held in trust) when (i) either (a)
all Debt Securities under such Indenture previously authenticated and
delivered (other than (1) Debt Securities that were destroyed, lost or stolen
and that have been replaced or paid and (2) Debt Securities for the payment of
which money has been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust)
have been delivered to the Trustee for cancellation or discharge from such
trust) have been delivered to the Trustee for cancellation or (b) all such
Debt Securities under such Indenture not theretofore delivered to the Trustee
for cancellation (1) have become due and payable, (2) will become due and
payable at their Stated Maturity within one year, or (3) are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name and at the
expense of the Company, and the Company has deposited or caused to be
deposited with the Trustee as trust funds in trust for such purpose an amount
sufficient to pay and discharge the entire indebtedness on such Debt
Securities under such Indenture not previously delivered to the Trustee for
cancellation, for principal and any premium and interest to the date of such
deposit (in the case of Debt Securities under such Indenture which have become
due and payable) or to the Stated Maturity or redemption date as the case may
be, (ii) the Company has paid or caused to be paid all other sums payable
under such Indenture by the Company, and (iii) the Company has delivered to
the Trustee an Officer's Certificate and an Opinion of Counsel, each to the
effect that all conditions precedent relating to the satisfaction and
discharge of such Indenture have been satisfied.
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the
purpose of making payment and for all other purposes. (Section 308)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 112)
REGARDING THE TRUSTEE
The Indentures contain certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize for its own account on certain property received
in respect of any such claim as security or otherwise. (Section 613) The
Trustee is permitted to engage in certain other transactions; however, if it
acquires any conflicting interest and there is a default under the Securities
of any series for which the Trustee serves as trustee, the Trustee must
eliminate such conflict or resign. (Section 608)
17
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Company consists of 1,000,000,000 shares
of common stock, $0.10 par value ("Common Stock"). As of May 29, 1997, there
were 210,533,505 shares of Common Stock issued and outstanding. The following
summary is qualified in its entirety by reference to the Company's Certificate
of Incorporation and Bylaws.
COMMON STOCK
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders and are entitled to cumulative
voting in the election of directors. Subject to preferences that may be
applicable to any future preferred stock or any other senior equity, the
holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared from time to time by the Board of Directors out of
funds legally available therefor. In the event of a liquidation, dissolution
or winding up of MTI, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
rights of preferred stock, if any, then outstanding. The Common Stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions available to the Common Stock. All
outstanding shares of Common Stock are fully paid and nonassessable.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW
The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"), which, subject to certain exceptions,
prohibits a Delaware corporation from engaging in any business combination
with any interested stockholder for a period of three years following the time
that such stockholder became an interested stockholder, unless: (i) prior to
such time, the board of directors of the corporation approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder; (ii) upon consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those shares owned
(a) by persons who are directors and also officers and (b) by employee stock
plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer; or (iii) at or subsequent to such time, the business
combination is approved by the board of directors and authorized at an annual
or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock that is
not owned by the interested stockholder.
Section 203 defines "business combination" to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii)
any sale, transfer, pledge or other disposition of 10% or more of the assets
of the corporation involving the interested stockholder; (iii) subject to
certain exceptions, any transaction that results in the issuance or transfer
by the corporation of any stock of the corporation to the interested
stockholder; (iv) any transaction involving the corporation that has the
effect of increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested stockholder; or
(v) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation. In general, Section 203 defines an "interested
stockholder" as any entity or person beneficially owning 15% or more of the
outstanding voting stock of the corporation and any entity or person
affiliated with or controlling or controlled by such entity or person.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is U.S. Bank of Idaho.
18
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Securities separately or together (i) to one or
more underwriters or dealers for public offering and sale by them and (ii) to
investors directly or through agents. The distribution of the Securities may
be effected from time to time in one or more transactions at a fixed price or
prices (which may be changed from time to time), at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Each Prospectus Supplement will describe the method of
distribution of the Securities offered thereby.
In connection with the sale of the Securities, underwriters, dealers or
agents may receive compensation from the Company or from purchasers of the
Securities for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers or agents which
participate in the distribution of the Securities may be deemed to be
underwriters under the Securities Act and any discounts or commissions
received by them and any profit on the resale of the Securities received by
them may be deemed to be underwriting discounts and commissions thereunder.
Any such underwriter, dealer or agent will be identified and any such
compensation received from the Company will be described in the Prospectus
Supplement. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Under agreements that may be entered into with the Company, underwriters,
dealers and agents may be entitled 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, dealers or
agents may be required to make in respect thereof.
The Company may grant underwriters who participate in the distribution of
Securities an option to purchase additional Securities to cover over-
allotments, if any.
All Debt Securities will be new issues of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the
Company for public offering and sale may make a market in such securities, but
such underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for any Securities.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with or perform services for the Company in the
ordinary course of business.
LEGAL OPINIONS
The validity of the Securities is being passed upon for the Company by
Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California.
EXPERTS
The consolidated balance sheets of Micron Technology, Inc. as of August 29,
1996 and August 31, 1995 and the consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended August 29, 1996 incorporated herein by reference to the Annual Report on
Form 10-K of Micron Technology, Inc. for the year ended August 29, 1996 have
been so incorporated in reliance upon the report of Coopers & Lybrand, L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
19
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OF-
FER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLI-
CATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE
DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO ITS DATE.
-----------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... S-3
Risk Factors............................................................... S-7
Use of Proceeds............................................................ S-15
Capitalization............................................................. S-15
Price Range of Common Stock................................................ S-16
Selected Consolidated Financial Data....................................... S-17
Description of Notes....................................................... S-19
Certain Federal Income Tax Considerations.................................. S-27
Underwriting............................................................... S-29
Legal Matters.............................................................. S-30
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference ............................ 2
The Company ................................................................ 3
Risk Factors ............................................................... 3
Use of Proceeds............................................................. 3
Ratio of Earnings to Fixed Charges.......................................... 3
Description of Debt Securities ............................................. 4
Description of Capital Stock ............................................... 18
Plan of Distribution ....................................................... 19
Legal Opinions ............................................................. 19
Experts .................................................................... 19
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$435,000,000
[LOGO OF MICRON]
7% CONVERTIBLE
SUBORDINATED NOTES
DUE JULY 1, 2004
-----------
PROSPECTUS SUPPLEMENT
-----------
GOLDMAN, SACHS & CO.
ROBERTSON, STEPHENS & COMPANY
MONTGOMERY SECURITIES
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
