<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 333-74501
PROSPECTUS SUPPLEMENT
(To Prospectus Dated March 16, 1999)
[LOGO OF ARMSTRONG]
$200,000,000
Armstrong World Industries, Inc.
7.45% Senior Notes Due 2029
------------
The senior notes will mature on May 15, 2029. The senior notes bear
interest at the rate of 7.45% per year. The Company will pay interest on the
senior notes on May 15 and November 15 of each year, beginning on November 15,
1999. The senior notes are not redeemable before maturity and do not have the
benefit of any sinking fund.
The senior notes are unsecured and rank equally with all of our other
current and future unsecured senior indebtedness. The senior notes will not be
listed on any national securities exchange or the Nasdaq Stock Market.
------------
Investing in the senior notes involves certain risks and uncertainties
which are described in the "Risk Factors" section on page S-7 of this
prospectus supplement and beginning on page 6 of the accompanying prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the senior notes or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
------------
<TABLE>
<CAPTION>
Per Senior Note Total
--------------- ------------
<S> <C> <C>
Public Offering Price............................. 99.882% $199,764,000
Underwriting Discount............................. 0.875% $ 1,750,000
Proceeds to the Company (before expenses)......... 99.007% $198,014,000
</TABLE>
The public offering price set forth above does not include accrued
interest, if any, from May 19, 1999.
------------
The Underwriters expect to deliver the senior notes in book-entry form only
through the facilities of The Depository Trust Company against payment for the
senior notes in New York, New York, on or about May 19, 1999. This is a firm
commitment underwriting.
------------
Joint Book-Running Managers
Salomon Smith Barney J.P. Morgan & Co.
Banc One Capital Markets, Inc.
Barclays Capital
HSBC Securities, Inc.
May 14, 1999
<PAGE>
You should rely only on the information contained in, or incorporated by
reference into, this prospectus supplement and the accompanying prospectus. We
have not, and the Underwriters have not, authorized anyone to provide you with
information different from that contained in this prospectus supplement and
the accompanying prospectus. We are not, and the Underwriters are not,
offering to sell the senior notes and/or seeking offers to buy the senior
notes, in any jurisdictions where offers and sales are not permitted. The
information contained in this prospectus supplement and the accompanying
prospectus is accurate only as of the dates of this prospectus supplement and
the accompanying prospectus, regardless of the time of delivery of this
prospectus supplement and the accompanying prospectus or any sale of the
senior notes. In this prospectus supplement and the accompanying prospectus,
the "Company," "we," "us" and "our" refer to Armstrong World Industries, Inc.
------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information...................................... S-3
Incorporation of Certain Documents By Reference.......................... S-3
Cautionary Statement Concerning Forward-looking Statements............... S-4
Prospectus Supplement Summary............................................ S-5
Risk Factors............................................................. S-7
Ratio of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges................................................................. S-9
Use of Proceeds.......................................................... S-10
Capitalization........................................................... S-11
Description of Senior Notes.............................................. S-12
Underwriters............................................................. S-15
Legal Matters............................................................ S-16
Experts.................................................................. S-16
Prospectus
Where You Can Find More Information...................................... 2
Incorporation of Certain Documents by Reference.......................... 2
Cautionary Statement Concerning Forward-looking Information.............. 3
The Company.............................................................. 4
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 8
Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividends................................... 9
Description of Debt Securities........................................... 10
Description of Capital Stock............................................. 25
Description of Warrants.................................................. 32
Description of Depositary Shares......................................... 33
Plan of Distribution..................................................... 36
Legal Matters............................................................ 38
Experts.................................................................. 38
</TABLE>
S-2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. The Securities and
Exchange Commission is referred to in this prospectus supplement and the
accompanying prospectus as the "Commission." You may read and copy any document
we file at the Commission's public reference rooms located at 450 Fifth Street,
N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549; at regional offices
of the Commission at the Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and at 7 World Trade Center, New
York, New York 10048. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our Commission filings (file number
001-02116) are also available to the public at the Commission's web site at
http://www.sec.gov. You may also read and copy these documents at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
In addition, we have filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended, and referred to as the
"Securities Act," with respect to the senior notes. This prospectus supplement
and the accompanying prospectus does not contain all of the information in the
Registration Statement. For further information with respect to the Company and
the senior notes, you should read the Registration Statement and its exhibits.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" the information we
file with them, which means:
. we can disclose important information to you by referring you to those
documents;
. incorporated documents are considered part of this prospectus supplement
and the accompanying prospectus; and
. information we file with the Commission will automatically update and
supersede the information contained in this prospectus supplement.
We incorporate by reference the documents listed below which were filed with
the Commission under the Securities Exchange Act of 1934, as amended, and
referred to as the "Exchange Act" and any future filings made with the
Commission under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, until
such time as all of the securities covered by this prospectus supplement have
been sold.
. Our Annual Report on Form 10-K for its fiscal year ended December 31,
1998; and
. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Armstrong World Industries, Inc.
2500 Columbia Avenue
Lancaster, Pennsylvania 17603
Attn:Jean Gallagher
Investor Relations
(717) 397-0611
S-3
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Cautionary Statement About Future Results
This prospectus supplement and the accompanying prospectus include forward-
looking statements. Forward-looking statements provide the Company's
expectations or forecasts of future events. These statements may be identified
by the fact that they use words such as "anticipate," "estimate," "expect,"
"project," "intend," "plan," "believe," "outlook," and other words of similar
meaning in discussions of future operating or financial performance. In
particular, these include statements relating to future earnings per share,
dividends, financial results, operating results, prospective products, future
performance of current products, future sales or expenses, and the outcome of
contingencies such as legal proceedings.
Any of these forward-looking statements may turn out to be wrong. Actual
future results may vary materially. Consequently, no forward-looking statement
can be guaranteed.
Many factors could cause the Company's actual results to differ materially
from expected historical results. Such factors include:
. the strength of end-use markets for our building products in North
America,
. levels of raw material and energy costs,
. competitive pricing caused by global overcapacity for building products
such as our floors and ceilings,
. economic and political disruptions in emerging markets and developing
countries,
. integration of businesses acquired in 1998, and
. the outcome of the asbestos, environmental and any other legal
proceedings as described the "Legal Proceedings" sections of the
Company's 10-K, 10-Q and 8-K filings with the SEC.
This should not be considered to be a complete list of all potential risks
and uncertainties that might affect our future results. We undertake no
obligation to update any forward-looking statements, whether as a result of
new information, future events or otherwise. The related disclosures in our
report on Form 10-K filed in March 1999, and any further disclosures the
Company makes in subsequent 10-Q, 8-K and 10-K reports to the Commission
should also be consulted.
S-4
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The Company
This summary may not contain all the information that maybe important to
you. You should read the entire prospectus supplement and the accompanying
prospectus, including the financial data and related notes included herein and
the documents incorporated by reference herein, before making an investment
decision.
The Company was incorporated in Pennsylvania in 1891. We design,
manufacture and sell interior finishings, including floor coverings, building
products (primarily ceiling systems) and wood products. These products are
sold primarily for use in the furnishing, refurbishing, repair, modernization
and construction of residential, commercial and institutional buildings. We
also manufacture various industrial and other products, including pipe
insulation, gasket material and textile machine parts. Through Triangle
Pacific Corp., a company we acquired on July 23, 1998 and referred to as
"Triangle," we manufacture hardwood and other flooring and relevant products,
as well as kitchen and bathroom cabinets. Further, effective August 31, 1998,
we acquired 93% of DLW Aktiengesellschaft, a German company, referred to as
"DLW," that manufactures flooring sold primarily in European markets.
Our business includes five segments: floor coverings, building products,
wood products, insulation products and all other products, each of which is
described below.
. Floor Coverings
We are a worldwide manufacturer of floor coverings for the interiors of
homes and commercial and institutional buildings, offering a broad range of
resilient flooring together with adhesives, installation and maintenance
materials and accessories. Resilient flooring, in both sheet and tile form,
together with laminate flooring and linoleum, is made in a variety of types,
designs, and colors. These types of flooring offer such features as ease of
installation, reduced maintenance (no-wax), and cushioning for greater
underfoot comfort. Floor covering products are sold to the commercial and
residential market segments through wholesalers, retailers (including large
home centers), and contractors, and to the hotel/motel and manufactured homes
industries.
. Building Products
We are a major producer of ceiling materials in the United States and
Europe, and market both residential and commercial ceiling systems. Ceiling
materials for the home are offered in a variety of types and designs; most
provide noise reduction and features intended to permit ease of installation.
Our residential ceiling products are sold through wholesalers and retailers
(including large home centers). Commercial ceiling systems, designed for use
in shopping centers, offices, schools, hospitals, and other commercial and
institutional structures, are available in numerous colors, performance
characteristics and designs. They offer characteristics such as acoustical
control, rated fire protection, and aesthetic appeal. We sell commercial
ceiling materials and accessories, along with acoustical wall panels, to
ceiling systems contractors and to resale distributors. Suspension ceiling
systems products are manufactured and sold through a joint venture with
Worthington Industries.
. Wood Products
Through Triangle Pacific, we manufacture and sell hardwood flooring and
other flooring and related products. Our wood products segment also
manufactures and distributes kitchen and bathroom cabinets. These products are
used primarily in residential new construction and remodeling, with some
commercial applications such as retail stores and restaurants. Flooring sales
are generally made through independent wholesale flooring distributors.
Bathroom cabinets are distributed through Company-operated distributors and
are sold directly to the end-user. The business of this segment is seasonal,
with demand for its products generally highest between the months of April and
November.
S-5
<PAGE>
The Offering
Issuer.......................... Armstrong World Industries, Inc.
Notes Offered................... $200,000,000 aggregate principal amount of
7.45% Senior Notes due 2029.
Maturity........................ May 15, 2029.
Interest........................ We will pay interest on the senior notes on
May 15 and November 15 of year, beginning
November 15, 1999.
Ranking......................... The senior notes will be unsecured
obligations, ranking equally with all of our
other unsecured and unsubordinated
indebtedness which may be outstanding from
time to time.
Redemption...................... The senior notes will not be redeemable prior
to maturity.
Use of Proceeds................. We anticipate that the net proceeds from the
offering will be approximately $197.9 million.
We expect to use the net proceeds to repay
short-term indebtedness.
Risk Factors.................... You should consider all of the information
contained in this prospectus supplement and
the accompanying prospectus before making an
investment in the Senior Notes. In particular,
you should consider the risks set forth under
the heading "Risk Factors" on page S-7 of this
prospectus supplement and page 6 of the
accompanying prospectus.
Ratio of Earnings to Fixed
Charges and Earnings to
Combined Fixed Charges.......... Our consolidated ratios of earnings from
continuing businesses to fixed charges was
0.63 (earnings were inadequate to cover fixed
charges by $28.9 million) for the year ended
December 31, 1998 and 3.48 for the three
months ended March 31, 1999.
. Insulation Products
We manufacture insulation products for the technical insulation market.
Insulation products are made in a variety of types and designs to satisfy
various industrial and commercial applications with the majority of the
products comprising closed cell flexible foams. A broad range of cladding and
other related materials for the insulation contracting market are also
produced. Insulation products are sold primarily throughout Europe and North
America, with newer markets in Asia and South America.
On February 2, 1999, we announced our intent to form a joint venture in the
worldwide technical insulation business with NMC (USA)/Nomaco (Belgium) and
Thermaflex (Netherlands) subject to the completion of due diligence procedures
and regulatory approval.
. Other Products
Other business units offer specialty products for the automotive, textile
and other industries worldwide. Gasket materials are sold for new and
replacement use in the automotive, farm equipment, appliance, small engine,
compressor and other industries. Textile products include cots and aprons sold
to equipment manufacturers and textile mills. Gasket and textile products are
sold, depending on type and ultimate use, to original equipment manufacturers,
contractors, wholesalers, fabricators and end users. In May, 1999, DLW closed
the sale of its office furniture business. We had previously disclosed that
this business was being held for sale. We constantly evaluate our various
business units and may from time to time dispose of, or restructure, those
units.
S-6
<PAGE>
RISK FACTORS
The senior notes we plan to sell involve a certain degree of risk. Investors
should carefully consider the risk factors described below and the risk factors
described in the accompanying prospectus together with all of the information
set forth or incorporated by reference in this prospectus supplement and the
accompanying prospectus in determining whether to purchase any of the senior
notes.
Possible Adverse Consequences from Asbestos-Related Personal Injury Liability
We are one of many defendants in approximately 164,000 pending claims as of
March 31, 1999, alleging personal injury from exposure to asbestos. Nearly all
claims seek general and punitive damages arising from alleged exposures, at
various times, from World War II onward, to asbestos-containing products. These
claims generally involve allegations of negligence, strict liability, breach of
warranty and conspiracy with respect to its involvement with asbestos-
containing insulation products. We discontinued the sale of all such products
in 1969. The claims also allege that injury may be determined many years (up to
40 years) after first exposure to asbestos. Nearly all suits name many
defendants, and over 100 different companies are reportedly involved.
We generally are involved in all stages of claims resolution and litigation,
including individual trials, consolidated trials and appeals. Neither the rate
of future filings and resolutions nor the total number of future claims can be
predicted at this time with a high degree of certainty.
During 1998, pending claims increased by 71,000 claims. In the first quarter
of 1999, 11,380 additional claims were filed. Based on this claims experience
in the first quarter of 1999, there appear to have been favorable developments
with respect to some assumptions, but in some respects less favorable
developments than anticipated on average for 1999. We will continue to study
the variables as experienced in 1999 in order to identify trends that may
become evident and to assess their impact on the range of liability that is
probable and estimable. We will evaluate whether any changes are required to
our estimated liability as we receive additional claims experience.
We continually evaluate the nature and amount of recent claim settlements
and their impact on our projected asbestos resolution and defense costs. In
doing so, we review, among other things, our recent and historical settlement
amounts, the incidence of past claims, the mix of the injuries and occupations
of the plaintiffs, the number of cases pending against us, previous estimates
based on proposed settlement vehicles and our recent experience. Subject to
uncertainties, limitations and other variables that can affect our liability,
and based upon our experience, we have estimated our share of liability to
defend and resolve probable asbestos-related personal injury claims. Our
estimation of such liability that is probable and estimable through 2004 ranges
from $389.4 million to $778.0 million. We have concluded that no amount within
that range is more likely than any other, and therefore have reflected $389.4
million as a liability in our consolidated financial statements as of March 31,
1999. Of this amount, management expects to incur approximately $120.0 million
over the next 12 months and has reflected this amount as a current liability.
This estimate includes an assumption that the number of new claims filed
annually will be less than the number filed in 1998.
For claims that may be filed beyond 2004, management believes that the level
of uncertainty is too great to provide for reasonable estimation of the number
of future claims, the nature of such claims, or the cost to resolve them.
Accordingly, it is reasonably possible that the total exposure to personal
injury claims may be greater than the recorded liability.
We do not know how many claims will be filed against us in the future, nor
the details thereof, nor of pending suits not fully reviewed, nor the defense
and resolution costs that may ultimately result therefrom, nor whether an
alternative to a proposed, but unsuccessful, mass class action settlement
vehicle in the federal courts may emerge, nor the scope of our insurance
coverage ultimately deemed available.
Because of the uncertainties, it is extremely difficult to obtain reasonable
estimates of the amount of the ultimate liability. The estimate of likely
claims to be filed in the future is subject to an increasing degree of
uncertainty each year into the future. As
S-7
<PAGE>
additional experience is gained regarding claims and settlements or other new
information becomes available regarding the potential liability, we will
reassess our potential liability and revise the estimates as appropriate.
An insurance asset in the amount of $264.8 million is recorded as an asset
in our consolidated financial statements as of March 31, 1999. This amount
reflects our belief in the availability of insurance in this amount, based
upon our success in insurance recoveries, recent settlement agreements that
provide such coverage, the nonproducts recoveries by other companies and the
opinion of outside counsel. The amount to be received in the next 12 months is
dependent upon the actual liability incurred and the nature and result of
settlement discussions. Management estimates that the timing of future cash
payments for the remainder of the recorded asset may extend beyond 10 years.
As noted above, a number of variables affect the our estimate of our
asbestos liability. It is possible that an unexpected change in any of those
variables could have a material adverse effect on our financial condition and
results of operations, although we do not believe that will occur. In
addition, the net after-tax effect of any future liabilities recorded in
excess of insurance assets could be material in such future period.
S-8
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings from continuing businesses to fixed charges for the indicated
periods.
<TABLE>
<CAPTION>
Three
Months
Year Ended Ended
------------ ---------
December 31, March 31,
1998 1999
------------ ---------
<S> <C> <C>
Ratio of earnings from continuing businesses to
fixed charges................................... 0.63(1) 3.48
</TABLE>
- --------
(1)Earnings were inadequate to cover fixed charges by $28.9 million.
The ratio of earnings from continuing businesses to fixed charges has been
computed by dividing earnings from continuing businesses by fixed charges. For
purposes of calculating this ratio, earnings from continuing businesses
consist of consolidated earnings from continuing business operations before
income taxes plus fixed charges. Fixed charges consist of interest expense and
one-third of rent expense which is deemed to be representative of interest and
amortization of finance costs. The ratio of earnings from continuing
businesses to fixed charges for the last five fiscal years is set forth in the
accompanying prospectus.
S-9
<PAGE>
USE OF PROCEEDS
We anticipate that the net proceeds to the Company from the sale of the
senior notes in this offering will be approximately $197.9 million after
deducting underwriting discounts and commissions and expenses payable by the
Company. We expect to use the net proceeds from this offering to repay short-
term indebtedness as described below.
Pursuant to its commercial paper program, the Company issued commercial
paper to partially finance the acquisitions of Triangle and DLW and to repay
certain indebtedness assumed in connection therewith. The commercial paper
notes issued under this program have maturities of up to 364 days and bear
interest at rates between approximately 5.0% and 5.25%. At March 31, 1999, we
had approximately $888.3 million of outstanding commercial paper. The Company
intends to use the net proceeds of this offering to repay a portion of the
commercial paper notes issued under its program and may use a portion of such
proceeds for general corporate purposes pending the application thereof or
invest such funds in short-term, interest bearing, investment grade
obligations.
S-10
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated cash and cash equivalents,
short-term debt and capitalization of the Company as of March 31, 1999 (i) on
an actual basis and (ii) on a pro forma basis as adjusted to give effect to
the consummation of this offering and the application of the net proceeds
therefrom as described under "Use of Proceeds." This table should be read in
conjunction with and is qualified by reference to the selected financial data
contained in this prospectus supplement and the financial statements and notes
thereto included in documents incorporated by reference in this prospectus
supplement and the accompanying prospectus.
<TABLE>
<CAPTION>
Pro Forma
As Adjusted
Actual For This Offering(1)
-------- --------------------
(dollars in millions)
<S> <C> <C>
Cash and cash equivalents....................... $ 36.6 $ 36.6
Short-term debt:
Short-term debt............................... 188.8 188.8
Current maturities of long-term debt.......... 32.6 32.6
-------- --------
$ 221.4 $ 221.4
======== ========
Long-term debt:
7.45% Senior Notes due 2029................... $ -- $ 200.0
7.45% Senior Quarterly Interest Bonds due
2038......................................... 180.0 180.0
6.35% Senior Notes due 2003................... 199.9 199.9
6.50% Senior Notes due 2005................... 149.7 149.7
9.75% Debentures due 2008..................... 125.0 125.0
Commercial Paper, noncurrent.................. 750.0 550.0
Medium-term notes 8.75-9% due 2000-2001....... 25.6 25.6
Bank loans 1999-2000.......................... 83.6 83.6
Industrial development bonds.................. 31.0 31.0
Zero coupon note.............................. 2.9 2.9
Capital lease obligations..................... 12.8 12.8
Other......................................... 26.1 26.1
Less: Current maturities...................... (32.6) (32.6)
-------- --------
Net long-term debt.............................. 1,554.0 1,554.0
Employee Stock Ownership Plan (ESOP) loan
guarantee...................................... 178.6 178.6
Shareholders' equity:
Common stock $1 par value per share,
authorized 200 million shares; issued
51,878,910 shares............................ 51.9 51.9
Capital in excess of par value................ 173.6 173.6
Reduction for ESOP loan guarantee............. (195.6) (195.6)
Retained earnings............................. 1,286.5 1,286.5
Other comprehensive income (2)................ (26.5) (26.5)
-------- --------
Less common stock in treasury, at cost:
11,839,012 shares............................. (547.1) (547.1)
-------- --------
Total shareholders' equity.................. 742.8 742.8
-------- --------
Total capitalization........................ $2,475.4 $2,475.4
======== ========
</TABLE>
- --------
(1) Gives effect to the consummation of this offering and the application of
the net proceeds therefrom. See "Use of Proceeds."
(2) Includes minimum pension liability adjustment and foreign currency
translation adjustment and hedging activities.
S-11
<PAGE>
DESCRIPTION OF SENIOR NOTES
The following description of the particular terms of the senior notes being
offered (referred to in the accompanying prospectus as the "Senior Debt
Securities") supplements and to the extent inconsistent, replaces the
description of the general terms and provisions of Senior Debt Securities set
forth in the accompanying prospectus to which description reference is hereby
made. The following summary is qualified in its entirety by reference to the
Senior Indenture referred to in the accompanying prospectus, and reference
should be made to the accompanying prospectus and the Senior Indenture for the
definitions of certain capitalized terms used below.
General
The senior notes will mature on May 15, 2029, referred to as the "Maturity
Date," and will be limited in aggregate principal amount to $200,000,000. The
Company will issue the senior notes as a single series of Senior Debt
Securities under the Senior Indenture. The Company will issue the senior notes
in fully registered book-entry form only, without coupons, in denominations of
$1,000 and integral multiples thereof. The senior notes are not entitled to
the benefit of any sinking fund. Each of the senior notes will bear interest
at the rate per year shown on the cover page of this prospectus supplement
from and including May 19, 1999 or from and including the most recent Interest
Payment Date to which interest has been paid or provided for, payable on May
15 and November 15 of each year, beginning November 15, 1999 (each, referred
to as an "Interest Payment Date"), to the person in whose name the senior
notes are registered, referred to as the "Holder," at the close of business on
the date fifteen days prior to such Interest Payment Date, referred to as the
"Regular Record Date."
If any Interest Payment Date or the Maturity Date falls on a day that is
not a Business Day, the interest or principal payment shall be made on the
next day that is a Business Day, and no interest on such payment shall accrue
for the period from and after the Interest Payment Date or the Maturity Date.
Interest on the senior notes will be computed on the basis of a 360-day year
of twelve 30-day months.
The senior notes will be unsecured senior obligations of the Company,
ranking equally with all other unsecured and unsubordinated indebtedness of
the Company which may be outstanding from time to time. The senior notes will
not be redeemable prior to maturity.
The senior notes will not be listed on any national securities exchange or
the Nasdaq Stock Market.
Book-Entry System, Form and Delivery
The senior notes will be represented by one or more Global Securities
registered in the name of Cede & Co., the nominee of The Depository Trust
Company, as Depositary, and the provisions set forth under "Description of
Debt Securities--Global Securities" in the accompanying Prospectus will apply
to the senior notes.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its participants (the
"Participants") deposit with the Depositary. The Depositary also facilitates
the settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants, referred to
as the "Direct Participants," include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. The
Depositary is owned by a number of its Direct Participants and by The New York
Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the Depositary's system is
also available to others such as securities brokers and dealers, banks and
trust companies that clear through, or maintain a custodial relationship with
a Direct Participant, either directly or indirectly, referred to as the
"Indirect Participants." The rules applicable to the Depositary and its
Participants are on file with the Commission.
S-12
<PAGE>
Purchases of the senior notes under the Depositary's system must be made by
or through Direct Participants, who will receive a credit for the senior notes
on the Depositary's records. The ownership interest of each actual purchaser
of each senior note, referred to as "Beneficial Owner," is in turn to be
recorded on the Direct and Indirect Participants' respective records.
Beneficial Owners will not receive written confirmation from the Depositary of
their purchase, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of
ownership interest in the senior notes are to be accomplished by entries made
on the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interest in
the senior notes except in the event that use of the book-entry system for the
senior notes is discontinued.
To facilitate subsequent transfers, all senior notes deposited by
Participants with the Depositary will be registered in the name of Cede & Co.
The deposit of the senior notes with the Depositary and their registration in
the name of Cede & Co. effect no change in beneficial ownership. The
Depositary has no knowledge of the actual Beneficial Owners of the senior
notes; the Depositary's records reflect only the identify of the Direct
Participants to whose accounts such senior notes are credited, which may or
may not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Delivery of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
the senior notes. Under its usual procedures, the Depositary mails an omnibus
proxy, referred to as an "Omnibus Proxy," to the Company as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the senior notes
are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Principal and interest payments on the senior notes will be made to Cede &
Co. The Depositary's practice is to credit Direct Participants' accounts on
the relevant payment date in accordance with their respective holdings shown
on the Depositary's records unless the Depositary has reason to believe that
it will not receive payment on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities for the accounts of customers in
bearer form or registered in "street-name," and will be the responsibility of
such Participant and not of the Depositary, the Underwriters, or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to Cede & Co. is the
responsibility of the Company or the respective trustees. Disbursement of such
payments to Direct Participants is the responsibility of the Depositary, and
disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants.
The Depositary may discontinue providing its services as securities
depository with respect to the senior notes at any time by giving reasonable
notice to the Company. Under such circumstances and in the event that a
successor securities depository is not obtained, certificates for the senior
notes are required to be printed and delivered. In addition, the Company may
decide to discontinue use of the system of book-entry transfers through the
Depositary (or a successor securities depository). In that event, certificates
will be printed and delivered.
The Company will not have any responsibility or obligation to Participants
or the persons for whom they act as nominees with respect to the accuracy of
the records of the Depositary, its nominee or any Direct or Indirect
Participant with respect to any ownership interest in the senior notes, or
with respect to payments to or providing of notice for the Direct
Participants, the Indirect Participants or the Beneficial Owners.
S-13
<PAGE>
The Depositary's management is aware that some computer applications,
systems and the like for processing data, referred to as "Systems," that are
dependent upon calendar dates, including dates before, on, and after January
1, 2000, may encounter "Year 2000 problems." The Depositary has informed its
participants and other members of the financial community, referred to as the
"Industry," that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and income payments) to securityholders, book-entry deliveries, and
settlement of trades within the Depositary, referred to as "DTC Services,"
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
the Depositary's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, the Depositary's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom the Depositary licenses
software and hardware, and third party vendors on whom the Depositary relies
for information or the provision of services, including telecommunications and
electrical utility service providers, among others. The Depositary has
informed the Industry that it is contacting (and will continue to contact)
third party vendors from whom the Depositary acquires services to: (i) impress
upon them the importance of such services being Year 2000 compliant; and (ii)
determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, the Depositary is in the
process of developing such contingency plans as it deems appropriate.
According to the Depositary, the foregoing information with respect to the
Depositary has been provided to the Industry for informational purposes only
and is not intended to serve as a representation, warranty or contract
modification of any kind.
The information contained above under the caption "Description of Senior
Notes--Book-Entry System, Form and Delivery" concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable. Neither the Company, the Trustee nor the
underwriters, dealers or agents take responsibility for the accuracy or
completeness thereof.
The Trustee
The trustee under the Senior Indenture will be The First National Bank of
Chicago, as Trustee, and is referred to in this prospectus supplement as the
"Trustee." The First National Bank of Chicago, as Trustee also serves as
trustee under the Subordinated Indenture, dated as of December 23, 1998,
between the Company and the Trustee. The Trustee also provides other banking
services to the Company in the normal course of business.
Upon the occurrence of an Event of Default or an event which, after notice
or lapse of time or both, would become an Event of Default, or upon the
occurrence of a default under such other indenture, the Trustee may be deemed
to have a conflicting interest with respect to the senior notes for purposes
of the Trust Indenture Act of 1939 and, unless the Trustee is able to
eliminate any such conflicting interest, the Trustee may be required to resign
as Trustee under the Senior Indenture. In that event, the Company would be
required to appoint a successor trustee for the Senior Indenture.
S-14
<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement, dated the date hereof, the Underwriters named below, have
severally, but not jointly, agreed to purchase, and the Company has agreed to
sell to them, severally, the principal amounts of the senior notes set forth
opposite its name below:
<TABLE>
<CAPTION>
Principal
Amount
of Senior
Underwriter Notes
----------- ------------
<S> <C>
Salomon Smith Barney Inc. .................................. $ 80,000,000
J.P. Morgan Securities Inc.................................. 80,000,000
Banc One Capital Markets, Inc. ............................. 13,334,000
Barclays Capital Inc. ...................................... 13,333,000
HSBC Securities, Inc. ...................................... 13,333,000
------------
Total................................................... $200,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligation of the several
Underwriters to pay for and accept delivery of the senior notes is subject to
the approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all of the
senior notes if any are taken.
The Company has been advised by the Underwriters that the Underwriters
initially propose to offer the senior notes directly to the public at the
public offering prices set forth on the cover page hereof and to certain
dealers at prices that represent a concession not to exceed 0.500% of the
principal amount per senior note. Any Underwriter may allow, and any such
dealers may reallow, a concession to certain other dealers not to exceed
0.250% of the principal amount per senior note. After the senior notes are
released to the public, the offering price and other selling terms may from
time to time be changed by the Underwriters named on the cover page of this
prospectus supplement.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including civil liabilities under the Securities Act, or
to contribute to payments which the Underwriters may be required to make in
respect of such liabilities.
The senior notes are a new issue of securities with no established trading
market. The Company does not intend to apply for the listing of the senior
notes on a national securities exchange, but has been advised by the
Underwriters that they intend to make a market in the senior notes. However,
they are not obligated to do so and may discontinue the market making at any
time without notice. No assurance can be given as to the liquidity of the
trading market for the senior notes.
In order to facilitate the offering of the senior notes, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
prices of the senior notes. Specifically, the Underwriters may overallot in
connection with the offering, creating a short position in the senior notes
for their own account. In addition, to cover overallotments or to stabilize
the price of the senior notes, the Underwriters may bid for, and purchase, the
senior notes in the open market. Finally, the Underwriters syndicate may
reclaim selling concessions allowed to an Underwriter or a dealer for
distributing the senior notes in this offering, if the syndicate repurchases
previously distributed senior notes in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market prices of the senior notes above
independent market levels. The Underwriters are not required to engage in
these activities, and may end any of these activities at any time.
From time to time certain Underwriters and their affiliates engage in
transactions, including commercial banking and investment banking
transactions, and also perform services for the Company and its affiliates in
the ordinary course of business for which they have received and will continue
to receive customary fees. In addition, in the ordinary course of business the
Underwriters may actively trade securities of the Company for such
Underwriter's own account and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities.
S-15
<PAGE>
J.P. Morgan Securities Inc. acted as syndication agent under the Company's
credit facilities. In addition, Citibank N.A., Morgan Guaranty Trust Company
of New York, Barclays Bank plc and Marine Midland Bank, which are affiliates
of Salomon Smith Barney Inc., J.P. Morgan Securities Inc., Barclays Capital
Inc. and HSBC Securities, Inc., respectively, are lenders under the Company's
credit facilities. In addition, J.P. Morgan Securities Inc. acts as a dealer
under the Company's commercial paper program.
We estimate that the total expense of this offering, excluding underwriting
discounts and commissions, will be approximately $100,000.
LEGAL MATTERS
Certain matters with respect to the validity of the senior notes offered
hereby will be passed upon for the Company by Rogers & Wells LLP, New York,
New York. Certain legal matters relating to the senior notes will be passed
upon for the Underwriters by Davis Polk & Wardwell.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998, have been incorporated by reference herein in reliance upon
the report of KPMG LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
With respect to the unaudited interim financial information of the Company
for the period ended March 31, 1999, incorporated by reference herein, the
independent certified public accountants have reported that they applied
limited procedures in accordance with professional standards for a review of
such information. However, their separate report included in the Company's
quarterly report on Form 10-Q for the quarter ended March 31, 1999, states
that they did not audit and they do not express an opinion on the interim
financial information. Accordingly, the degree of reliance on such reports
should be restricted in light of the limited nature of the review procedures
applied. The accountants are not subject to the liability provisions of
section 11 of the Securities Act for their report on the unaudited interim
financial information because the report is not a "report" or a "part" of the
registration statement prepared or certified by the accountants within the
meaning of sections 7 and 11 of the Securities Act.
S-16
<PAGE>
PROSPECTUS
ARMSTRONG WORLD INDUSTRIES, INC.
----------------
$1,000,000,000
Debt Securities
Common Stock
Class A Preferred Stock
Warrants
Depositary Shares
We may offer from time to time, together or separately, (1) debt
securities, referred to as "Debt Securities," which may be either senior debt
securities or subordinated debt securities or other evidences of indebtedness
in one or more series; (2) shares of common stock, referred to as "Common
Stock," including Preferred Stock Purchase Rights which attach to each share
of Common Stock, referred to as "Rights"; (3) shares of Class A Preferred
Stock, referred to as "Preferred Stock," including shares of Series One
Preferred Stock issuable upon exercise of the Rights and one or more series of
Class A Preferred Stock which may be convertible into or exchangeable for
Common Stock or Debt Securities; (4) warrants or other rights to purchase Debt
Securities, Common Stock or Preferred Stock, or any combination thereof, as we
may designate at the time of the offering, referred to as "Warrants"; and (5)
depositary shares, referred to as "Depositary Shares." Our Common Stock is
listed on the New York Stock Exchange, the Pacific Stock Exchange and the
Philadelphia Stock Exchange under the symbol "ACK." Our 7.45% Senior Quarterly
Interest Bonds due 2038 are listed on the New York Stock Exchange under the
symbol "AKK." The Debt Securities, Common Stock, Preferred Stock, Warrants and
Depositary Shares are collectively referred to as the "Securities."
The aggregate initial offering price of the Securities that we intend to
offer will not exceed $1,000,000,000. The Securities may be issued as units
and in any combination. We will offer the Securities in amounts, at prices and
on terms to be determined by market conditions at the time of the offering.
We will provide the specific terms of the Securities in supplements to this
prospectus. You should read this prospectus and the prospectus supplements
carefully before you invest in the Securities. This prospectus may not be used
to consummate sales of Securities unless accompanied by a prospectus
supplement.
Your investment in the Securities may involve certain risks. See "Risk
Factors" beginning on page 6 of this prospectus and those risk factors
contained in the applicable prospectus supplement, if any, for any additional
risks in connection with your investment.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------
The date of this Prospectus is March 16, 1999.
The information contained in this prospectus is not complete and may be
changed. A registration statement relating to these Securities has been filed
with the Securities and Exchange Commission. We may not sell these Securities
until the registration statement becomes effective. This prospectus is not an
offer to sell or the solicitation of an offer to buy these Securities in any
state in which such offer, solicitation or sale is not permitted.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, we may sell any combination of the Securities described in
this prospectus in one or more offerings up to a total dollar amount of
$1,000,000,000. This prospectus provides you with a general description of the
Securities we may offer. Each time we sell Securities, we will provide a
prospectus supplement that will contain specific information about the terms
of that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
under the heading "Where You Can Find More Information" before you invest in
any of the Securities.
WHERE YOU CAN FIND MORE INFORMATION
Armstrong World Industries, Inc., referred to as the "Company," files
annual, quarterly and special reports, proxy statements and other information
with the Securities and Exchange Commission. The Securities and Exchange
Commission is referred to in this prospectus as the "Commission." You may read
and copy any document that the Company files at the Commission's public
reference rooms located at 450 Fifth Street, N.W., Judiciary Plaza, Room 1024,
Washington, D.C. 20549; at regional offices of the Commission at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and at 7 World Trade Center, New York, New York 10048.
The Company's filings with the Commission (file number 001-02116) are also
available to the public at the Commission's web site at http://www.sec.gov.
You may also read and copy these documents at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
In addition, the Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act of 1933, as amended, with
respect to the Securities. This prospectus does not contain all of the
information in the Registration Statement. For further information with
respect to the Company and the Securities, you should read the Registration
Statement and its exhibits.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows the Company to "incorporate by reference" the
information it files with them, which means that the Company can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and later information that the Company files with the Commission
will automatically update and supersede this information. The Company
incorporates by reference its Annual Report on Form 10-K for its fiscal year
ended December 31, 1998 and any future filings made with the Commission under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as
amended, until such time as all of the Securities have been sold. In this
prospectus, the Securities Exchange Act of 1934, as amended, is referred to as
the "Exchange Act," and the Securities Act of 1933, as amended, is referred to
as the "Securities Act."
2
<PAGE>
You may request a copy of these filings, at no cost, by writing or
telephoning the Company at the following address:
Armstrong World Industries, Inc.
2500 Columbia Avenue
Lancaster, Pennsylvania 17603
Attn: Deborah K. Owen
Senior Vice President, Secretary
and General Counsel
(717) 397-0611
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This prospectus and any accompanying prospectus supplement include forward-
looking statements. We have based these forward-looking statements on our
current expectations and projections about future events. Forward looking
statements are generally identifiable by use of the words "may," "will,"
"should," "expect," "anticipate," "estimate," "believe," "intend" or "project"
or the negatives of such words or variations thereon or comparable
terminology. These forward-looking statements are subject to risks,
uncertainties and assumptions about the Company, including, among other
things:
. material adverse changes in economic conditions in the markets
served by the Company;
. the possibility that currently unanticipated difficulties may arise
in integrating the operations of newly acquired businesses and newly
formed joint ventures; and
. competition from others in the markets served by the Company.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this prospectus and any accompanying
prospectus supplement might not occur.
3
<PAGE>
THE COMPANY
The Company was incorporated in Pennsylvania in 1891. We design,
manufacture and sell interior furnishings, including floor coverings, building
products (primarily ceiling systems) and wood products. These products are
sold primarily for use in the furnishing, refurbishing, repair, modernization
and construction of residential, commercial and institutional buildings. We
also manufacture various industrial and other products, including pipe
insulation, gasket material and textile machine parts. Through Triangle
Pacific Corp., a company acquired on July 23, 1998 and referred to as
"Triangle Pacific," we manufacture hardwood and other flooring and relevant
products, as well as kitchen and bathroom cabinets. Further, effective
August 31, 1998, we acquired 93% of DLW Aktiengesellschaft, a German company,
that manufactures flooring and some office furniture in Europe.
Our business includes five segments, flooring coverings, building products,
wood products, insulation products and all other products, each of which is
described below.
. Floor Coverings
We are a worldwide manufacturer of floor coverings for the interiors of
homes and commercial and institutional buildings, offering a broad range of
resilient flooring together with adhesives, installation and maintenance
materials and accessories. Resilient flooring, in both sheet and tile form,
together with laminate flooring, linoleum, carpet and sports flooring, is made
in a wide variety of types, designs, and colors. These types of flooring offer
such features as ease of installation, reduced maintenance (no-wax), and
cushioning for greater underfoot comfort. Floor covering products are sold to
the commercial and residential market segments through wholesalers, retailers
(including large home centers), and contractors, and to the hotel/motel and
manufactured homes industries.
. Building Products
We are a major producer of ceiling materials in the United States and
abroad, and market both residential and commercial ceiling systems. Ceiling
materials for the home are offered in a variety of types and designs; most
provide noise reduction and incorporate Company-designed features intended to
permit ease of installation. These residential ceiling products are sold
through wholesalers and retailers (including large home centers). Commercial
ceiling systems, designed for use in shopping centers, offices, schools,
hospitals, and other commercial and institutional structures, are available in
numerous colors, performance characteristics and designs and offer
characteristics such as acoustical control, rated fire protection, and
aesthetic appeal. We sell commercial ceiling materials and accessories, along
with acoustical wall panels, to ceiling systems contractors and to resale
distributors. Suspension ceiling systems products are manufactured and sold
through a joint venture with Worthington Industries.
. Wood Products
The Company, through Triangle Pacific, manufactures and sells hardwood
flooring and other flooring and related products. The wood products segment
also manufactures and distributes kitchen and bathroom cabinets. These
products are used primarily in residential new construction and remodeling,
with some commercial applications such as retail stores and restaurants.
Flooring sales are generally made through independent wholesale flooring
distributors and the cabinets are distributed through Company-operated
distributors and directly to the end-user. The business of this segment is
seasonal, with demand for its products generally the highest between the
months of April and November.
4
<PAGE>
. Insulation Products
We manufacture insulation products for the technical insulation market.
Insulation products are made in a wide variety of types and designs to satisfy
various industrial and commercial applications with the majority of the
products comprising closed cell flexible foams. A broad range of cladding and
other related materials for the insulation contracting market are also
produced. Insulation products are sold primarily throughout Europe and North
America, with increasing markets in Asia and South America.
. All Other Products
Other business units include the making of a variety of specialty products
for the automotive, textile and other industries worldwide. Gasket materials
are sold for new and replacement use in the automotive, farm equipment,
appliance, small engine, compressor and other industries. Textile products
include cots and aprons sold to equipment manufacturers and textile mills.
Gasket and textile products are sold, depending on type and ultimate use, to
original equipment manufacturers, contractors, wholesalers, fabricators and
end users.
5
<PAGE>
RISK FACTORS
The Securities we plan to sell may involve a significant degree of risk.
Investors should carefully consider the risk factors described below, together
with all of the information set forth or incorporated by reference in this
prospectus or any accompanying prospectus supplement, in determining whether
or not to purchase any of the Securities. Additional risk factors may be set
forth in an accompanying prospectus supplement.
. Risks Associated with Integration of Triangle Pacific, DLW and Other
Possible Expansion.
The Company recently experienced a period of significant expansion. This
expansion period included the acquisitions of Triangle and DLW. It also
included expansion into markets that have not been traditionally serviced by
the Company. As a result, our management now manages a substantially larger
enterprise. We can not give any assurance that we can effectively implement
the organizational and operational systems necessary for optimal management
and integration of our newly expanded businesses, or any other businesses that
we may acquire in the future. We also can not give any assurances that we will
be able to manage our growth successfully. In addition, our management is in
the ongoing process of evaluating the nature and scope of our operations and
various short-term and long-term strategic considerations. We must assess to
what extent integration, consolidation or other modification of our businesses
is appropriate. Some uncertainties and risks relating to the integration of
combined operations may exist and, therefore, it is difficult to predict or
quantify the impact of such decisions on our results of operations and
financial condition.
While management expects to realize certain operating synergies and cost
savings as a result of its recent acquisitions as well as any future
acquisitions, there can be no assurance that such synergies and savings will
be achieved. It may also be difficult to integrate these businesses into our
Company successfully or on a timely basis. As a result, any future
acquisitions may have an adverse effect on our results of operations and
financial position.
. Absence of Public Market for the Debt Securities, Warrants and Preferred
Stock.
Any new Securities sold will have no established trading market, other than
the Company's Common Stock, which is listed on the New York, Pacific and
Philadelphia Stock Exchanges. Any Common Stock sold pursuant to a prospectus
supplement will be listed on the New York, Pacific and Philadelphia Stock
Exchanges, subject to official notice of issuance. Any underwriters purchasing
our Securities for any 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 activities at any time without notice. As a
result, we can not give any assurance that the secondary market for any of the
Debt Securities, Warrants, Preferred Stock or Depositary Shares will be
liquid.
. Certain Provisions of the Company's Articles of Incorporation, Bylaws and
the Pennsylvania Business Corporation Law.
The Company's Articles of Incorporation and Bylaws, as well the
Pennsylvania Business Corporation Law, contain provisions that may have the
effect of delaying, deterring or preventing a change in control of the
Company, including without limitation, cumulative voting for directors,
classification of the board of directors into three classes, certain
supermajority voting requirements, the ability to issue shares of a series of
Preferred Stock without stockholder approval and the issuance of preferred
stock purchase rights which attach to each share of Common Stock and may
become exercisable in connection with certain acquisitions. For a further
description of these provisions, see "Description of Capital Stock."
6
<PAGE>
. Risks Associated with Year 2000 Issues.
Like most other companies, the Company strives to ensure that its
information systems are able to recognize and process date-sensitive
information properly as the year 2000 approaches. Systems that do not
recognize and process this information could generate erroneous data or even
fail. The Company is conducting reviews of its key computer systems and has
identified a number of systems that could be affected by the year 2000 issue.
The Company is undertaking to upgrade these systems to allow them to function
properly. If these steps are not completed successfully in a timely manner,
the Company's operations and financial performance could be adversely affected
through disruptions in operations.
7
<PAGE>
USE OF PROCEEDS
Except as otherwise described in any accompanying prospectus supplement,
the Company expects to add substantially all of the net proceeds from the sale
of the Securities to its funds to be used for general corporate purposes.
These general corporate purposes may include repayment of long-term and short-
term debt, capital expenditures, working capital and the financing of
acquisitions. Funds not used immediately may be invested in short-term
marketable securities.
8
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's consolidated ratios of
earnings from continuing businesses to fixed charges for the indicated
periods.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Ratio of earnings
from continuing businesses to fixed charges (1).. 8.71 1.06 8.23 10.29 0.63(2)
</TABLE>
- --------
(1) Excluding restructuring charges for all periods, the pre-tax loss on the
ceramic tile business combination for 1995 and an asbestos liability
charge in 1998, the ratios would have been 8.71, 7.26, 9.76, 10.29 and
5.06 for 1994, 1995, 1996, 1997 and 1998, respectively.
(2) Earnings were inadequate to cover fixed charges by $28.9 million.
The ratio of earnings from continuing businesses to fixed charges has been
computed by dividing earnings from continuing businesses by fixed charges. For
purposes of calculating this ratio, earnings from continuing businesses
consist of consolidated earnings from continuing business operations before
income taxes plus fixed charges. Fixed charges consist of interest expense and
one-third of rent expense which is deemed to be representative of interest and
amortization of finance costs.
The following table sets forth the Company's consolidated ratios of
earnings from continuing businesses to combined fixed charges and preferred
stock dividends for the indicated periods.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Ratio of earnings
from continuing businesses to fixed charges
(1).......................................... 4.89 0.83(2) 5.73 10.29 0.63(3)
</TABLE>
- --------
(1) Excluding restructuring charges for all periods, the pre-tax loss on the
ceramic tile business combination for 1995 and an asbestos liability
charge in 1998, the ratios would have been 4.85, 4.32, 6.78, 10.29 and
5.06 for 1994, 1995, 1996, 1997 and 1998, respectively.
(2) Earnings were inadequate to cover fixed charges plus preferred stock
dividends by $16.2 million.
(3) Earnings were inadequate to cover fixed charges by $28.9 million.
9
<PAGE>
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the Debt
Securities. A prospectus supplement will describe the specific terms of the
Debt Securities offered through that prospectus supplement and any general
terms outlined in this section that will not apply to those Debt Securities.
The senior debt securities, referred to as "Senior Debt Securities," will
be issued under an Indenture, dated as of December 23, 1998, between the
Company and The First National Bank of Chicago, as Trustee. In this
prospectus, The First National Bank of Chicago is referred to as the
"Trustee," and this Indenture is referred to as the "Senior Indenture." The
subordinated debt securities, referred to as "Subordinated Debt Securities,"
will be issued under a separate Indenture, dated as of December 23, 1998,
between the Company and the Trustee. In this prospectus, this Indenture is
referred to as the "Subordinated Indenture." The Senior Indenture and
Subordinated Indenture are sometimes referred to collectively as the
"Indentures."
The statements under this caption relating to the Debt Securities and the
Indentures are summaries only and are not complete. Such summaries make use of
terms defined in the Indentures. Wherever such terms are used herein or
particular provisions of the Indentures are referred to, such terms or
provisions, as the case may be, are incorporated by reference as part of the
statements made herein, and such statements are qualified in their entirety by
such reference. Certain defined terms in the Indentures are capitalized
herein. In the summary below, we have included references to section numbers
and articles of the applicable Indentures so that you can easily locate these
provisions. The Indentures have been filed as exhibits to the Registration
Statement of which this prospectus is a part. You should read the Indentures
for additional information before you decide to purchase any Debt Securities.
General
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued. They provide that Debt Securities may be issued
from time to time, in one or more series, each in an aggregate principal
amount authorized by the Company prior to issuance. (Section 301) The Debt
Securities will have terms and provisions that are not inconsistent with the
Indentures. These terms will relate 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 our
unsecured and unsubordinated obligations and will rank on a parity with all of
our other unsecured and unsubordinated indebtedness. The Subordinated Debt
Securities when issued will be subordinated in right of payment to the prior
payment in full of all our Senior Debt, 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 being sold will be Senior Debt Securities or Subordinated Debt
Securities, the price or prices of the Debt Securities being issued and will
describe the following terms of the Debt Securities:
. the title of the Debt Securities and the aggregate principal amount
of the Debt Securities being issued by the Company;
. the Person to whom any interest on a Debt Security of the series is
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
payment;
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. the date or dates on which the principal of and premium, if any, on
such Debt Securities is payable or the method of determination of
the principal and premium, if any;
. the interest rate or rates of such Debt Securities or the method of
determination thereof, if any, the date or dates from which any such
interest will accrue, the date or dates on which any such interest
will be payable and the record date for any such interest payable on
any interest payment date;
. the place or places where the principal of, and any premium and
interest, if any, on any of such Debt Securities will be payable;
. the terms and conditions relating to redemption of any such Debt
Securities, if applicable;
. the obligation, if any, of the Company to redeem, repay or purchase
such Debt Securities pursuant to any sinking fund or analogous
provisions or at the option of a holder and the terms and conditions
upon which such Debt Securities will be redeemed, repaid or
purchased pursuant to such obligation;
. the denominations of such Debt Securities, if other than
denominations of $1,000 and any integral multiple of $1,000;
. whether such Debt Securities are to be issued at less than their
principal amount and the amount of the discount at which such Debt
Securities will be issued;
. 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;
. if other than United States dollars, 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 of such Debt
Securities in the currency of United States dollars is to be
determined for any purpose, including for the purpose of determining
the principal amount deemed to be outstanding at any time);
. 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 of such Debt Securities, 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);
. if other than the entire principal amount thereof, the portion of
the principal amount of any of such Debt Securities that will be
payable upon declaration of acceleration of the maturity of such
Debt Securities;
. 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 of such Debt Securities which will be
due and payable upon any Maturity other than the Stated Maturity or
which will be deemed to
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be outstanding as of any such date (or, in any such case, the manner
in which such deemed principal amount is to be determined);
. provisions, if any, for the defeasance of such Debt Securities as
described under "Defeasance and Covenant Defeasance--Defeasance and
Discharge" or "Defeasance and Covenant Defeasance--Covenant
Defeasance," or under both such captions;
. if applicable, the conversion rights with respect to such Debt
Securities;
. whether any of such Debt Securities will be issuable in the form of
one or more Global Securities, defined below, 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 legend referred to under "Form,
Exchange and Transfer-- Global Securities" and, if different from
those described under such caption, any circumstances under which
any such Global Security may be exchanged, in whole or in part, for
Debt 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;
. 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;
. any addition to or change in the covenants in the Indentures described
under "Certain Restrictive Covenants" applicable to any of such Debt
Securities; and
. any other terms of such Debt Securities not inconsistent with the
provisions of the applicable 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. 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.
Unless otherwise described in an applicable prospectus supplement, the
Indentures and the forms of the Debt Securities will not contain provisions
designed to afford holders of the Debt Securities protection in the event of a
takeover, recapitalization, or similar restructuring involving the Company
that may adversely affect holders of Debt Securities.
The Company shall deliver Debt Securities of any series, duly executed by
the Company to the Trustee for authentication, together with an order for the
authentication and delivery of such Debt Securities. The Trustee, in
accordance with such order, shall authenticate and deliver such Debt
Securities. No Debt Securities of any series shall be entitled to any benefit
under the Indentures or be valid or obligatory for any purpose unless there
appears thereon a certificate of authentication substantially in the form
provided for in the Indentures and manually executed by the Trustee or an
authenticating agent duly appointed by the Trustee. Such certificate shall be
conclusive evidence, and the only evidence, that such Debt Securities have
been duly authenticated and delivered under, and are entitled to the benefits
of, the Indentures.
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Conversion Rights
If a series of Debt Securities is convertible, the applicable prospectus
supplement relating to such series will describe the terms on which those Debt
Securities are convertible and the property or securities into which such Debt
Securities are convertible. Such terms may 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 securities or property to be
received by the holders of Debt Securities would be calculated according to
the market price of our Common Stock or other securities or property as of a
certain stated time. (Article Fourteen)
Subordination of Subordinated Debt Securities
Unless otherwise stated in the applicable prospectus supplement, the
following provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities, to the extent set forth in the
Subordinated Indenture, will be subordinate in right of payment to the prior
payment in full of all Senior Debt, including the Senior Debt Securities. Upon
any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Debt will be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of the Subordinated
Debt Securities will be entitled to receive or retain any payment in respect
of the principal of (and premium, if any) or interest, if any, on the
Subordinated Debt Securities. (Section 1502)
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will be entitled to receive payment in full of all amounts due
thereon prior to the holders of the Subordinated Debt Securities being
entitled to receive or retain any payment in respect of the principal of (and
premium, if any) or interest, if any, on the Subordinated Debt Securities.
(Section 1503)
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to
Senior Debt, or an event of default with respect to any Senior Debt resulting
in the acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default. (Section 1504) For purposes
of the subordination provisions, 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.
"Senior Debt" means 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 to the extent that
such claim for post-petition interest is allowed in such proceeding), on Debt
(as defined under "Restrictive Covenants--Limitation on Liens"), whether
incurred on or prior to the date of the Subordinated Indenture or thereafter
incurred, unless, in the instrument creating or evidencing such Debt or
pursuant to which such Debt is outstanding, it is provided that such
obligations are not superior in right of payment to the Subordinated Debt
Securities or to other Debt which is pari passu with, or Subordinated to, the
Subordinated Debt Securities; provided, however, that Senior Debt shall not be
deemed to include the Subordinated Debt Securities.
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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.
Further provisions, if any, applicable to the subordination of the
Subordinated Debt Securities of a particular series may be described in the
applicable prospectus supplement.
Form, Exchange and Transfer
Unless otherwise specified in the applicable prospectus supplement, the
Debt Securities of each series will be issuable only in fully registered form,
without coupons, and only in denominations of $1,000 and integral multiples of
$1,000. (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 any
taxes or other governmental charges as described in the Indentures. 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. The Company may also 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)
In the event of a redemption in part, the Company will not be required to
(i) issue, register the transfer of or exchange any Debt Security of that
series (or of that series and specified terms, 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, in whole or in
part, called for redemption, except the unredeemed portion of any such Debt
Security being redeemed in part. (Section 305)
Global Securities
The Debt Securities of a particular series may be issued in the form of one
or more Global Securities, which will be deposited with a depositary, referred
to as the "Depositary," or its nominee or a custodian therefor, each of which
will be identified in the prospectus supplement relating to such series. The
Global Securities will have an aggregate principal amount equal to that of the
Debt Securities that they represent. The Global Securities will have a legend
regarding their restrictions on
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exchanges and registration of transfer 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 in this summary, 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 of a Global Security
will be registered in such names as the Depositary may direct. (Sections 204
and 305)
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the Debt
Securities and the Indentures. Except as provided above, owners of beneficial
interests in a Global Security will not be entitled to have such Global
Security or any Debt Securities that it represents 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 of such Global Security. 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, referred
to as "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 other matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the 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
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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.
However, at the Company's option, 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 in New York, New York 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 monies paid by the Company to a Paying Agent for the payment of
principal of, premium, if any, or interest on any Debt Security that remain
unclaimed at the end of two years after such principal, premium or interest
has become due and payable will be repaid to the Company. After such time, the
Holder of such Debt Security will look only to the Company for payment of such
amounts. (Section 1003)
Restrictive Covenants
. Limitation on Liens. The Senior Indenture provides that, except as
otherwise provided in the next succeeding paragraph, neither the Company nor
any Restricted Subsidiary will issue, assume or guarantee any indebtedness for
borrowed money, referred to as "Debt," secured by any mortgage, pledge,
security interest, lien or other encumbrance, referred to as a "Lien," upon
any Principal Property of the Company or of any Restricted Subsidiary or upon
any shares of stock or Debt of any Restricted Subsidiary (whether such
Principal Property, shares of stock or Debt are now owned or hereafter
acquired) unless the Company secures or causes such Restricted Subsidiary to
secure the Senior Debt Securities equally and ratably with, or prior to, such
secured Debt, for so long as such Debt will be so secured. The restriction
will not apply to Debt secured by:
(A) liens on property, shares of stock or indebtedness of any
corporation existing at the time such corporation becomes a
Restricted Subsidiary or arising thereafter (i) otherwise than in
connection with the borrowing of money arranged thereafter and (ii)
pursuant to contractual commitments entered into prior to and not in
contemplation of such corporation's becoming a Restricted
Subsidiary;
(B) liens on any property (including shares of stock or Debt) existing
at the time of acquisition thereof (including acquisition through
merger or consolidation) or securing the payment of all or any part
of the purchase price or construction cost thereof or securing any
Debt incurred prior to, at the time of or within 180 days after, the
acquisition of such property, shares of stock or Debt or the
completion of any such construction, whichever is later, for the
purpose of financing all or any part of the purchase price or
construction costs thereof (provided such Liens are limited to such
property, improvements thereon and the land upon which such property
and
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improvements are located and any other property not then
constituting a Principal Property);
(C) liens on any property to secure all or any part of the cost of
development, operations, construction, alteration, repair or
improvement of all or any part of such property, or to secure Debt
incurred prior to, at the time of or within 180 days after, the
completion of such development, operation, construction, alteration,
repair or improvement, whichever is later, for the purpose of
financing all or any part of such cost (provided such Liens are
limited to such property, improvements thereon and the land upon
which such property and improvements are located and any other
property not then constituting a Principal Property);
(D) liens which secure Debt owing by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary or by the Company to a
Restricted Subsidiary;
(E) liens securing indebtedness of a corporation which becomes a
successor of the Company in accordance with the provisions described
under the heading "Consolidation, Merger and Sale of Assets" below;
(F) liens on property of the Company or a Restricted Subsidiary in favor
of the United States of America or any State thereof, or any
department agency or instrumentality or political subdivision of the
United States of America or any State thereof, or in favor of any
other country or any political subdivision thereof, 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 construction of the property subject to such Liens, or in
favor of any trustee or mortgagee for the benefit of holders of
indebtedness of any such entity incurred for any such purpose;
(G) liens existing at December 23, 1998; and
(H) any extension, renewal or replacement (or successive extension,
renewals or replacements), in whole or in part, of any Lien referred
to in the foregoing clauses (A) to (G), inclusive, or of any Debt
secured thereby; provided that such extension, renewal or
replacement Lien shall be limited to all or any part of the same
property that secured the Lien extended, renewed or replaced (plus
any improvements on such property) and shall secure no larger amount
of Debt than that existing at the time of such extension, renewal or
replacement.
Notwithstanding the foregoing restrictions, the Company and any one or more
Restricted Subsidiaries may issue, assume or guarantee Debt secured by a Lien
which would otherwise be subject to the foregoing restrictions if at the time
it does so, referred to as the "Incurrence Time," the aggregate amount of such
Debt plus all other Debt of the Company and its Restricted Subsidiaries
secured by a Lien which would otherwise be subject to the foregoing
restrictions (not including Debt permitted to be secured under clauses (A)
through (H) referred to above), plus the aggregate Attributable Debt
(determined as of the Incurrence Time) of Sale and Leaseback Transactions
(other than Sale and Leaseback Transactions permitted by clause (1) under the
heading "--Limitations on Sale and Leaseback Transactions" below) entered into
after December 23, 1998 and in existence at the Incurrence Time (less the
aggregate amount of proceeds of such Sale and Leaseback Transactions which
shall have been applied in accordance with clause (3) under "Limitations on
Sale and Leaseback Transactions"), does not exceed 15% of Consolidated Net
Tangible Assets.
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. Limitations on Sale and Leaseback Transactions. The Senior Indenture
provides that neither we nor any of our Restricted Subsidiaries will enter
into any Sale and Lease-Back Transaction with respect to any Principal
Property unless either:
(1) the Company or such Restricted Subsidiary would (at the time of
entering into such arrangement) be entitled pursuant to the
foregoing covenant relating to "Limitation on Liens," without
equally and ratably securing the Senior Debt Securities, to issue,
assume or guarantee indebtedness secured by a Lien on such Principal
Property; or
(2) the Attributable Debt of the Company and its Restricted Subsidiaries
in respect of such Sale and Leaseback Transaction and all other Sale
and Leaseback Transactions entered into after December 23, 1998
(other than such Sale and Leaseback Transactions as are permitted by
clause (1) or clause (3) of this paragraph), plus the aggregate
principal amount of Debt secured by Liens on Principal Properties
then outstanding (excluding any such Debt secured by Liens covered
in subdivisions (A) through (H) under the heading "--Limitation on
Liens" above) which do not equally and ratably secure the Senior
Debt Securities, would not exceed 15% of Consolidated Net Tangible
Assets; or
(3) the Company, within 180 days after the sale or transfer, applies or
causes a Restricted Subsidiary to apply an amount equal to the
greater of the net proceeds of such sale or transfer or fair market
value of the Principal Property so sold and leased back at the time
of entering into such Sale and Leaseback Transaction (in either case
as determined by the Board of Directors) to the retirement of Senior
Debt Securities or other indebtedness of the Company (other than
indebtedness Subordinated to the Senior Debt Securities) or
indebtedness of a Restricted Subsidiary, for money borrowed, having
a stated maturity more than 12 months from the date of such
application or which is extendible at the option of the obligor
thereon to a date more than 12 months from the date of such
application, provided that the amount to be so applied shall be
reduced by (i) the principal amount of Senior Debt Securities
delivered within 180 days after such sale or transfer to the Trustee
for retirement and cancellation, and (ii) the principal amount of
any such indebtedness of the Company or a Restricted Subsidiary
other than Senior Debt Securities voluntarily retired by the Company
or a Restricted Subsidiary within 180 days after such sale or
transfer; provided, further, that notwithstanding the foregoing, no
retirement referred to in this clause (3) may be affected by payment
at Maturity.
Notwithstanding the foregoing, where the Company or any Restricted
Subsidiary is the lessee in any Sale and Leaseback Transaction, Attributable
Debt shall not include any Debt resulting from the guarantee by the Company or
any other Restricted Subsidiary of the lessee's obligation thereunder.
Certain Definitions
The term "Attributable Debt" means, in respect of a Sale and Leaseback
Transaction and as of any particular time, the present value (discounted at
the rate of interest implicit in the terms of the lease involved in such Sale
and Leaseback Transaction, as determined in good faith by the Company) of the
obligation of the lessee thereunder for net rental payments (excluding,
however, any amounts required to be paid by such lessee, whether or not
designated as rent or additional rent, on account of maintenance and repairs,
services, insurance, taxes, assessments, water rates or similar charges or any
amounts required to be paid by such lessee thereunder contingent upon monetary
inflation or the amount of sales, maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges)
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during the remaining term of such lease (including any period for which such
lease has been extended or may, at the option of the lessor, be extended).
The term "Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, and (b) all
current liabilities, all as reflected in the Company's latest audited
consolidated balance sheet contained in the Company's most recent annual
report to its stockholders under Rule 14a-3 of the Exchange Act prior to the
time as of which "Consolidated Net Tangible Assets" shall be determined.
The term "Maturity," when used with respect to any security, means the date
on which the principal of such security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity
or by declaration of acceleration, call for redemption or otherwise.
The term "Principal Property" means any single manufacturing plant,
research laboratory or other similar facility located within the United States
of America (other than its territories and possessions) and owned by, or
leased to, the Company or any Restricted Subsidiary, the book value of the
property, plant and equipment of which (as shown, net of depreciation, on the
books of the owner or owners) is not less than 2% of the Consolidated Net
Tangible Assets at the end of the most recent fiscal year of the Company,
reflected in the latest audited consolidated statement of financial position
contained in the Company's most recent annual report to its stockholders under
Rule 14a-3 of the Exchange Act, except (a) any such plant or facility (i)
owned or leased jointly or in common with one or more Persons other than the
Company and its Subsidiaries, in which the interest of the Company and its
Restricted Subsidiaries does not exceed 50%, or (ii) which the Board of
Directors determines by Board Resolution in good faith is not of material
importance to the total business conducted, or assets owned, by the Company
and its Subsidiaries as an entirety, or (b) any portion of any such plant or
facility which the Board of Directors determines by Board Resolution in good
faith not to be of material importance to the use or operation of such plant
or facility.
The term "Restricted Subsidiary" means any Subsidiary substantially all the
property of which is located, or substantially all of the business of which is
carried on, within the United States of America (other than its territories
and possessions) which shall at the time, directly or indirectly through one
or more Subsidiaries or in combination with one or more other Subsidiaries,
own or be a lessee of a Principal Property.
Consolidation, Merger and Sale of Assets
The Indentures provide that the Company may not consolidate with or merge
into, or convey, transfer or lease its properties and assets substantially as
an entirety to, any Person, referred to as a "successor Person," and may not
permit any Person to merge into, or convey, transfer or lease its properties
and assets substantially as an entirety to, the Company, unless:
(i) the successor Person (if any) is a corporation, partnership, trust
or other entity organized and validly 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, no Event of
Default, and no event that, after notice or lapse of time or both,
would become an Event of Default, has occurred and is continuing;
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(iii) if, as a result of the transaction, property of the Company or a
Restricted Subsidiary becomes subject to a Lien that would not be
permitted under the provisions described under the heading
"Restrictive Covenants--Limitations on Liens" above, the Company
takes such steps as shall be necessary to secure the Senior Debt
Securities, if any, equally and ratably with (or prior to) the
indebtedness secured by such Lien; and
(iv) certain other conditions are met. (Section 801)
Events of Default
Unless otherwise provided with respect to any series of Debt Securities,
the following are Events of Default under the Indentures with respect to Debt
Securities of any series:
. failure to pay principal of or premium, if any, on any Debt Security
of that series when due (with respect to Subordinated Debt
Securities, whether or not such payment is prohibited by the
subordination provisions of the Subordinated Indenture);
. failure to pay any interest on any Debt Securities of that series
when due, continued for 30 days (with respect to Subordinated Debt
Securities whether or not such payment is prohibited by the
subordination provision of the Subordinated Indenture);
. failure to deposit any sinking fund payment, when due, in respect of
any Debt Security of that series (with respect to Subordinated Debt
Securities, whether or not such deposit is prohibited by the
subordination provisions of the Subordinated Indenture);
. 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 principal amount of the Outstanding Debt
Securities of that series, as provided in the Indentures;
. certain events in bankruptcy, insolvency or reorganization; and
. any other Event of Default as may be specified with respect to Debt
Securities of such series.
If an Event of Default (other than an Event of Default relating to
bankruptcy, insolvency or reorganization as described above) with respect to
the Debt Securities of any series at the time outstanding occurs and is
continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount of the outstanding securities of that series 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 relating to bankruptcy, insolvency or
reorganization as described above with respect to the Debt Securities of any
series at the time outstanding occurs, 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. After any such acceleration, but before a judgment or decree for
the payment of money based on such acceleration has been obtained by the
Trustee, 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
nonpayment of accelerated principal (or other specified amount), have been
cured or waived as provided in the
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Indentures. (Section 502) For information as to waiver of defaults, see
"Modification and Waiver" below.
Subject to the provisions of the Indentures relating to the duties of the
Trustee, in case an Event of Default occurs and is 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)
Holders of a Debt Security of any series do not 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 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 Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of its covenants and agreements under the
Indentures. The Company must also specify all such known defaults under the
Indentures. (Section 1004)
Modification and Waiver
With respect to the Debt Securities of any series, modifications or
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 the modification or
amendment, except that no such modification or amendment may, without the
consent of the holders of all the outstanding securities of such series to:
(a) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Debt Security;
(b) reduce the principal amount of, or 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 of such Debt Security;
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(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 the provisions of the Indentures with respect to modification
and waiver. (Section 902)
The holders of a majority in principal amount of the outstanding securities
of any series may waive 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 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 United States 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)
We 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, except in limited circumstances. 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
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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
shorter period as we may specify (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)
Defeasance and Covenant Defeasance
Unless otherwise specified in the applicable prospectus supplement, we may
elect 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.
. Defeasance and Discharge. The Indentures provide that the Company will be
discharged from all its obligations with respect to such Debt Securities
(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 and to hold moneys for payment in trust) upon the deposit in
trust for the benefit of the holders of such Debt Securities of money or U.S.
Government Obligations, or both, that, 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 provide that the Company
may omit to comply with certain restrictive covenants, including those
described under "Restrictive Covenants" and in the last sentence under
"Consolidation, Merger and Sale of Assets" and any that may be described in
the applicable prospectus supplement, and the occurrence of certain 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. In
order to do so, the Company 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, that, 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.
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In the event the Company exercises this option with respect to any Debt
Securities and such Debt Securities are 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 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)
Notices
Notices to Holders of Debt Securities will be given by mail to the
addresses of such holders as they 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 of the debt security (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 First National Bank of Chicago, as Trustee, serves as trustee under the
Indentures. The Trustee also provides cash management and other banking and
advisory services to the Company in the normal course of business.
In certain circumstances, such as an Event of Default, the Trustee may be
deemed to have a conflicting interest with respect to the Debt Securities for
purposes of the Trust Indenture Act of 1939, as amended. If the Trustee is
unable to eliminate any such conflicting interest, the Trustee may be required
to resign as Trustee under either the Subordinated Indenture or the Senior
Indenture. In that event, we would be required to appoint a successor trustee
for such Indenture.
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DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Company consists of 200,000,000 shares
of Common Stock, par value $1.00 per share, and 20,000,000 shares of Class A
Preferred Stock, without par value. The following summary of the material
terms of the capital stock of the Company is not complete and is qualified in
its entirety by reference to, the more complete descriptions contained in (i)
the Articles of Incorporation of the Company, as amended, the Bylaws of the
Company, as amended, and the Rights Agreement, effective March 21, 1996,
between the Company and ChaseMellon Shareholder Services, L.L.C., formerly
known as Chemical Mellon Shareholder Services, L.L.C., as Rights Agent, which
are incorporated by reference as exhibits to the registration statement of
which this prospectus is a part, and (ii) the certificate of designation or
amendment to the Articles of Incorporation relating to each series of
Preferred Stock.
Common Stock
. Dividends. Holders of our Common Stock may receive dividends when
declared by our Board of Directors out of funds that we can legally use to pay
dividends. In certain cases, holders of Common Stock may not receive dividends
until we have satisfied our obligations to any holders of outstanding
preferred stock.
. Preferred Stock Purchase Rights. Attached to each share of Common Stock
offered hereby will be a right to purchase Series One Preferred Stock. The
rights are exercisable under the circumstances described below under the
heading "--Series One Preferred Stock and Preferred Stock Purchase Rights" and
the exercise of such rights may have the effect of delaying, deterring or
preventing a change of control of the Company described below under the
heading "--Certain Provisions Affecting Control of the Company."
. Voting Rights. Holders of our Common Stock are entitled to one vote per
share on all matters to be voted upon by shareholders, except that
shareholders are entitled to cumulate their votes in the election of
directors. Under cumulative voting, a shareholder has the right to multiply
the total number of shares held by the shareholder by the number of directors
to be elected. The shareholder can then cast the total number of votes so
determined for one nominee or can distribute them among different nominees.
Our Bylaws require shareholders desiring to nominate persons for election as a
director to give advance notice of such nominations to the Company.
Generally, to receive authorization, corporate actions voted upon by the
shareholders of the Company, or by a class of such shareholders of the
Company, require the affirmative vote of a majority of the votes cast by such
shareholders, or by such class of shareholders, entitled to vote thereon.
However, this does not apply to the election of directors which are subject to
cumulative voting as discussed above. Further, our Articles of Incorporation
and Bylaws require the approval by the holders of at least 80% of the votes
which all shareholders of the Company would be entitled to cast at an annual
election of directors, voting together as a single class, for the removal of
any director, class of directors or the entire Board of Directors (subject to
nonremoval if sufficient votes are cast against removal) or for any change to
any provision of our Articles of Incorporation or Bylaws providing for the
number of directors, the classification of directors or the filling of
vacancies on the Board of Directors, unless any such change is unanimously
approved by our Board of Directors. In addition, our Bylaws may be amended
only by a vote of two-thirds of the Board of Directors then in office, subject
to the power of the shareholders to change such action.
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Our Bylaws provide for the Board of Directors to be divided into three
classes of directors, each class as nearly equal in number as possible, with
one class being elected each year for a three-year term. This helps ensure
continuity and stability of corporate leadership and policy, but it also has
the effect of making it more difficult for a person to acquire control of the
Company. As a result of this classification system, at least two annual
meetings are necessary to effect a change in a majority of the Company's
directors. Further, while cumulative voting enables minority shareholders to
gain representation on the Board, the existence of a classified Board
increases the number of shares required to elect at least one director.
. Liquidation. In the event of a liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining after the payment of the liabilities and the liquidation
preferences of any outstanding preferred stock.
. Listing. Our outstanding shares of Common Stock are listed on the New
York, Pacific and Philadelphia Stock Exchanges under the symbol "ACK." Any
additional Common Stock we issue will also be listed on the New York, Pacific
and Philadelphia Stock Exchanges, subject to official notice of issuance.
. Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Common Stock is ChaseMellon Shareholder Services, L.L.C.
. Other Information. The Common Stock does not carry preemptive rights, is
not redeemable, does not have any conversion rights, is not subject to further
calls and is not subject to any sinking fund provisions. The shares of Common
Stock currently outstanding are fully paid and nonassessable. Except in
certain circumstances as discussed below under "Description of Capital Stock--
Certain Provisions Affecting Control of the Company," the Common Stock is not
subject to discriminatory provisions based on ownership thresholds.
Class A Preferred Stock
The Class A Preferred Stock, other than Series One Preferred Stock
discussed below under the heading "--Series One Preferred Stock and Preferred
Stock Purchase Rights," is issuable in one or more series and will have the
dividend, conversion, redemption, voting and liquidation rights set forth
below unless otherwise provided in the prospectus supplement relating to a
particular series of the preferred stock. The applicable prospectus supplement
relating to the particular series of the preferred stock offered by such
prospectus supplement will contain specific terms, including:
(i) the title of the series and the number of shares in the series
offered;
(ii) the price at which such series will be issued;
(iii) the dividend rate (or method of calculation), if any, the dates
on which dividends will be payable and the dates from which
dividends shall commence to accumulate for such series;
(iv) any redemption or sinking fund provisions of such series;
(v) any conversion provisions of such series;
(vi) the voting rights, if any, of such series;
(vii) the liquidation preference of such series; and
(viii) any additional dividend, liquidation, redemption, sinking fund and
other special or relative rights, preferences, qualifications,
privileges, limitations, options and restrictions of such series.
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The Board of Directors of the Company is empowered, without approval of the
stockholders, to cause shares of Class A Preferred Stock to be issued in one
or more series, with the numbers of shares of each series to be determined by
it. The Board of Directors will be authorized to fix or alter the designation,
number, voting powers, preferences and relative, participating, optional and
other rights, and the qualifications, limitations or restrictions of such
rights pursuant to a certificate of designations or an amendment to the
Company's Articles of Incorporation. Among the specific matters that may be
determined by the Board of Directors are the rate of dividends; the redemption
price, if any; the terms of a sinking fund or redemption or purchase account,
if any; the amount payable in the event of any voluntary liquidation,
dissolution or winding up of the affairs of the Company; conversion or
exchange rights, if any; and voting power, if any.
Although the Company has no present intention to issue additional shares of
Class A Preferred Stock, the issuance of shares of the Class A Preferred
Stock, or the issuance of rights to purchase such shares, could be used to
discourage an unsolicited acquisition proposal. For instance, the issuance of
a series of Class A Preferred Stock might impede a business combination by
including class voting rights that would enable the holders to block such a
transaction; or such issuance might facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of Class
A Preferred Stock could adversely affect the voting power of the holders of
the Common Stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best
interests of the stockholders of the Company, the Board of Directors could act
in a manner that would discourage an acquisition attempt or other transaction
that some or even a majority of the stockholders might believe to be in their
best interests or in which stockholders might receive a premium for their
stock over the then market price of such stock. The Board of Directors does
not at present intend to seek stockholder approval prior to any issuance of
currently authorized stock, unless otherwise required by law or the rules of
any market on which the Company's securities are traded.
. Dividends. The Preferred Stock will be preferred over the Common Stock
(but may be subordinated as to the other series of Preferred Stock) with
respect to the payment of dividends. Holders of shares of each series of
Preferred Stock will be entitled to receive dividends (either in cash, shares
of Common Stock or Preferred Stock, or otherwise) if such dividends are
declared by our Board of Directors, at the rate and on the date or dates set
forth in the applicable prospectus supplement. Such preferred stock dividend
payments are made prior to the declaration of or setting aside for payment of
dividends or distributions on the Common Stock. With respect to each series of
Preferred Stock, the dividends on each share of such series will be cumulative
from the date of issuance of such shares unless some other date is set forth
in the prospectus supplement relating to any such series. Accruals of
dividends will not bear interest.
. Conversion. Shares of any series of Preferred Stock will be convertible
into shares of Common Stock, any other series of Preferred Stock or Debt
Securities to the extent set forth in the prospectus supplement relating to
any such series.
. Redemption. Shares of any series of Preferred Stock will be redeemable to
the extent set forth in the prospectus supplement relating to any such series,
which may or may not include any restrictions on the repurchase or redemption
of such Preferred Stock while there is any arrearage in the payment of
dividends.
. Voting Rights. Unless otherwise provided in the prospectus supplement,
holders of our Preferred Stock will be entitled to one vote for each share of
Preferred Stock held by them on all matters presented to shareholders.
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. Liquidation. The Preferred Stock will be preferred over the Common Stock
(but may be subordinated as to other series of Preferred Stock, as described
in this prospectus) as to assets so that the holders of each series of
Preferred Stock will be entitled to be paid the amount set forth in the
prospectus supplement relating to any such series, upon the voluntary or
involuntary liquidation, dissolution or winding up of the Company. Such
payments are made before any distribution is made to the holders of Common
Stock. However, in such case the holders of such series of Preferred Stock
will not be entitled to any other or further payment.
. Other Information. Unless otherwise provided in the applicable prospectus
supplement, the Preferred Stock will not carry any preemptive rights, will not
be, upon issuance, subject to further calls and will not be, upon issuance,
subject to any sinking fund provisions. The Preferred Stock will be, when
issued, fully paid and nonassessable. Unless otherwise provided in the
applicable prospectus supplement, and except in certain circumstances as
discussed below under "--Certain Provisions Affecting Control of the Company,"
the Preferred Stock will not be upon issuance, subject to discriminatory
provisions based on ownership thresholds.
The description of the terms of a particular series of Preferred Stock
offered hereby that will be set forth in the applicable prospectus supplement
is not complete and is qualified in its entirety by reference to the
applicable certificate of designations or amendment to the Company's Articles
of Incorporation with respect to each series.
Series One Preferred Stock and Preferred Stock Purchase Rights
. Preferred Stock Purchase Rights. The Series One Preferred Stock, which is
a series of Class A Preferred Stock, is issuable pursuant to the exercise of
rights to purchase Series One Preferred Stock. In this prospectus, such rights
are referred to as "Rights." The Series One Preferred Stock is not being
offered hereby, although the Rights will attach to any Common Stock which may
be sold pursuant to this prospectus and any prospectus supplement. On March
21, 1996, our Board of Directors paid a distribution of one Right for each
outstanding share of our Common Stock to shareholders of record on January 19,
1996, and with respect to each share of Common Stock that may be issued by the
Company prior to the date on which the Rights first become exercisable (or the
earlier redemption or expiration of the Rights), subject to adjustment in
certain events. In general, the Rights become exercisable ten days after a
person or group either acquires beneficial ownership of shares representing
20% or more of the voting power of the Company or announces a tender or
exchange offer that would result in such person or group beneficially owning
shares representing 28% or more of the voting power of the Company. When the
Rights become exercisable, each Right entities its holder (other than such 20%
shareholder or tender or exchange offeror) to buy one one-hundredth of a newly
issued share of Series One Preferred Stock at a purchase price of $300,
subject to adjustment. If, after the Rights become exercisable, any person or
group becomes the beneficial owner of 28% or more of the voting power of the
Company or if the Company is the surviving corporation in a merger with a
person or group that owns 20% or more of the voting power of the Company, then
each owner of a Right (other than such 20% or 28% shareholder) will be
entitled to purchase shares of our Common Stock having a value equal to twice
the exercise price of the Right. In addition, if, after the Rights become
exercisable, the Company is a party to a merger and is not the surviving
company or 50% or more of the Company's assets or earnings power are sold in a
single or series of related transactions, then each owner of a Right will be
entitled to purchase shares of the acquiring person having a value equal to
twice the exercise price of the Right. Until the Rights first become
exercisable, the Rights attach to and trade with shares of the Company's
Common Stock. Generally, the Rights are redeemable at the option of the
Company for $.05 per Right at any time prior to the tenth day following a
public announcement that a person or group has acquired beneficial ownership
of 20% or more of the voting power of the Company. The Rights expire by their
terms on March 21, 2006, unless earlier redeemed.
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The terms of the Rights are set forth in the Rights Agreement which has
been filed with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A/A filed on March 15, 1996, file number 001-
02116, which is incorporated herein by reference.
. Dividends. Subject to the rights and preferences of the holders of any
other series of Class A Preferred Stock, the holders of Series One Preferred
Stock are entitled to receive cumulative, quarterly dividends, without
interest, when and as declared by our Board of Directors, out of funds legally
available to pay dividends, in preference to the holders of Common Stock. Such
dividends are in an amount per share equal to the greater of $36.00 or 100
times, as adjusted, the aggregate per share amount of all cash and non-cash
dividends or other distributions, other than a dividend or distribution
payable in shares of Common Stock, paid on the Common Stock in the immediately
preceding quarter.
. Conversion Rights. In the event the Company enters into any
consolidation, merger, combination or other transaction in which the Common
Stock is exchanged for or changed into other stock or securities, cash and/or
any other property, then the Series One Preferred Stock will be at the same
time, similarly exchanged for or converted into an amount per share equal to
100 times, as adjusted, the aggregate amount for or into which the Common
Stock is exchanged or converted.
. Voting Rights. Holders of Series One Preferred Stock have no voting
rights except as may be provided by law.
. Redemption. The Series One Preferred Stock may be redeemed at the option
of our Board of Directors, as a whole, but not in part, at any time, at a cash
price per share equal to 100 times, as adjusted, the average market value, as
defined, of the Common Stock, plus all accrued but unpaid dividends. The
Company is not entitled, however, to purchase or otherwise acquire shares of
the Series One Preferred Stock if the quarterly dividend in respect thereof is
accrued and has not been paid or declared and a sum sufficient for the payment
thereof set apart unless all shares of such stock at the time outstanding are
purchased or otherwise acquired.
. Liquidation. Subject to the rights and preferences of the holders of any
other series of Class A Preferred Stock, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of Series
One Preferred Stock are entitled to $100 per share, plus all accrued and
unpaid dividends, plus an amount equal to the holder's pro rata share of
assets that would be available for distribution after payment of all
liabilities, liquidation preferences and distributions on the Common Stock, if
any, as determined according to a formula and subject to adjustment in certain
events. The amount payable to the holders of Series One Preferred Stock as so
determined is prior to any payment or distribution to the holders of Common
Stock.
. Other Information.The Series One Preferred Stock does not carry any
preemptive rights, will not be subject, upon issuance, to any sinking fund
provisions and will not be subject, upon issuance, to any further calls. Upon
issuance, the shares of the Series One Preferred Stock will be fully paid and
nonassessable. Except in certain circumstances as discussed below under
"Description of Capital Stock--Certain Provisions Affecting Control of the
Company," the Series One Preferred Stock will, upon issuance, be freely
alienable and not subject to discriminatory provisions based on ownership
thresholds.
Certain Provisions Affecting Control of the Company
. General. Certain provisions of our Articles of Incorporation and Bylaws,
as well as the Pennsylvania Business Corporation Law, referred to as the
"PBCL," operate only with respect to extraordinary corporate transactions,
such as mergers, reorganizations, tender offers, sales or transfers
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of substantially all of the Company's assets or the liquidation of the
Company, and could have the effect of delaying or making more difficult a
change in control of the Company in certain circumstances.
The provisions of the Company's Articles of Incorporation, Bylaws and the
PBCL described below are designed to reduce, or have the effect of reducing,
the vulnerability of the Company to an unsolicited proposal for the
restructuring or sale of all or substantially all of the assets of the Company
or an unsolicited takeover attempt that is unfair to the Company's
stockholders. The summary of such provisions set forth below is not complete
and is subject to and qualified in its entirety by reference to the Company's
Articles of Incorporation, Bylaws and the PBCL.
The Company's Board of Directors has no present intention to introduce
additional measures that might have an anti-takeover effect. The Company's
Board of Directors, however, expressly reserves the right to introduce such
measures in the future.
. Certain Provisions of the Articles of Incorporation and Bylaws. The
provisions of our Articles of Incorporation and Bylaws which may have the
effect of delaying, deterring or preventing a change of control of the Company
include the classification of our Board of Directors into three classes,
cumulative voting for members of the Board of Directors, the requirement of an
80% vote of outstanding shares to remove directors, each as described under
the heading "--Common Stock -- Voting Rights" above, and the ability of the
Board of Directors to issue Class A Preferred Stock in one or more series as
described under the heading "--Class A Preferred Stock" above. In addition,
our Articles of Incorporation provide that a Business Combination (as defined
below) with an Interested Shareholder (as defined below) requires the
affirmative vote of shareholders entitled to cast at least a majority of the
votes which all shareholders, other than the Interested Shareholder, would be
entitled to cast at an annual election of directors, voting together as a
single class, unless the transaction is approved by a majority of the
Disinterested Directors (as defined below) or the transaction meets certain
fair price and procedural requirements. An "Interested Shareholder" is, with
certain exceptions, any person, or his assignee or successor (not including
the Company or an affiliate of the Company), who is (or was within the
previous two years) the beneficial owner of more than ten percent of the
voting power of the outstanding voting stock, together with such person's
affiliates and associates. A "Business Combination" includes, among other
transactions, the following:
(i)the merger or consolidation of the Company with the Interested
Shareholder;
(ii) the sale of all or substantially all of the assets of the Company
to the Interested Shareholder or its affiliates or associates;
(iii) the issuance of securities of the Company to an Interested
Shareholder having a value equal to greater than ten percent of the
assets of the Company;
(iv) the adoption of any plan for the liquidation or dissolution of the
Company proposed by or on behalf of the Interested Shareholder; or
(v) any reclassification or recapitalization of securities which
effectively increases the proportional equity share of the
Interested Shareholder.
The term "Disinterested Director" means a director who is neither
affiliated with nor a representative of an Interested Shareholder and (i) was
a director prior to the time an Interested Shareholder became such, (ii) was
recommended or elected to fill a vacancy created by an increase in the size of
the Board of Directors by a majority of the Disinterested Directors then in
office, or (iii) was a successor of a Disinterested Director and was
recommended or elected to succeed a Disinterested Director by a majority of
the Disinterested Directors then in office.
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Certain other provisions of our Articles of Incorporation and Bylaws which
could have the effect of delaying or preventing a Change in Control of the
Company are described above under the captions "Description of Capital Stock--
Common Stock" and "Description of Capital Stock--Class A Preferred Stock."
. Preferred Stock Purchase Rights. In addition to the provisions of the
Company's Articles of Incorporation and Bylaws discussed above, the Company
has issued Preferred Stock Purchase Rights which also may have the effect of
delaying, deterring or preventing a change of control of the Company. The
Preferred Stock Purchase Rights and the terms of the Series One Preferred
Stock issuable upon exercise of such rights are described above under the
heading "--Series One Preferred Stock and Preferred Stock Purchase Rights."
. Certain Provisions of the PBCL. The Company is governed by certain "anti-
takeover" provisions in the PBCL which include the following:
(i) provisions which prohibit certain business combinations (as
defined in the PBCL) involving a corporation that has voting
shares registered under the Exchange Act and an "interested
shareholder" (generally defined to include a person who
beneficially owns shares representing at least 20% of the votes
that all shareholders would be entitled to cast in an election of
directors of the corporation) unless certain conditions are
satisfied or an exemption is applicable;
(ii) provisions concerning a "control-share acquisition" in which the
voting rights of certain shareholders of the corporation
(specifically, a shareholder who acquires 20%, 33 1/3% or 50% or
more of the voting power of the corporation) are conditioned upon
the consent of a majority vote at a meeting of the independent
shareholders of the corporation after disclosure by such
shareholder of certain information, and with respect to which such
shareholder is effectively deprived of voting rights if consent is
not obtained;
(iii) provisions pursuant to which any profit realized by a "controlling
person or group," generally defined as a 20% beneficial owner,
from the disposition of any equity securities within twenty-four
months prior to, and eighteen months succeeding, the acquisition
of such control is recoverable by the corporation;
(iv) provisions pursuant to which severance payments are to be made by
the corporation to any eligible employee of a covered corporation
whose employment is terminated, other than for willful misconduct,
with ninety days before, or twenty-four months after, a control-
share acquisition;
(v) provisions pursuant to which any holder of voting shares of a
registered corporation who objects to a "control transaction"
(generally defined as the acquisition by a person or group (the
"controlling person or group") that would entitle the holders
thereof to cast at least 20% of the votes that all shareholders
would be entitled to cast in an election of the directors of the
corporation) is entitled to make a written demand on the
controlling person or group for payment of the fair value of the
voting shares of the corporation held by the shareholder;
(vi) a set of interrelated provisions which are designed to support the
validity of actions taken by the Board of Directors in response to
takeover bids, including specifically the Board's authority to
"accept, reject or take no action" with respect to a takeover bid,
and permitting the unfavorable disparate treatment of a takeover
bidder; and
(viii) provisions which allow the directors broad discretion in
considering the best interests of the corporation, including a
provision which permits the Board to consider various corporate
interests including the short and long-term interests of the
corporation and the resources, intent and conduct of any person
seeking to acquire the corporation.
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DESCRIPTION OF WARRANTS
We may issue Warrants for the purchase of Debt Securities, Common Stock,
Preferred Stock or any combination thereof. Warrants may be issued alone or
together with any other Securities offered by a prospectus supplement, and may
be attached to or separate from such Securities. Warrants may be issued under
warrant agreements, each referred to as a "Warrant Agreement." The Warrant
Agreement will be entered into between the Company and a warrant agent,
referred to as a "Warrant Agent," as specified in the applicable prospectus
supplement. The Warrant Agent will act solely as our agent in connection with
the Warrants of a particular series and will not act as an agent or trustee
for any holders or beneficial owners of Warrants. The following description
sets forth certain general terms and provisions of the Warrants to be offered
and is not intended to be complete. Further terms of the Warrants and the
applicable Warrant Agreement will be set forth in the applicable prospectus
supplement.
If we offer Warrants, the applicable prospectus will describe their terms,
including, where applicable, the following:
(i) the title of such Warrant;
(ii) the aggregate number of such Warrants;
(iii) the price or prices at which such Warrants will be issued;
(iv) the designation, number and terms of the Debt Securities, Common
Stock, Preferred Stock, or combination of such Securities,
purchasable upon exercise of such Warrants;
(v) the designation and terms of the other Securities, if any, with which
such Warrants are issued and the number of such Warrants issued with
each such Security;
(vi) the date, if any, on and after which such Warrants and the related
underlying Securities will be separately transferable;
(vii) the price at which each underlying Security purchasable upon
exercise of such Warrants may be purchased;
(viii) the date on which the right to exercise such Warrants shall
commence and the date on which such right shall expire;
(ix) the minimum amount of such Warrants that may be exercised at any one
time;
(x) information with respect to book-entry procedures, if any;
(xi) a discussion of any applicable federal income tax considerations;
and
(xii) any other terms of such Warrants, including terms, procedures and
limitations relating to the transferability, exchange and exercise
of such Warrants.
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DESCRIPTION OF DEPOSITARY SHARES
. General. The Company may, at its option, elect to offer fractional shares
of Preferred Stock, rather than full shares of Preferred Stock. In the event
such option is exercised, the Company will issue to purchasers receipts for
Depositary Shares, each of which will represent a fraction (to be set forth in
the applicable prospectus supplement relating to a particular series of
Preferred Stock) of a share of a particular series of Preferred Stock.
The shares of any series of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate deposit agreement, referred to as a
"Deposit Agreement," between the Company and a bank or trust company. The bank
or trust company selected by the Company is referred to as the "Preferred
Depositary." The Preferred Depositary must have its principal office in the
United States and must have a combined capital and surplus of at least
$50,000,000. The prospectus supplement relating to a series of Depositary
Shares will set forth the name and address of the Preferred Depositary.
Subject to the terms of the Deposit Agreement, each owner of a Depositary
Share will be entitled, in proportion to the applicable fractional interest in
a share of Preferred Stock underlying such Depositary Share, to all the rights
and preferences of the Preferred Stock underlying such Depositary Share
(including dividend, voting, redemption, conversion and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement. Pending the preparation of definitive
engraved Depositary Receipts, the Preferred Depositary may, upon the written
order of the Company, issue temporary Depositary Receipts substantially
identical to (and entitling the holders thereof to all the rights pertaining
to) the definitive Depositary Receipts but not in definitive form. Definitive
Depositary Receipts will be prepared thereafter without unreasonable delay,
and temporary Depositary Receipts will be exchangeable for definitive
Depositary Receipts at our expense.
Upon surrender of Depositary Receipts at the office of the Preferred
Depositary and upon payment of the charges provided in the Deposit Agreement
and subject to the terms thereof, a Depositary Share Holder is entitled to
have the Preferred Depositary deliver to such holder the whole shares of
Preferred Stock underlying the Depositary Shares evidenced by the surrendered
Depositary Receipts.
. Dividends. The Preferred Depositary will distribute all cash dividends or
other cash distributions received in respect of the Preferred Stock to the
record holders of Depositary Shares relating to such Preferred Stock in
proportion to the numbers of such Depositary Shares owned by such holders on
the relevant record date. The Preferred Depositary will distribute only such
amount, however, as can be distributed without attributing to any holder of
Depositary Shares a fraction of one cent, and any balance not so distributed
will be added to and treated as part of the next sum received by the Preferred
Depositary for distribution to record holders of Depositary Shares.
In the event of a distribution other than in cash, the Preferred Depositary
will distribute property received by it to the record holders of Depositary
Shares entitled thereto, unless the Preferred Depositary determines that it is
not feasible to make such distribution, in which case the Preferred Depositary
may, with the approval of the Company, sell such property and distribute the
net proceeds from such sale to such holders.
. Conversion and Exchange. If any Preferred Stock underlying the Depositary
Shares is subject to provisions relating to its conversion or exchange as set
forth in a prospectus supplement relating thereto, each record holder of
Depositary Shares will have the right or obligation to convert or exchange
such Depositary Shares into other securities of the Company or rights or
payments pursuant to the terms thereof.
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. Redemption. After the date fixed for redemption as may be set forth in
any prospectus supplement relating to the Depositary Shares, the Depositary
Shares so called for redemption will no longer be deemed to be outstanding,
and all rights of the holders of the Depositary Shares will cease, except the
right to receive the moneys payable upon such redemption and any money or
other property to which the holders of such redeemed Depositary Shares were
entitled upon surrender to the Preferred Depositary of the Depositary Receipts
evidencing such Depositary Shares. Unless otherwise provided in the prospectus
supplement or in the Deposit Agreement, the Depositary Shares will not be
subject to any restriction on the repurchase or redemption thereof while there
is any arrearage in the payment of dividends.
. Voting Rights. Upon receipt of notice of any meeting at which the holders
of the Preferred Stock are entitled to vote, the Preferred Depositary will
mail the information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each record holder
of such Depositary Shares on the record date (which will be the same date as
the record date for the Preferred Stock) will be entitled to instruct the
Preferred Depositary as to the exercise of the voting rights pertaining to the
number of shares of Preferred Stock underlying such holder's Depositary
Shares. The Preferred Depositary will endeavor, insofar as practicable, to
vote the number of shares of Preferred Stock underlying such Depositary Shares
in accordance with such instructions, and the Company will agree to take all
action which may be deemed necessary by the Preferred Depositary in order to
enable the Preferred Depositary to do so. The Preferred Depositary will
abstain from voting shares of Preferred Stock to the extent it does not
receive specific instructions from the holders of Depositary Shares relating
to such Preferred Stock.
. Other Information. Unless otherwise provided in the prospectus supplement
or the Deposit Agreement, the Depositary Shares will not carry any conversion
rights, will not be subject, upon issuance, to any sinking fund provisions,
will not carry any liquidation or preemption rights and will not be, upon
issuance, subject to any further calls. The Depositary Shares will be, when
issued, freely alienable, fully paid and nonassessable. Unless otherwise
provided in the prospectus supplement or the Deposit Agreement, and except in
certain circumstances as described above under "-- Certain Provisions
Affecting Control of the Company," the Preferred Stock will not be, upon
issuance, subject to discriminatory provisions based on ownership thresholds.
. Amendment and Termination of the Deposit Agreement. The form of
Depositary Receipt evidencing the Depositary Shares and any provision of the
Deposit Agreement may at any time be amended by agreement between the Company
and the Preferred Depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the Depositary Shares then outstanding. A Deposit
Agreement may be terminated by the Company or the Preferred Depositary only
if: (i) all outstanding Depositary Shares relating thereto have been redeemed
or (ii) there has been a final distribution in respect of the Preferred Stock
of the relevant series in connection with any liquidation, dissolution or
winding up of the Company and such distribution has been distributed to the
holders of the related Depositary Shares.
. Charges of Depositary. The Company will pay all transfer and other taxes
and governmental charges arising solely from the existence of the depositary
arrangements. The Company will also pay charges of the Preferred Depositary in
connection with the initial deposit of the Preferred Stock and any redemption
of the Preferred Stock. Holders of Depositary Shares will pay transfer and
other taxes and governmental charges and such other charges as are expressly
provided in the Deposit Agreement to be for their accounts.
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. Miscellaneous. The Preferred Depositary will forward to the holders of
Depositary Shares all reports and communications which are delivered to the
Preferred Depositary and which the Company is required to furnish to the
holders of the Preferred Stock.
Neither the Preferred Depositary nor the Company will be liable if either
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Company and the Depositary under the Deposit Agreement will be limited to
performance in good faith of their duties thereunder and they will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Shares or Preferred Stock unless satisfactory indemnity is
furnished. Either may rely upon written advice of its counsel or accountants,
or information provided by persons presenting Preferred Stock for deposit,
holders of Depositary Shares or other persons believed to be competent and on
documents believed to be genuine.
. Resignation and Removal of Depositary. The Preferred Depositary may
resign at any time by delivering to the Company notice of its election to do
so, and the Company may at any time remove the Preferred Depositary, any such
resignation or removal to take effect upon the appointment of a successor
Preferred Depositary and the Company's acceptance of such appointment. Such
successor Preferred Depositary must be appointed within 90 days after delivery
of the notice of resignation or removal and must be a bank or trust company
having its principal office in the United States and having a combined capital
and surplus of at least $50,000,000.
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PLAN OF DISTRIBUTION
We may sell the Securities in any one or more of the following three ways:
(i) to or through underwriters or dealers; (ii) through agents; or, (iii)
directly to one or more purchasers. The prospectus supplement relating to the
Securities being sold will set forth the terms of the Securities being sold,
including the name or names of any underwriters, dealers or agents, the
purchase price of such Securities and the proceeds to the Company from such
sale, any underwriting discounts, selling commissions and other items
constituting underwriters', dealers' or agents' compensation, any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers or agents, and any securities exchanges on which the
Securities of such series may be listed, will be set forth in, or may be
calculated from the information set forth in the prospectus supplement. Only
underwriters so named in the prospectus supplement will be deemed to be
underwriters in connection with the Securities offered thereby. The
distribution of Securities may be effected from time to time in one or more
transactions including negotiated transactions at a fixed public offering
price or at varying prices determined at the time of the sale.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Unless otherwise set forth in the prospectus supplement, the obligations of
the underwriters to purchase Securities will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all the
Securities offered by the prospectus supplement if any of such Securities are
purchased. In connection with the sale of Securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Securities for whom they may act as agent. Underwriters may sell
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters and/or
commissions (which may be changed from time to time) from the purchasers for
whom they may act as agent. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
We may grant an option to the underwriters named in the prospectus
supplement, exercisable during a fixed period after the date of the prospectus
supplement, to purchase additional Securities to cover overallotments, if any,
at the same price as the initial Securities to be purchased by the
underwriters. The underwriters may purchase such Securities only to cover
overallotments made in connection with an offering of Securities.
We may also directly sell Securities or use agents (which may also act as
principals) designated by us from time to time. Any agent involved in the
offer or sale of the Securities in respect of which this prospectus is
delivered will be named, and any commissions payable by us to such agent will
be set forth in, or may be calculated from the information set forth in, the
prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best efforts basis for the
period of its appointment. In the case of sales made directly by us, no
commission will be payable.
If so indicated in the prospectus supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery
contracts
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providing for payment and delivery on a date specified in the future. Such
contracts will be subject to the conditions set forth in the prospectus
supplement, and the prospectus supplement will set forth the commissions
payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may be customers
of, engage in transactions with, or perform services for the Company or its
affiliates in the ordinary course of business.
All of the Securities will be a new issue of securities with no established
trading market, other than the Common Stock, which is currently listed on the
Philadelphia, Pacific and New York Stock Exchanges under the symbol "ACK." The
Securities, other than the Common Stock, may or may not be listed on a
national securities exchange or a foreign securities exchange. In the event
that such Securities are not listed on a national securities exchange, certain
broker-dealers may make a market in such Securities, but will not be obligated
to do so and may discontinue any market making at any time without notice. No
assurance can be given that any broker-dealer will make a market in such
Securities or as to the liquidity of the trading market for such Securities.
The prospectus supplement with respect to such Securities of any series will
state, if known, whether or not any broker-dealer intends to make a market in
such Securities. If no such determination has been made, the prospectus
supplement will so state.
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LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby will
be passed upon for the Company by Rogers & Wells LLP, New York, New York. With
respect to matters of Pennsylvania law, we may rely on Pennsylvania counsel
chosen by the Company at the time of the issuance of the Securities or may
name separate counsel who will pass on certain legal matters under
Pennsylvania law in the prospectus supplement relating to that offering. If
certain legal matters in connection with the Securities offered hereby will be
passed upon by counsel for any underwriters, dealers or agents, that counsel
will be named in the prospectus supplement relating to that offering.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1998 and 1997 and for each of the years in the three-year period ended
December 31, 1998 and related financial statement schedule, have been
incorporated by reference herein in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
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$200,000,000
Armstrong World Industries, Inc.
7.45% Senior Notes Due 2029
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PROSPECTUS SUPPLEMENT
May 14, 1999
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Joint Book-Running Managers
Salomon Smith Barney J.P. Morgan & Co.
Banc One Capital Markets, Inc.
Barclays Capital
HSBC Securities, Inc.
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