<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration No. 33-53087
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 18, 1998)
[LOGO]
$100,000,000
ARVIN INDUSTRIES, INC.
6 3/4% NOTES DUE 2008
--------------
Interest on the 6 3/4% Notes due 2008 (the "Notes") is payable by Arvin
Industries, Inc. ("Arvin" or the "Company") semi-annually on each March 15 and
September 15 beginning September 15, 1998. The Notes will mature on March 15,
2008.
The Notes will be issued only in fully registered form and will be
represented by one or more Global Securities (as defined herein) registered in
the name of the nominee of The Depository Trust Company ("DTC"), as securities
depositary. Beneficial interests in the Notes will be shown on, and transfers
thereof will be effected only through, the records maintained by DTC's
participants. Except as described in "Description of Notes--Book-Entry System,"
owners of beneficial interests in the Notes will not be entitled to receive
Notes in definitive form and will not be treated by the Company as the holders
thereof. Settlement for the Notes will be made in immediately available funds.
The Notes are expected to trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the Notes will therefore
settle in immediately available funds. All payments of principal and interest
will be made by the Company in immediately available funds. See "Description of
the Notes--Same Day Settlement and Payment."
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
<S> <C> <C> <C>
Per Note......................................... 99.609% .65% 98.959%
Total............................................ $99,609,000 $650,000 $98,959,000
</TABLE>
(1) Plus accrued interest, if any, from March 23, 1998.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities under the Securities Act of 1933. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $200,000.
-------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and
reject any orders in whole or in part. It is expected that delivery of the
Global Securities will be made through the facilities of DTC on or about March
23, 1998.
-------------------
MERRILL LYNCH & CO. LEHMAN BROTHERS
------------
<PAGE>
The date of this Prospectus Supplement is March 18, 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES OFFERED
HEREBY. SUCH TRANSACTIONS MAY INCLUDE STABILIZING TRANSACTIONS AND THE PURCHASE
OF NOTES TO COVER SYNDICATE SHORT POSITIONS, SYNDICATE SHORT COVERING
TRANSACTIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
------------------------
THE COMPANY
Arvin is a diversified international manufacturer and supplier of automotive
parts and a variety of other products through operating entities in the U.S. and
numerous other countries. The Company is a worldwide leader in automotive
exhaust systems and ride control products for the original equipment ("OE") and
replacement markets. The Company's consolidated revenues were approximately
$2.35 billion in fiscal 1997.
Since its founding in 1919, Arvin has grown through internal development,
acquisitions and a number of international joint ventures. In recent years, the
Company's strategy has been to strengthen its automotive parts businesses by
achieving a mix of sales to both original equipment manufacturers ("OEMs") and
replacement market parts suppliers on a global basis. Recently, management has
implemented a series of strategic initiatives to increase the Company's global
competitive position within the automotive parts marketplace.
The Company classifies its business based on the two primary markets it
serves: Automotive Original Equipment and Automotive Replacement. In fiscal
1997, Arvin derived approximately 69% of its total revenues from the OE market,
with the remaining 31% coming from replacement market sales.
THE AUTOMOTIVE ORIGINAL EQUIPMENT SEGMENT
The principal products and primary customers of the Automotive Original
Equipment segment are set forth below. The Company believes that it is the
leading exhaust system supplier to OE customers in North America and Europe, and
among the top three OE ride control suppliers in these markets.
<TABLE>
<CAPTION>
PRINCIPAL PRODUCTS PRIMARY CUSTOMERS
- ------------------------------------ --------------------------------------------
<S> <C> <C>
EXHAUST SYSTEMS Chrysler Nissan
--Mufflers Fiat Renault
--Exhaust and Tail Pipes Ford Saturn
--Catalytic Converters General Motors TRW (airbag sensors)
--Tubular Manifolds Honda Toyota/Nummi
RIDE CONTROL PRODUCTS Mazda Volkswagen/SEAT
--Shock Absorbers Mercedes Benz Volvo
--Struts Mitsubishi
GAS LIFT SUPPORTS
VACUUM ACTUATORS
METAL TUBULAR PARTS
COATED COIL STEEL AND ALUMINUM
PRESS-MOLDED THERMOPLASTICS
VINYL-METAL STAMPINGS
</TABLE>
S-2
<PAGE>
Arvin's OE segment has undergone a significant transformation in the last
decade, moving to a fully integrated engineering, development and production
operation. This transformation has been driven by the shift in customer
requirements and a change in the capabilities required to be a successful,
long-term participant in this market.
Arvin competes with other independent parts suppliers and with
manufacturers' captive parts operations. The Company has significantly enhanced
its delivery capabilities geographically since the late 1980s through both
acquisitions and the formation of a number of international joint ventures.
Arvin believes that its aggressive capital spending program has resulted in
world-class manufacturing operations, capable of delivering outstanding value
and quality to its customers.
THE AUTOMOTIVE REPLACEMENT SEGMENT
The principal products, brand names and primary customers of the Automotive
Replacement segment are set forth below. The Company believes that it is among
the top two replacement exhaust and ride control manufacturers in both North
America and Europe.
<TABLE>
<CAPTION>
PRINCIPAL PRODUCTS BRAND NAMES PRIMARY CUSTOMERS
- ------------------------- ------------------ ------------------------
<S> <C> <C>
MUFFLERS MUFFLERS RETAILERS
Maremont Sears
EXHAUST AND TAIL PIPES Cherry Bomb Canadian Tire
TIMAX Pep Boys
CATALYTIC CONVERTERS ANSA AutoZone
ROSI
SHOCK ABSORBERS TESH WHOLESALE DISTRIBUTORS
Parts, Inc.
MACPHERSON STRUTS SHOCK ABSORBERS United Auto Parts
Gabriel General Parts
GAS SPRINGS
GAS LIFT SUPPORTS INSTALLERS
Strong Arm Meineke
Kwik-Fit
</TABLE>
The Company's replacement market operations compete with both OEMs and
independent suppliers in North America and Europe, and serve the market through
its own sales force as well as a network of manufacturers' representatives. The
Company's competitive position has been enhanced by rigorous attention to lead
time reduction and lowest cost product development. Continuous improvement in
the manufacturing processes has had a positive impact on order fill rates and
the cost and quality of the products manufactured.
S-3
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the Company at
December 28, 1997, and as adjusted to reflect the application of the estimated
net proceeds from the sale of the Notes. See "Use of Proceeds." The table should
be read in conjunction with the Company's consolidated financial statements and
notes thereto included in the documents incorporated by reference herein. See
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 28, 1997
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term debt.......................................................................... $ 2.4 $ 2.4
Current maturities of long-term debt:
9.8%--9.98% medium-term notes due 1998................................................. 45.0 --
Other.................................................................................. 8.2 8.2
Long-term debt:
Capital lease obligations.............................................................. 10.7 10.7
7.94% notes due 2005................................................................... 50.0 50.0
6 7/8% notes due 2001.................................................................. 75.0 75.0
10% medium-term notes due 2000......................................................... 49.8 49.8
10 3/8% Euro-Sterling Notes due 2018................................................... 32.8 32.8
Other.................................................................................. 4.0 4.0
Notes.................................................................................. -- 100.0
--------- -----------
Total long-term debt..................................................................... 222.3 322.3
--------- -----------
Minority interest........................................................................ 12.4 12.4
Company-obligated mandatorily redeemable preferred capital securities of subsidiary trust
holding solely subordinated debentures of the Company.................................. 98.9 98.9
Shareholders' equity:
Common shares.......................................................................... 65.6 65.6
Capital in excess of par value......................................................... 248.8 248.8
Retained earnings...................................................................... 275.1 275.1
Cumulative translation adjustment...................................................... (41.8) (41.8)
Employee stock benefit trust........................................................... (25.6) (25.6)
Common shares held in treasury......................................................... (36.9) (36.9)
--------- -----------
Total shareholders' equity............................................................... 485.2 485.2
--------- -----------
Total capitalization..................................................................... $ 874.4 $ 929.4
--------- -----------
--------- -----------
</TABLE>
S-4
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following summary financial information should be read in conjunction
with the consolidated financial statements of the Company and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1997. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus. The summary operating results, financial position and
cash flow information for and as of the end of each of the fiscal years in the
five-year period ended December 28, 1997, are derived from the audited
consolidated financial statements of the Company. Amounts for the 1994 and 1993
fiscal years have been restated for discontinued operations.
<TABLE>
<CAPTION>
AT OR FOR THE FISCAL YEAR ENDED
-----------------------------------------------------
DEC. 28, DEC. 29, DEC. 31, JAN. 1, JAN. 2,
1997 1996 1995 1995 1994
--------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS(1)
Net sales................................................. $ 2,349.0 $ 2,212.7 $ 1,966.4 $ 1,849.5 $ 1,640.8
Income from operations(2)................................. 167.2 120.1 99.5 104.1 113.1
Net interest expense...................................... 35.0 36.9 41.2 40.1 33.0
Earnings.................................................. 65.0 47.1 17.9 24.6 38.4
FINANCIAL POSITION
Cash and equivalents...................................... $ 108.9 $ 39.4 $ 15.2 $ 11.1 $ 35.1
Total assets.............................................. 1,447.1 1,307.8 1,218.6 1,231.5 1,175.5
Total debt................................................ 277.9 346.6 402.3 441.4 440.1
Capital securities........................................ 98.9 -- -- -- --
Shareholders' equity...................................... 485.2 437.4 395.1 396.3 420.6
CASH FLOW(1)
Depreciation and amortization............................. $ 85.6 $ 83.3 $ 73.9 $ 77.8 $ 62.6
Capital expenditures (net)................................ 93.8 73.7 96.9 98.1 77.9
RATIOS
Operating income margin(2)................................ 7.1% 5.4% 5.1% 5.6% 6.9%
Operating income(2)/Net interest expense.................. 4.8x 3.2x 2.4x 2.6x 3.4x
Total debt(3)/Operating income(2)......................... 2.3x 2.9x 4.0x 4.2x 3.9x
Total debt(3)/Total capitalization........................ 43.1% 42.4% 48.5% 50.7% 49.3%
</TABLE>
- --------------------------
(1) From continuing operations.
(2) Reflects income from continuing operations prior to expenses unrelated to
the Company's operating segments.
(3) Includes Capital Securities.
S-5
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company to be received from the sale of the Notes
offered hereby, after payment of expenses related to the offering and
underwriting discounts and commissions, are estimated to be approximately $98.8
million. The Company intends to use the net proceeds to refund long-term
indebtedness that is maturing during 1998 (approximately $45.0 million) and for
general corporate purposes, including working capital and capital expenditures.
Pending such uses, the net proceeds may be temporarily invested in marketable
securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------
DEC. 28, DEC. 29, DEC. 31, JAN. 1, JAN. 2,
1997 1996 1995 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........... 3.2 2.4 1.6 1.8 2.5
</TABLE>
For purposes of calculating the ratios, "earnings" consist of earnings from
continuing operations before income taxes, adjusted for the portion of fixed
charges deducted from such earnings. "Fixed charges" consist of interest on all
indebtedness (including capital lease obligations and capitalized interest),
amortization of debt expense and the percentage of rental expense on operating
leases deemed representative of the interest factor. The ratios of earnings to
fixed charges, before the restructuring and special charges, for 1997, 1996,
1995 and 1994 were 3.3, 2.5, 1.9 and 2.4, respectively.
DESCRIPTION OF NOTES
The Notes are a series of Senior Debt Securities described in the
accompanying Prospectus, dated March 18, 1998 (the "Prospectus"). Reference
should be made to the accompanying Prospectus for a detailed summary of
additional provisions of the Notes and of the Senior Indenture under which the
Notes are issued. Capitalized terms not defined herein have the meaning given
them in the Senior Indenture.
GENERAL
The Notes are to be issued as a series of Senior Debt Securities limited to
$100,000,000 in aggregate principal amount under the Senior Indenture described
more fully under "Description of Debt Securities," "Provisions Applicable to
Both Senior and Subordinated Debt Securities," and "Provisions Applicable Solely
to Senior Debt Securities" in the accompanying Prospectus.
The Notes will mature on March 15, 2008. The Notes will bear interest from
March 23, 1998 at the rate per annum referred to on the cover page of this
Prospectus Supplement, payable semi-annually on March 15 and September 15 of
each year (each an "Interest Payment Date") commencing with the Interest Payment
Date next following the Original Issue Date; provided, however, that any payment
of principal or interest to be made on an Interest Payment Date that is not a
Business Day shall be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date and no additional
interest shall accrue as a result of such delayed payment. Each payment of
interest shall include interest accrued through the day before the Interest
Payment Date. Interest on the Notes will be computed on the basis of a 360-day
year of twelve 30-day months. The "Record Date" with respect to any Interest
Payment Date will be the March 1 or September 1 next preceding such Interest
Payment Date, whether or not such date shall be a Business Day.
S-6
<PAGE>
BOOK-ENTRY SYSTEM
The Notes will initially be represented by one or more global securities
(each a "Global Security") deposited with DTC and registered in the name of a
nominee of DTC, except as set forth below. The settlement of transactions with
respect to each Global Security will be facilitated through electronic
computerized book-entry changes in participants' accounts, thereby eliminating
the physical movement of Note certificates. The Notes will be available for
purchase in denominations of $1,000 and integral multiples thereof in book-entry
form only. Unless and until certified Notes are issued under the limited
circumstances described herein, no beneficial owner of a Note shall be entitled
to receive a definitive certificate representing a Note. So long as DTC or any
successor depositary (the "Depositary") or its nominee is the registered owner
of a Global Security, such Depositary or such nominee, as the case may be, will
be considered to be the sole owner or holder of the Notes represented thereby
for all purposes of the Senior Indenture. Unless and until it is exchanged in
whole or in part for the Notes represented thereby, a Global Security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
So long as Notes are represented by a Global Security, all payments of
principal and interest with respect thereto will be made to the Depositary or
its nominee (or a successor), as the case may be, as the sole registered owner
of the Global Security representing such Notes.
The Company expects that the Depositary or its nominee, upon receipt of any
payment of principal or interest in respect of a Global Security representing
Notes, will credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in the principal amount of such Global
Security as shown on the records of the Depositary or such nominee.
If the Depositary is at any time unwilling, unable or ineligible to continue
as Depositary for a Global Security and a successor is not appointed by the
Company within 90 days, the Company will issue certificated Notes in definitive
form in exchange for such Global Security. In addition, the Company may at any
time determine not to have the Notes represented by a Global Security, and, in
such event, will issue certificated Notes in definitive form in exchange for
such Global Security. In either instance, an owner of a beneficial interest in a
Global Security will be entitled to physical delivery of certificated Notes in
definitive form equal in principal amount to such beneficial interest in such
Global Security and to have such certificated Notes registered in its name.
Certificated Notes so issued in definitive form will be issued in denominations
of $1,000 and integral multiples thereof and will be issued in registered form
only, without coupons.
See "Description of Debt Securities" in the accompanying Prospectus for
additional information concerning the Notes, the Senior Indenture and the
book-entry system.
SAME DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters (as hereinafter
defined) in immediately available funds. All payments of principal and interest
to the Depositary will be made by the Company in immediately available funds.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, the Notes are expected
to trade in the DTC's Same-Day Funds Settlement System until maturity, and, to
the extent that secondary market trading activity in the Notes is effected
through the facilities of DTC, such secondary market trading activity in the
Notes will settle in immediately available funds. No assurance can be given as
to the effect, if any, of settlements in immediately available funds on trading
activity in the Notes.
S-7
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") among the Company and each of Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Lehman Brothers Inc. (collectively, the
"Underwriters"), the Company has agreed to sell to each of the Underwriters
named below, and each of the Underwriters has severally agreed to purchase from
the Company, the aggregate principal amount of Notes set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
- ---------------------------------------------------------------------------------------- --------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................................. $ 50,000,000
Lehman Brothers Inc. ................................................................... $ 50,000,000
--------------
Total......................................................................... $ 100,000,000
--------------
--------------
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all the Notes offered
hereby if any Notes are purchased. In the event of default by any Underwriter,
the Underwriting Agreement provides that, in certain circumstances, purchase
commitments of the nondefaulting Underwriter may be increased or the
Underwriting Agreement may be terminated.
The Company has been advised by the Underwriters that they propose initially
to offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of 0.40% of the principal amount of the Notes.
The Underwriters may allow and such dealers may reallow a discount not in excess
of 0.25% of the principal amount of the Notes to certain other dealers. After
the initial public offering, the public offering price and such concessions and
discount may be changed.
There is no public trading market for the Notes and the Company does not
presently intend to apply for listing of the Notes on any national securities
exchange or for quotation of the Notes on any automated dealer quotation system.
The Company has been advised by Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Lehman Brothers Inc. that each intends to make a market in the
Notes; however, the Underwriters are not obligated to do so and may discontinue
making a market at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes or that an active public market
for the Notes will develop. If an active public trading market for the Notes
does not develop, the market price and liquidity of the Notes may be adversely
affected. If the Notes are traded, they may trade at a discount from their
initial offering price, depending on prevailing interest rates in the market for
similar securities, the performance of the Company and certain other factors.
The Underwriters are permitted to engage in certain transactions that
stabilize the price of the Notes. Such transactions consist of bids or purchases
for the purpose of pegging, fixing or maintaining the price of the Notes. If the
Underwriters create a short position in the Notes in connection with the
offering, i.e., if they sell Notes in an aggregate principal amount exceeding
that set forth on the cover page of this Prospectus Supplement, the Underwriters
may reduce that short position by purchasing Notes in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the Company nor the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Notes. In
S-8
<PAGE>
addition, neither the Company nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, or contribute to payments which the
Underwriters may be required to make in respect thereof.
Certain of the Underwriters have engaged in transactions with, and, from
time to time, have performed services for, the Company in the ordinary course of
business.
S-9
<PAGE>
PROSPECTUS
[LOGO]
ARVIN INDUSTRIES, INC.
$225,000,000
DEBT SECURITIES
PREFERRED SHARES
DEPOSITARY SHARES
COMMON SHARES
WARRANTS
--------------------
Arvin Industries, Inc. ("Arvin" or the "Company") may offer from time to
time, together or separately, its (i) unsecured debt securities ("Debt
Securities"), which may be either senior ("Senior Debt Securities") or
subordinated ("Subordinated Debt Securities"), consisting of debentures, notes
or other unsecured evidences of indebtedness in one or more series; (ii)
Preferred Shares, no par value, in one or more series ("Preferred Shares"),
which may be issued in the form of Depositary Shares evidenced by Depositary
Receipts; (iii) Common Shares, $2.50 par value ("Common Shares"), and related
preferred share purchase rights; and (iv) warrants ("Warrants") to purchase
securities designated by the Company at the time of the offering of any
Warrants. Subordinated Debt Securities and Preferred Shares may be convertible
into other securities of the Company. The Debt Securities, Preferred Shares,
Depositary Shares, Common Shares and Warrants are collectively referred to as
the "Securities."
The Securities offered pursuant to this Prospectus may be issued in one or
more series or issuances at an aggregate initial offering price not to exceed
$225,000,000 (or its equivalent in foreign currency or currency units) in
amounts, at prices and on terms to be determined at or prior to the time of sale
and set forth in one or more supplements to this Prospectus (each, a "Prospectus
Supplement").
Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered will be set forth in the accompanying Prospectus
Supplement, including, where applicable, the initial public offering price of
the Securities, the net proceeds thereof to the Company, any listing of such
Securities on a securities exchange and any other special terms. The Prospectus
Supplement will set forth with regard to Securities being offered, without
limitation, the following: (i) in the case of Debt Securities (and, if Warrants
to purchase Debt Securities are being offered, similar information with respect
to the Debt Securities that may be purchased upon exercise of each such
Warrant), the specific designation, aggregate principal amount, whether such
Debt Securities will be Senior Debt Securities or Subordinated Debt Securities,
authorized denominations, maturity, any interest rate (which may be fixed or
variable) or method of calculation of interest and date of payment of any
interest, any premium, the place or places where principal of, premium, if any,
and any interest on such Debt Securities will be payable, any terms of
redemption at the option of the Company or the holder, any terms for sinking
fund payments, any currency or currency units of denomination and payment, if
other than U.S. dollars, and any other terms (including in the case of
Subordinated Debt Securities, any terms for conversion into other securities of
the Company) in connection with the offering and sale of the Debt Securities in
respect of which this Prospectus is delivered; (ii) in the case of Preferred
Shares (and, if Warrants to purchase Preferred Shares are being offered, similar
information with respect to the Preferred Shares that may be purchased upon
exercise of each such Warrant), the specific designation and stated value,
number of shares, any dividend (including the method of calculating payment of
dividends and the timing thereof), redemption, liquidation, voting and other
rights, any sinking fund provisions, any terms for conversion into other
securities of the Company and any other terms, including whether the Company has
elected to offer the Preferred Shares in the form of Depositary Shares and, if
so, the terms of such Depositary Shares, including the fraction of a Preferred
Share represented by each Depositary Share; (iii) in the case of Common Shares,
the number of shares and the terms of offering thereof; and (iv) in the case of
Warrants, the designation and number, the Securities to be purchased upon
exercise, the exercise price, manner of exercise, detachability, expiration date
and any other terms in connection with the offering, sale and exercise of the
Warrants. If so specified in the applicable Prospectus Supplement, Securities
may be issued in whole or in part in the form of one or more temporary or global
securities.
The Prospectus Supplement will also contain information, where applicable,
about certain United States federal income tax considerations relating to the
Securities covered by the Prospectus Supplement.
The Common Shares are listed on the New York Stock Exchange and the Chicago
Stock Exchange under the symbol "ARV." Any Common Shares sold pursuant to a
Prospectus Supplement will be approved for listing on such exchanges, upon
notice of issuance.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Company may sell the Securities to or through underwriters or dealers
and may also sell Securities directly to other purchasers or through agents. See
"Plan of Distribution." The Prospectus Supplement will set forth the names of
any underwriters, dealers or agents involved in the sale of the Securities in
respect of which this Prospectus is being delivered and any applicable fee,
commission and discount arrangements with them. See "Plan of Distribution" for a
description of any indemnification arrangements between the Company and any
underwriters, dealers or agents.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is March 18, 1998.
<PAGE>
IN CONNECTION WITH ANY UNDERWRITTEN OFFERING, THE UNDERWRITERS OF SUCH
OFFERING MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
Arvin has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (including any amendments
thereto, the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") with respect to the Securities offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted pursuant to the rules of the Commission. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document are not necessarily complete. With respect to each such contract,
agreement or other document filed or incorporated by reference as an exhibit to
the Registration Statement, reference is made to such exhibit for a more
complete description of the matter involved, and each such statement is
qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy materials and other information with the
Commission. Such reports, proxy materials and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, 500 West Madison Street, Chicago, Illinois 60661 and New York
Regional Office, 13th Floor, Seven World Trade Center, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C 20549 at prescribed rates.
Such reports, proxy materials and other information may also be inspected and
copied at the offices of the New York Stock Exchange, 20 Broad Street, New York,
New York 10005 and the Chicago Stock Exchange, 440 South LaSalle Street,
Chicago, Illinois 60604.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are hereby incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1997; and
2. The description of the Common Shares contained in the Company's
Registration Statement on Form 8-A, filed June 19, 1950, supplementing its
Registration Statement on Form 10, filed October 25, 1939, and the
description of the associated Preferred Share Purchase Rights contained in
the Company's Registration Statement on Form 8-A, dated June 10, 1986, as
amended February 28, 1989, December 9, 1994 and May 10, 1996, in each case
as filed under Section 12 of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities made hereby shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document that also
is or is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
2
<PAGE>
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all documents incorporated by reference into this Prospectus (not
including exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents). Requests for such copies should
be directed to Shareholder Relations, Arvin Industries, Inc., One Noblitt Plaza,
Box 3000, Columbus, Indiana 47202-3000; telephone (812) 379-3000.
THE COMPANY
Arvin is a diversified international manufacturer and supplier of automotive
parts and a variety of other products through operating entities in the U.S. and
numerous other countries. Since its founding in 1919, Arvin has grown through
internal development, acquisitions and a number of international joint ventures.
In recent years, Arvin's strategy has been to strengthen its automotive parts
businesses by achieving a mix of sales to both original equipment manufacturers
and replacement parts suppliers on a global basis.
The Company was incorporated in Indiana in 1921. Its principal executive
offices are located at One Noblitt Plaza, Box 3000, Columbus, Indiana
47202-3000, and its telephone number is (812) 379-3000. Arvin's Common Shares
are listed on the New York Stock Exchange and the Chicago Stock Exchange under
the symbol "ARV."
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds from the sale of the Securities will be used for general corporate
purposes, which may include the repayment of indebtedness, working capital
expenditures and investments in, or acquisitions of, businesses and assets.
Pending application of such net proceeds for specific purposes, such proceeds
may be invested in short-term or marketable securities. Specific allocations of
proceeds to a particular purpose that have been made at the date of any
Prospectus Supplement will be described therein.
RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------------------------------
DEC. 28, DEC. 29, DEC. 31, JAN. 1, JAN. 2,
1997 1996 1995 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Charges....................................... 3.2 2.4 1.6 1.8 2.5
Ratio of Earnings to Combined Fixed Charges and Preferred
Dividends........................................................ 3.2 2.4 1.6 1.8 2.5
</TABLE>
For purposes of calculating the ratios, "earnings" consist of earnings from
continuing operations before income taxes, adjusted for the portion of fixed
charges deducted from such earnings. "Fixed charges" consist of interest on all
indebtedness (including capital lease obligations and capitalized interest),
amortization of debt expense and the percentage of rental expense on operating
leases deemed representative of the interest factor. The ratios of earnings to
fixed charges, before the restructuring and special charges, for 1997, 1996,
1995 and 1994 were 3.3, 2.5, 1.9 and 2.4, respectively. No Preferred Shares were
outstanding during the periods, and, accordingly, no preferred dividends were
paid.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Debt Securities offered by any
Prospectus Supplement and the extent, if any, to which such general provisions
are not applicable will be described in a Prospectus Supplement relating to such
Debt Securities.
3
<PAGE>
The Debt Securities will be general unsecured obligations of Arvin and will
constitute either senior debt securities or subordinated debt securities. Those
Debt Securities that will be senior debt securities ("Senior Debt Securities")
will be issued under an Indenture dated as of July 3, 1990 (the "Senior
Indenture") between the Company and Harris Trust and Savings Bank, as trustee
under the Senior Indenture. In the case of Debt Securities that will be
subordinated debt securities ("Subordinated Debt Securities"), the Debt
Securities will be issued under an Indenture (the "Subordinated Indenture") to
be entered into between Arvin and First Chicago NBD Corporation, as trustee
under the Subordinated Indenture. The Senior Indenture and the Subordinated
Indenture are sometimes referred to individually as an "Indenture" and
collectively as the "Indentures." Copies of the Senior Indenture and the form of
Subordinated Indenture have been filed as exhibits to the Registration
Statement. The trustees under the Senior Indenture and the Subordinated
Indenture are sometimes referred to collectively as the "Trustees."
The following summaries of certain provisions of the Senior Debt Securities,
the Subordinated Debt Securities and the Indentures do not purport to be
complete and are qualified in their entirety by reference to all the provisions
of the Indenture applicable to a particular series of Debt Securities, including
the definitions therein of certain terms. Wherever particular Sections, Articles
or defined terms of the Indentures are referred to, it is intended that such
Sections, Articles or defined terms shall be incorporated by reference herein.
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the applicable Indenture.
PROVISIONS APPLICABLE TO BOTH SENIOR
AND SUBORDINATED DEBT SECURITIES
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities that can be issued thereunder and provide that Debt Securities may be
issued from time to time thereunder in one or more series, each in an aggregate
principal amount authorized by the Company prior to issuance. The Indentures do
not limit the amount of other unsecured indebtedness or securities that may be
issued by the Company.
The holders of Debt Securities will not benefit from any covenant or other
provision that would afford such holders special protection in the event of a
highly leveraged transaction involving Arvin. At the date of this Prospectus,
the Company does not intend to include any covenants or other provisions
affording such protection in any series of the Debt Securities. If the Company
determines in the future that it is desirable to include any such covenants or
other provisions in any series of Debt Securities, they will be described in the
Prospectus Supplement for that series. Certain other covenants under the Senior
Indenture are described below under "Provisions Applicable Solely to Senior Debt
Securities--Certain Covenants."
Each Indenture provides that Debt Securities may be issued thereunder by the
Company from time to time upon satisfaction of certain conditions precedent,
including the delivery to the Trustee of a resolution of the board of directors,
or a committee thereof, of the Company that fixes or provides for the
establishment of terms of such Debt Securities, including: (1) the specific
designation of the Debt Securities and the series of which such Debt Securities
shall be a part; (2) the aggregate principal amount and denominations of such
Debt Securities; (3) the date or dates on which such Debt Securities will
mature; (4) the rate or rates per annum (which may be fixed or floating) at
which such Debt Securities will bear interest, if any, (5) the dates on which
such interest, if any, will be payable, the record dates with respect to such
interest payment dates and the date from which such interest, if any, will
accrue; (6) the premium, if any, and conditions thereof; (7) the provisions, if
any, for redemption of such Debt Securities prior to stated maturity at the
option of the Company, the redemption price and any remarketing arrangements
relating thereto; (8) the provisions, if any, for repayment of such Debt
Securities prior to stated maturity at the option of the Holders thereof; (9)
the place or places where the principal, premium,
4
<PAGE>
if any, and interest on the Debt Securities will be payable; (10) any currency
or currency units of denomination and payment, if other than U.S. dollars; (11)
the ranking of the Debt Securities as Senior or Subordinated; (12) in the case
of Subordinated Debt Securities, any terms for conversion into other securities
of the Company; (13) any additional information with respect to book-entry
procedures, if applicable; and (14) any other provisions permitted by the
applicable Indenture. Reference is made to the Prospectus Supplement for the
terms of the Debt Securities being offered hereby.
The Debt Securities will be issued in fully registered form without coupons,
unless provisions relating to bearer securities are set forth in the Prospectus
Supplement for the Debt Securities being offered. No service charge will be made
for any registration of transfer of Debt Securities or exchange of Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charges that may be imposed in connection therewith.
The provisions of each Indenture provide the Company with the ability, in
addition to the ability to issue Debt Securities with terms different from those
of Debt Securities previously issued, to "reopen" a previous issue of a series
of Debt Securities and issue additional Debt Securities of such series.
Principal, premium, if any, and interest, if any, on Debt Securities will be
payable in the manner, at the places and subject to the restrictions set forth
in the applicable Indenture, the Debt Securities and the Prospectus Supplement
relating thereto, provided that (unless otherwise provided in the applicable
Prospectus Supplement) payment of any interest may be made at the option of the
Company by check mailed to the Holders of registered Debt Securities at their
registered addresses.
Debt Securities may be presented for exchange or transfer in the manner, at
the places and subject to the restrictions set forth in the applicable
Indenture, the Debt Securities and the Prospectus Supplement relating thereto.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Arvin may not consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other
corporation, unless (i) if Arvin is not the continuing corporation, the
successor corporation shall be a corporation organized and existing under the
laws of the United States of America or a State thereof; (ii) the successor
corporation shall expressly assume by a supplemental indenture, executed and
delivered to the Trustee in form satisfactory to the Trustee, the due and
punctual payment of the principal, premium, if any, and interest on, the Debt
Securities, according to their tenor and the due and punctual performance and
observance of all covenants and conditions of the applicable Indenture to be
performed by the Company; and (iii) the Company or such successor corporation,
as the case may be, shall not immediately after such merger or consolidation, or
such sale, lease or conveyance, be in default in the performance of any such
covenant or condition.
MODIFICATION AND WAIVER
Modification and amendment of either Indenture may be effected by the
Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Debt Securities of
each series affected thereby, provided that no such modification or amendment
may, without the consent of the Holder of each Outstanding Debt Security
affected thereby, (a) change the Stated Maturity of the principal of, or any
installment of interest on, any Debt Security or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or reduce the amount of the principal of an Original Issue
Discount Debt Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof, or change the currency in which any Debt
Security or any premium or the interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption or repayment, on or after the
Redemption Date or Repayment Date), or, in the case of Subordinated Debt
Securities, modify any provision relating to their subordination in a manner
adverse to
5
<PAGE>
the holders thereof, or (b) reduce the percentage in principal amount of the
Outstanding Debt Securities of any series, the consent of whose Holders is
required for any such amendment, or the consent of whose Holders is required for
any waiver provided for in the Indenture, or (c) modify any of the provisions
set forth in this paragraph, except to increase any such percentage or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Debt Security
affected thereby. Except with respect to such matters, the Holders of at least a
majority in principal amount of Outstanding Debt Securities of any series may,
with respect to such series, waive past defaults under the applicable Indenture
(other than a default in payment of principal, premium, if any, or interest) and
waive compliance by the Company with certain provisions of the Indenture.
SATISFACTION AND DISCHARGE OF AN INDENTURE
If the Company deposits or causes to be deposited with the Trustee cash or
direct obligations of the United States of America or obligations the payment of
principal and interest on which is guaranteed by the United States of America
(and which are not callable at will by the issuer thereof) as will together with
the income to accrue thereon, be sufficient to pay and discharge the entire
indebtedness on all Outstanding Debt Securities of any series when due, and
complies with certain other conditions, then, at the direction of the Company,
the Company shall be deemed to have paid and discharged the entire Indebtedness
with respect to such series of Outstanding Debt Securities (except for certain
surviving obligations including, among other things, the rights of the Holders
thereof to receive from such deposits payment of principal, premium, if any, and
interest with respect to such Outstanding Debt Securities when such payments are
due).
If the Company deposits with the Trustee cash or securities as described
above and either (A) all Debt Securities theretofore authenticated and delivered
under the applicable Indenture have been delivered for cancellation (other than
(i) Debt Securities (or coupons in the case of bearer securities) that have been
destroyed, lost or stolen and which have been paid or replaced, (ii) coupons
pertaining to bearer securities whose surrender is not required or has been
waived under certain circumstances and (iii) Debt Securities (or coupons in the
case of bearer securities) the payment for which has been previously deposited
in trust or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust) or (B) all such Debt Securities have
become due and payable or will become due and payable at their Stated Maturity
within one year or, if redeemable at the option of the Company, are to be called
for redemption within one year, and the Company complies with certain other
conditions, then, at the direction of the Company, such Indenture shall cease to
be of further effect, except as to certain rights of transfer or exchange.
EVENTS OF DEFAULT
Each Indenture defines an Event of Default with respect to any series of
Debt Securities issued thereunder as being any one of the following events: (i)
default for 30 days in any payment of interest on any Debt Security of such
series; (ii) default in the payment of principal of, or premium, if any, on, any
Debt Security of such series when due; (iii) default in the deposit of any
sinking fund payment with respect to any Debt Security of such series when due;
(iv) default, for 90 days after appropriate notice, in performance of any other
covenant or warranty in such Indenture (other than a covenant or warranty
included in such Indenture solely for the benefit of one or more series of Debt
Securities other than that series); (v) the failure to pay principal of or
interest on any other obligation for borrowed money of the Company (including
default under any other series of Debt Securities and in the case of the Senior
Debt
6
<PAGE>
Securities, including default on any guaranty of an obligation for borrowed
money of a Restricted Subsidiary) beyond any period of grace with respect
thereto if (x) the aggregate principal amount of any such obligation is in
excess of $10,000,000 (or in the case of any such obligation in which the amount
payable upon acceleration is less than the amount payable at stated maturity,
the amount then payable upon acceleration exceeds $10,000,000), (y) the default
in such payment is not being contested by the Company in and by appropriate
proceedings, and (z) the default in such payment has not been cured or waived
prior to the notice in writing to the Company as provided in such Indenture;
(vi) certain events of bankruptcy, insolvency or reorganization; or (vii) any
other Event of Default provided with respect to Debt Securities of that series.
In case an Event of Default specified in (vi) above occurs, all unpaid principal
of, premium, if any, and accrued interest on Outstanding Debt Securities of any
series shall ipso facto become and shall be immediately due and payable without
any declaration or other act on the part of the applicable Trustee or any
Holder, and if any other Event of Default shall occur and be continuing with
respect to any series of Debt Securities, the Trustee with respect thereto or
the Holders of not less than 25% in aggregate principal amount of the
Outstanding Debt Securities of that series may declare the principal of such
series (or, as in the case of Original Issue Discount Securities, such portion
of the principal as may be specified in the terms of that series) to be due and
payable immediately. However, at any time after such a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree based on such acceleration has been obtained, the
Holders of a majority in aggregate principal amount of Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration if all Events of Default other than the non-payment of
accelerated principal, with respect to Debt Securities of that series, have been
cured or waived as provided in such Indenture.
Reference is made to the Prospectus Supplement relating to any Debt Security
that is an Original Issue Discount Security for the particular provisions
relating to acceleration of the Maturity of a portion of the principal amount of
such Original Issue Discount Security upon the occurrence of an Event of Default
and the continuation thereof.
Each Indenture requires the Company to file annually with the Trustee an
Officer's Certificate as to the absence of certain defaults under the terms of
such Indenture. Each Indenture provides that the Trustee thereof shall, within
90 days after the occurrence of a default with respect to any such series for
which there are Debt Securities outstanding which is continuing, give to the
Holders of such Debt Securities notice of all uncured defaults known to it (the
term default to include the events specified above without grace periods);
provided that, except in the case of default in the payment of principal,
premium, if any, or interest on any of the Debt Securities of any series or the
payment of any sinking fund installment on the Debt Securities of any series,
the Trustee shall be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interest of the Holders
of Debt Securities.
Subject to the provisions of each Indenture relating to the duties of the
Trustee thereof in case an Event of Default shall occur and be continuing, each
Indenture provides that the Trustee shall be under no obligation to exercise any
of its rights or powers under such Indenture at the request, order or direction
of the Holders of the Debt Securities unless such Holders shall have offered to
the Trustee reasonable indemnity. Subject to such provisions for indemnification
and other rights of the Trustee, each Indenture provides that the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of any
series affected shall 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 Debt Securities of
such series.
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to such Indenture or for any remedy
thereunder unless (i) such Holder shall have previously given to the Trustee
thereof written notice of a continuing Event of Default with respect to Debt
Securities of that series, (ii) the Holders of at least 25% in aggregate
principal amount of the Outstanding Debt Securities of that series shall have
made written request to the Trustee to institute such proceeding as
7
<PAGE>
Trustee, (iii) such Holder or Holders shall have offered to the Trustee
reasonable indemnity, (iv) the Trustee shall have failed to institute such
proceeding within 60 days, and (v) the Trustee shall not have received from the
Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of that series a direction inconsistent with such request. However,
the Holder of any Debt Security will have an absolute right to receive payment
of the principal, premium, if any, and interest on such Debt Security on or
after the due dates expressed in such Debt Security and to institute suit for
the enforcement of any such payment.
BOOK-ENTRY DEBT SECURITIES
Debt Securities of a series may be issued in whole or in part in the form of
one or more global securities ("Global Securities") that will be deposited with,
or on behalf of, a depository identified in the Prospectus Supplement relating
to such series. Payments of principal, premium, if any, and interest, if any, on
Debt Securities of such series represented by a Global Security will be made to
the Depository.
The Company anticipates that any Global Securities will be deposited with,
or on behalf of, The Depository Trust Company ("DTC"), New York, New York, that
such Global Securities will be registered in the name of DTC's nominee, and that
the following provisions will apply to the depository arrangements with respect
to any such Global Securities. Additional or differing terms of the depository
arrangement relating to Debt Securities of any series issued in the form of
Global Securities will be described in the related Prospectus Supplement.
So long as DTC or its nominee is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole holder of
the Debt Securities represented by such Global Security for all purposes under
the applicable Indenture. Except as described below, owners of beneficial
interests in a Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities in certificated
form and will not be considered the record owners or holders of Debt Securities
under the applicable Indenture. The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
certificated form; accordingly, such laws may limit the transferability of
beneficial interests in a Global Security.
If DTC is at any time unwilling or unable to continue as depository with
respect to any Debt Securities that are represented by a Global Security and a
successor depository is not appointed by the Company within 60 days, the Company
will issue individual Debt Securities in certificated form in exchange for the
Global Securities. In addition, the Company may at any time determine not to
have any Debt Securities of one or more series represented by Global Securities
and, in such event, will issue individual Debt Securities of such series in
certificated form in exchange for the relevant Global Securities. In any such
instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery of individual Debt Securities in certificated form
equal in principal amount to such beneficial interest and to have such Debt
Securities in certificated form registered in its name.
The following information concerning DTC and DTC's book-entry system has
been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
Any Debt Securities for which DTC will act as securities depository will
be issued as fully registered securities registered in the name of Cede &
Co. (DTC's partnership nominee).
One fully registered Debt Security certificate will be issued with
respect to up to $200 million of principal amount of the Debt Securities of
a series, and an additional certificate will be issued with respect to any
remaining principal amount of such series.
DTC 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
8
<PAGE>
System, a "clearing corporation" within the meaning of the New York
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC 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
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC 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 DTC system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of Debt Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Debt
Securities on DTC's records. The ownership interest of each actual purchaser
of each Debt Security ("Beneficial Owner") is in turn to be recorded on the
Participants' records. A Beneficial Owner will not receive written
confirmation from DTC of its purchase, but such Beneficial Owner is expected
to receive a written confirmation providing details of the transaction, as
well as periodic statements of its holdings, from the Participant through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in Debt Securities 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
interests in Debt Securities, except in the event that use of the book-entry
system for the Debt Securities is discontinued.
The deposit of the Debt Securities with DTC and their registration in
the name of Cede & Co. will effect no change in beneficial ownership. DTC
will have no knowledge of the actual Beneficial Owners of the Debt
Securities; DTC records will reflect only the identity of the Direct
Participants to whose accounts Debt Securities 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 DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
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 DTC nor Cede & Co. will consent or vote with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (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 Debt Securities are credited on
the record date (identified on a list attached to the Omnibus Proxy).
Principal, premium and interest payments on the Debt Securities will be
made to DTC. DTC's practice is to credit Direct Participants' accounts on
the payable date in accordance with their respective holdings as shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on the payable date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
Participant and not of DTC, the Trustee or any Paying Agent 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 DTC is the responsibility
of the Company or the Trustee or any Paying Agent, disbursement of such
9
<PAGE>
payments to Direct Participants will be the responsibility of DTC and
disbursement of such payments to the Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the Debt Securities at any time by giving reasonable notice to
the Company or the Paying Agent. Under such circumstances, in the event that
a successor securities depository is not appointed, Debt Security
certificates are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Debt Security certificates will be printed and delivered.
Unless stated otherwise in the applicable Prospectus Supplement, any
underwriters, dealers or agents with respect to any Debt Securities issued as
Global Securities will be Direct Participants in DTC.
None of the Company, any underwriter, dealer or agent, the applicable
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests in a Global Security, or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
INFORMATION CONCERNING THE TRUSTEES
Harris Trust and Savings Bank is the trustee under the Senior Indenture, and
First Chicago NBD Corporation is expected to serve as the trustee under the
Subordinated Indenture. Each Trustee may also serve as warrant agent with
respect to any Debt Warrants to purchase underlying Debt Securities issued under
the Indenture with respect to which it acts as trustee (see "Description of
Warrants--Debt Warrants"). The Company also maintains banking relationships in
the ordinary course of business with each of the Trustees, and the Trustees
participate, along with several other banks, in certain credit facilities with
Arvin and certain of its subsidiaries. The Trustee for the Senior Indenture is,
as of the date of this Prospectus, trustee with respect to the Company's 6 7/8%
Notes due February 15, 2001. As of December 28, 1997, the Trustee for the Senior
Indenture also was trustee with respect to $72,000,000 aggregate principal
amount of the Company's Medium Term Notes issued under the Senior Indenture and
$23,000,000 aggregate principal amount of Medium Term Notes of Arvin Overseas
Finance B.V., an indirect wholly owned subsidiary of Arvin. As of December 28,
1997, Arvin had outstanding $147,000,000 aggregate principal amount of its debt
securities issued under the Senior Indenture.
GOVERNING LAW
The Indentures are governed, and the Debt Securities will be governed, by
the laws of the State of New York.
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
Senior Debt Securities will be issued under the Senior Indenture and will
rank pari passu with all other unsecured and unsubordinated debt of the Company.
CERTAIN COVENANTS
The Senior Indenture contains certain covenants, including those described
below with respect to the incurrence of Secured Debt by Arvin and its Restricted
Subsidiaries, Sale and Leaseback Transactions on the part of Arvin and its
Restricted Subsidiaries, and the transfer of Principal Facilities to
Unrestricted Subsidiaries. Certain of the terms used in these covenants are
defined below under "Certain Definitions." These covenants do not, however,
focus on the amount of debt incurred in any transaction and do not afford
protection to holders of the Debt Securities in the event of a highly leveraged
transaction that is not in violation of the covenants.
10
<PAGE>
The Senior Indenture provides that so long as the Debt Securities issued
pursuant to such Indenture are outstanding, Arvin will not, and will not cause
or permit a Restricted Subsidiary to, create, incur, assume or guarantee any
Secured Debt or create any Security Interest securing any indebtedness existing
on the date of such Indenture that would constitute Secured Debt if it were
secured by a Security Interest in a Principal Facility unless the Senior Debt
Securities will be secured equally and ratably (subject to applicable priorities
of payment) by the Security Interest securing such Secured Debt or indebtedness,
except that Arvin and its Restricted Subsidiaries may create, incur, assume or
guarantee certain Secured Debt without so securing the Senior Debt Securities.
Among such permitted Secured Debt is indebtedness secured by (i) certain
Security Interests to secure payment of the cost of acquisition, construction,
development or improvement of property; (ii) Security Interests on property at
the time of acquisition assumed by Arvin or a Restricted Subsidiary, or on the
property or on the outstanding shares or indebtedness of a corporation or firm
at the time it becomes a Restricted Subsidiary or is merged into or consolidated
with Arvin or a Restricted Subsidiary, or on properties of a corporation or firm
acquired by Arvin or a Restricted Subsidiary as an entirety or substantially as
an entirety; (iii) Security Interests arising from conditional sales agreements
or title retention agreements with respect to property acquired by Arvin or any
Restricted Subsidiary; (iv) Security Interests securing indebtedness of a
Restricted Subsidiary owing to Arvin or to another Restricted Subsidiary; (v)
mechanics' and other statutory liens arising in the ordinary course of business
(including construction of facilities) in respect of obligations that are not
due or that are being contested in good faith; (vi) liens for taxes, assessments
or governmental charges not yet due or for taxes, assessments or governmental
charges that are being contested in good faith; (vii) Security Interests
(including judgment liens) arising in connection with legal proceedings so long
as such proceedings are being contested in good faith and, in case of judgment
liens, execution thereon is stayed; (viii) certain landlords' liens on fixtures;
(ix) Security Interests to secure partial, progress, advance or other payments
or indebtedness incurred for the purpose of financing construction on or
improvement of property subject to such Security Interests; and (x) certain
Security Interests in favor, or made at the request, of governmental bodies.
Additionally, permitted Secured Debt includes (with certain limitations) any
extension, renewal or refunding, in whole or in part, of any Secured Debt
permitted at the time of the original incurrence thereof. In addition to the
foregoing, Arvin and its Restricted Subsidiaries may incur Secured Debt, without
equally and ratably securing the Senior Debt Securities, if the sum of (a) the
amount of Secured Debt entered into after the date of the Senior Indenture and
otherwise prohibited by the Senior Indenture plus (b) the aggregate value of
Sale and Leaseback Transactions entered into after the date of the Senior
Indenture and otherwise prohibited by the Senior Indenture does not exceed ten
percent of Consolidated Net Tangible Assets.
The Senior Indenture provides that so long as Debt Securities issued
pursuant to such Indenture are outstanding Arvin will not, and will not permit
any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction
unless (a) Arvin or such Restricted Subsidiary would be entitled to incur
Secured Debt permitted by the Indenture only by reason of the provision
described in the last sentence of the preceding paragraph equal in amount to the
net proceeds of the property sold or transferred or to be sold or transferred
pursuant to such Sale and Leaseback Transaction and secured by a Security
Interest on the property to be leased without equally and ratably securing the
Notes or (b) Arvin or a Restricted Subsidiary shall apply within 180 days after
the effective date of such Sale and Leaseback Transaction, an amount equal to
such net proceeds (x) to the acquisition, construction, development or
improvement of properties, facilities or equipment which are, or upon such
acquisition, construction, development or improvement will be, a Principal
Facility or Facilities or a part thereof or (y) to the redemption of Senior Debt
Securities or (z) to the repayment of Senior Funded Debt of Arvin or of any
Restricted Subsidiary (other than the Senior Funded Debt owed to any Restricted
Subsidiary), or in part to such acquisition, construction, development or
improvement and in part to such redemption and/or repayment. In lieu of applying
an amount equal to such net proceeds to such redemption Arvin may, within 180
days after such sale or transfer, deliver to the Trustee Senior Debt Securities
(other than Senior Debt Securities made the basis of a reduction in a mandatory
sinking fund payment) for cancellation and thereby reduce the amount
11
<PAGE>
to be applied to the redemption of the Senior Debt Securities by an amount
equivalent to the aggregate principal amount of the Senior Debt Securities so
delivered.
The Senior Indenture provides that so long as Debt Securities issued
pursuant to such Indenture are outstanding, Arvin will not, and will not cause
or permit any Restricted Subsidiary to, transfer any Principal Facility to any
Unrestricted Subsidiary unless it shall apply within 180 days of the effective
date of such transaction an amount equal to the fair value of such Principal
Facility at the time of such transfer (i) to the acquisition, construction,
development or improvement of properties, facilities or equipment which are, or
upon such acquisition, construction, development or improvement will be, a
Principal Facility or Facilities or a part thereof or (ii) to the redemption of
the Senior Debt Securities or (iii) to the repayment of Senior Funded Debt of
Arvin or any Restricted Subsidiary (other than Senior Funded Debt owed to any
Restricted Subsidiary), or in part to such acquisition, construction,
development or improvement and in part to such redemption and/or repayment. In
lieu of applying all or any part of such amount to such redemption, Arvin may,
within 180 days of such transfer, deliver to the Trustee Senior Debt Securities
(other than Senior Debt Securities made the basis of a reduction in a mandatory
sinking fund payment) for cancellation and thereby reduce the amount to be
applied to the redemption of the Senior Debt Securities by an amount equivalent
to the aggregate principal amount of the Senior Debt Securities so delivered.
CERTAIN DEFINITIONS
The following terms are defined substantially as follows in Section 101 of
the Senior Indenture and are used herein as so defined.
"Consolidated Net Tangible Assets" means, in each case, with respect to
Arvin (a) the total amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom (i) all liabilities and
liability items, except for indebtedness payable by its terms more than one year
from the date of incurrence thereof (or renewable or extendable at the option of
the obligor for a period ending more than one year after such date of
incurrence), capitalized rent, capital stock (including redeemable preferred
stock) and surplus, surplus reserves and deferred income taxes and credits and
other non-current liabilities, and (ii) all goodwill, trade names, trademarks,
patents, unamortized debt discount, unamortized expenses incurred in the
issuance of debt, and other like intangibles which, in each case, under
generally accepted accounting principles in effect on July 3, 1990, the date of
the Senior Indenture, would be included on a consolidated balance sheet of Arvin
and its Restricted Subsidiaries, less (b) loans, advances, equity investments
and guarantees (other than accounts receivable arising from the sale of
merchandise in the ordinary course of business) at the time outstanding that
were made or incurred by Arvin and its Restricted Subsidiaries to, in or for
Unrestricted Subsidiaries or to, in or for corporations while they were
Restricted Subsidiaries and which at the time of computation are Unrestricted
Subsidiaries.
"Principal Facility" means any manufacturing plant, warehouse, office
building or parcel of real property (including fixtures but excluding leases and
other contract rights which might otherwise be deemed real property) owned by
Arvin, or any Restricted Subsidiary, whether owned on the date of the Senior
Indenture or thereafter, provided each such plant, warehouse, office building or
parcel of real property has a gross book value (without deduction for any
depreciation reserves) at the date as of which the determination is being made
of in excess of three percent of the Consolidated Net Tangible Assets, other
than any such plant, warehouse, office building or parcel of real property or
portion thereof which, in the opinion of the Board of Directors (evidenced by a
Board Resolution), is not of material importance to the business conducted by
Arvin and its Subsidiaries taken as a whole.
"Restricted Subsidiary" means (a) any Subsidiary other than an Unrestricted
Subsidiary and (b) any Subsidiary that was an Unrestricted Subsidiary but which,
subsequent to the date of the applicable Indenture, is designated by Arvin
(evidenced by a Board Resolution) to be a Restricted Subsidiary; provided,
however, that Arvin may not designate any such Subsidiary to be a Restricted
Subsidiary if Arvin would thereby breach any covenant or agreement contained in
the Senior Indenture (on the assumption
12
<PAGE>
that any transaction to which such Subsidiary was a party at the time of such
designation and which would have given rise to Secured Debt or constituted a
Sale and Leaseback Transaction at the time it was entered into had such
Subsidiary then been a Restricted Subsidiary was entered into at the time of
such designation).
"Sale and Leaseback Transaction" means any sale or transfer made by Arvin or
one or more Restricted Subsidiaries (except a sale or transfer made to Arvin or
one or more Restricted Subsidiaries) of any Principal Facility that (in the case
of a Principal Facility which is a manufacturing plant, warehouse or office
building) has been in operation, use or commercial production (exclusive of test
and start-up periods) by Arvin or any Restricted Subsidiary for more than 180
days prior to such sale or transfer, or that (in the case of a Principal
Facility that is a parcel of real property other than a manufacturing plant,
warehouse or office building) has been owned by Arvin or any Restricted
Subsidiary for more than 180 days prior to such sale or transfer, if such sale
or transfer is made with the intention of leasing, or as part of an arrangement
involving the lease of such Principal Facility to Arvin or a Restricted
Subsidiary (except a lease for a period not exceeding 36 months made with the
intention that the use of the leased Principal Facility by Arvin or such
Restricted Subsidiary will be discontinued on or before the expiration of such
period). Any Secured Debt permitted under the Senior Indenture will not be
deemed to create or be defined to be a Sale and Leaseback Transaction.
"Secured Debt" means any indebtedness for money borrowed by, or evidenced by
a note or other similar instrument of, Arvin or a Restricted Subsidiary, and any
other indebtedness of Arvin or a Restricted Subsidiary on which, by the terms of
such indebtedness, interest is paid or payable, including obligations evidenced
or secured by leases, installment sales agreements or other instruments in
connection with private activity bonds which are qualified bonds under Section
141 of the Internal Revenue Code of 1986 (other than indebtedness owed by a
Restricted Subsidiary to Arvin, by a Restricted Subsidiary to another Restricted
Subsidiary or by Arvin to a Restricted Subsidiary), which in any such case is
secured by (a) a Security Interest in any Principal Facility, or (b) a Security
Interest in any shares of stock owned directly or indirectly by Arvin in a
Restricted Subsidiary or in indebtedness for money borrowed by a Restricted
Subsidiary from Arvin or another Restricted Subsidiary. The securing in the
foregoing manner of any previously unsecured debt shall be deemed to be the
creation of Secured Debt at the time such security is given. The amount of
Secured Debt at any time outstanding shall be the aggregate amount then owing
thereon by Arvin and its Restricted Subsidiaries.
"Senior Funded Debt" means any obligation of Arvin or any Restricted
Subsidiary which constituted funded debt as of the date of its creation and
that, in the case of such funded debt of Arvin, is not subordinate and junior in
right of payment to the prior payment of the Senior Debt Securities. As used
herein "funded debt" shall mean any obligation payable by its terms more than
one year from the date of incurrence thereof (or renewable or extendable at the
option of the obligor for a period ending more than one year after such date of
incurrence), which under generally accepted accounting principles should be
shown on the balance sheet as a liability.
"Subsidiary" means any corporation of which at the time of determination
Arvin and/or one or more Subsidiaries owns or controls directly or indirectly
more than 50 percent of the shares of Voting Stock.
"Unrestricted Subsidiary" means (a) any Subsidiary acquired or organized
after the date of the Senior Indenture, provided, however, that such Subsidiary
is not a successor, directly or indirectly, to, and does not directly or
indirectly own any equity interest in, any Restricted Subsidiary, (b) any
Subsidiary the principal business and assets of which are located outside the
United States of America (including its territories and possessions) or Canada
or both, (c) any Subsidiary the principal business of which consists of
financing the acquisition or disposition of machinery, equipment, inventory,
accounts receivable and other real, personal and intangible property by Persons
including Arvin or a Subsidiary, (d) any Subsidiary the principal business of
which is owning, leasing, dealing in or developing real property for residential
or office building purposes, and (e) any Subsidiary substantially all the assets
of which consist of stock or
13
<PAGE>
other securities of an Unrestricted Subsidiary or Unrestricted Subsidiaries of
the character described in clauses (a) through (d) of this paragraph, unless and
until, in each of the cases specified in this paragraph, any such designation
shall have been designated to be a Restricted Subsidiary pursuant to clause (b)
of the definition of "Restricted Subsidiary."
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
Subordinated Debt Securities will be issued under the Subordinated Indenture
and will rank pari passu with certain other subordinated debt of the Company
that may be outstanding from time to time and will rank junior to all Senior
Indebtedness of the Company (including any Senior Debt Securities) that may be
outstanding from time to time. The particular terms of the Subordinated Debt
Securities offered by any Prospectus Supplement, including the terms of
subordination and the definition of Senior Indebtedness, may be modified from
those set forth in the following general provisions, as and to the extent
described in the Prospectus Supplement.
SUBORDINATION
The payment of the principal of (and premium, if any) and interest on the
Subordinated Debt Securities is expressly subordinated, to the extent and in the
manner set forth in the Subordinated Indenture (with any changes therein
effected by the terms of the particular Subordinated Debt Securities indicated
in the Prospectus Supplement), in right of payment to the prior payment in full
of all Senior Indebtedness of the Company.
In the event of any dissolution or winding up, or total or partial
liquidation or reorganization of the Company, whether in bankruptcy,
reorganization, insolvency, receivership or similar proceeding, the holders of
Senior Indebtedness will be entitled to receive payment in full of all amounts
due or to become due on or in respect of all Senior Indebtedness before the
Holders of the Subordinated Debt Securities are entitled to receive any payment
on the Subordinated Debt Securities, including principal (or premium, if any) or
interest.
Unless otherwise indicated in the Prospectus Supplement, no payment in
respect of the Subordinated Debt Securities shall be made if, at the time of
such payment, there exists a default in payment (beyond any applicable grace
period) on all or any portion of any Senior Indebtedness, and such default shall
not have been cured or waived in writing or the benefits of such subordination
in the Subordinated Indenture shall not have been waived in writing by or on
behalf of the holders of such Senior Indebtedness.
If, notwithstanding the foregoing, the Trustee or the Holder of any of the
Subordinated Debt Securities receives any payment or distribution of any kind
before all Senior Indebtedness is paid in full or payment thereof provided for,
such payment or distribution shall be applied to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The term "Senior Indebtedness" is defined in the Subordinated Indenture as
Indebtedness (which includes any Senior Debt Securities), either outstanding as
of the date of the Subordinated Indenture or subsequently issued, that by its
terms is not subordinated in right of payment to any unsecured Indebtedness of
the Company or is pari passu with subordinated Indebtedness of the Company.
The term "Indebtedness," as applied to any Person, is defined in the
Subordinated Indenture as all indebtedness, whether or not represented by bonds,
debentures, notes or other securities, created or assumed by such Person for the
repayment of money borrowed, and obligations, computed in accordance with
generally accepted accounting principles, as lessee under leases that should be,
in accordance with generally accepted accounting principles, treated as capital
leases. All Indebtedness secured by a lien upon property owned by Arvin or any
Subsidiary and upon which Indebtedness such Person customarily pays interest,
although such Person has not assumed or become liable for the payment of such
Indebtedness,
14
<PAGE>
shall be deemed to be Indebtedness of such Person. All Indebtedness of others
guaranteed as to payment of principal by such Person or in effect guaranteed by
such Person through a contingent agreement to purchase such Indebtedness shall
also be deemed to be indebtedness of such Person.
If Subordinated Debt Securities are issued under the Subordinated Indenture,
the aggregate principal amount of Senior Indebtedness outstanding as of a recent
date will be set forth in the related Prospectus Supplement. The Subordinated
Indenture does not restrict the amount of Senior Indebtedness that Arvin may
incur.
CONVERSION
The terms on which Subordinated Debt Securities of any series are
convertible into Common Shares or other securities of the Company will be set
forth in the Prospectus Supplement relating thereto. Except as otherwise
indicated in the Prospectus Supplement, any right to convert Subordinated Debt
Securities called for redemption will terminate at the close of business on the
redemption date. In the case of Subordinated Debt Securities convertible into
Common Shares, the initial conversion price will be subject to appropriate
adjustment in certain events, including: (i) a dividend or distribution on the
Common Shares in Common Shares; (ii) a subdivision or combination of the Common
Shares; (iii) an issuance to all holders of Common Shares of certain rights
(other than the Rights, as defined below under "--Preferred Share Purchase
Rights") or warrants entitling them (for a period expiring within 45 days after
the relevant record date) to subscribe for or purchase Common Shares at less
than the current market price; and (iv) a distribution on the Common Shares of
evidences of indebtedness of the Company or assets (other than cash dividends or
distributions from retained earnings) or rights (other than Rights) or warrants
to subscribe for or purchase any of its securities (other than those referred to
above).
In addition, except as otherwise indicated in the Prospectus Supplement, in
any of the following events: (i) the reclassification or change of outstanding
Common Shares (other than certain changes in par value, or as a result of a
subdivision or combination); (ii) any consolidation, merger or combination of
the Company as a result of which holders of Common Shares shall be entitled to
receive stock, securities or other assets with respect to or in exchange for
such Common Shares; or (iii) any sale or conveyance of the assets of the Company
as, or substantially as, an entirety to any other entity as a result of which
holders of Common Shares shall be entitled to receive stock, securities or other
assets with respect to or in exchange for such Common Shares; then, in any such
event, the Holders of Subordinated Debt Securities that are convertible into
Common Shares shall have the right to convert such Subordinated Debt Securities
into the kind and amount of shares of stock and other securities or assets
receivable upon such event by a holder of the number of Common Shares issuable
upon conversion of such Subordinated Debt Securities immediately prior to such
event.
No adjustment of the conversion price will be required to be made in any
case until cumulative adjustments amount to at least one percent of the current
conversion price. The Company reserves the right to make such reductions in the
conversion price, in addition to those required in the foregoing provisions, as
the Company in its discretion shall determine to be advisable in order that
certain stock-related distributions hereafter made by the Company to its
shareholders will not be taxable. Each Common Share issued upon conversion will,
in certain circumstances and subject to certain terms and conditions set forth
in the Rights Agreement, include the associated Rights. See "--Preferred Share
Purchase Rights." Fractional Common Shares will not be issued upon conversion of
Subordinated Debt Securities that are convertible into Common Shares, but, in
lieu thereof, the Company will pay a cash adjustment based upon the market price
of the Common Shares.
Except as otherwise indicated in the Prospectus Supplement, Subordinated
Debt Securities surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date (except the Securities of
any series called for redemption on a redemption date during such period) must
be
15
<PAGE>
accompanied by payment of an amount equal to the interest thereon which the
registered Holder is to receive. In the case of any Subordinated Debt Security
which has been converted after any Regular Record Date but on or before the next
Interest Payment Date (except Securities of any series whose Maturity is prior
to such Interest Payment Date), interest whose Stated Maturity is on such
Interest Payment Date will be payable on such Interest Payment Date
notwithstanding such conversion, and such interest shall be paid to the Holder
of such Security on such Regular Record Date. Except as described above, no
interest on converted Securities will be payable by the Company on any Interest
Payment Date subsequent to the date of conversion. No other payment or
adjustment for interest or dividends is to be made upon conversion.
The conversion price for any Subordinated Debt Securities that are
convertible into securities of the Company other than Common Shares will be
subject to such adjustment as may be set forth in the related Prospectus
Supplement.
DESCRIPTION OF CAPITAL SHARES
GENERAL
Under the Company's Restated Articles of Incorporation (the "Articles of
Incorporation") the Company is authorized to issue 50,000,000 Common Shares, par
value $2.50 per share, 24,549,808 of which were issued and outstanding as of
March 1, 1998, and 8,978,058 preferred shares, without par value (the "Preferred
Shares"), none of which were outstanding as of March 1, 1998, which may be
issued at any time by the Board of Directors in such series with such terms as
it may fix in resolutions providing for the issuance thereof. The number of
authorized Preferred Shares includes 500,000 authorized Series C Junior
Participating Preferred Shares (the "Series C Preferred Shares") issuable under
the Rights Agreement (as described below), none of which were outstanding as of
March 1, 1998. The number of authorized Series C Preferred Shares may be
increased from time to time by resolution of the Board of Directors. See
"--Preferred Share Purchase Rights." The Company may issue the remainder of the
Preferred Shares in one or more series.
COMMON SHARES
Subject to the prior dividend rights of the Preferred Shares, holders of the
Common Shares are entitled to receive dividends and other distributions, when
and as declared by the Board of Directors of the Company. Certain of the
long-term debt obligations of the Company contain covenants that may indirectly
restrict the payment of dividends on shares of its capital stock, although none
materially limits the Company's ability to pay dividends at the date of this
Prospectus. Any such material limitations will be described in a Prospectus
Supplement relating to Common Shares.
Holders of Common Shares are entitled to one vote for each share held, and
except as required by the Indiana Business Corporation Law (the "IBCL") or as
may be otherwise specifically provided in an amendment to the Articles of
Incorporation, vote together with any Preferred Shares having general voting
rights as a single class.
After creditors and the prior rights of any Preferred Shares have been
satisfied upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company, the holders of the Common Shares are entitled
to share ratably in the remaining assets of the Company.
The Common Shares have no conversion privileges or preemptive rights and,
except as described below, are not subject to redemption at the option of the
Company. The Articles of Incorporation, the IBCL and, from time-to-time, various
loan agreements to which the Company is or may become a party may restrict the
Company's ability to redeem or repurchase its own shares in other situations.
The Common Shares are listed on the New York Stock Exchange and the Chicago
Stock Exchange. The transfer agent and registrar of the Common Shares is Harris
Trust and Savings Bank, Chicago, Illinois.
16
<PAGE>
PROVISIONS WITH POSSIBLE ANTI-TAKEOVER EFFECTS
The Company's By-Laws currently provide for the classification of the Board
of Directors into three classes. The Articles of Incorporation limit the number
of directors that may be elected to not less than 12 or more than 17 (exclusive
of such number of Directors as may be elected by any class of shares of the
Company other than the Common Shares on account of specified dividend arrearages
in accordance with the Articles of Incorporation), permit removal of directors
only for cause and only by the affirmative vote of two- thirds of the
outstanding voting shares, establish the power to make, alter, amend or repeal
the By-Laws exclusively in the Board of Directors and require that any merger,
dissolution or other significant restructuring of the Company be approved by 80%
of the directors or by 80% of the shares outstanding and entitled to vote
thereon (which shareholder vote is also required to amend these provisions). The
By-Laws also provide that amendments thereof require an affirmative vote of
two-thirds of the directors then in office. The Articles of Incorporation
provide that the By-Laws may contain provisions requiring the disclosure to the
Company of the names of beneficial owners of Common Shares and imposing
sanctions in the event of nondisclosure (such as prohibiting voting by,
withholding dividends to, and redeeming the Common Shares held by, the
non-disclosing record holder). The Company's By-Laws do not currently contain
such provisions.
In addition, the Articles of Incorporation provide that if any person who is
the beneficial owner of more than 50% of the Company's outstanding Common Shares
acquires any additional shares pursuant to a tender offer or if any person or
entity becomes the beneficial owner of more than 50% of the Company's
outstanding Common Shares in a tender offer for such shares, not approved by a
majority of the Board of Directors who are unaffiliated with the person or
entity making the tender offer, then all holders of Common Shares (and holders
of rights, options, warrants and securities then exercisable or convertible into
Common Shares), other than the acquiring person, are entitled for a limited
period to have the Company repurchase any or all of their shares at the
"repurchase price." The "repurchase price" is the greater of (a) the highest per
share price paid by the person or entity making the tender offer within the
prior eighteen months (plus aggregate earnings per Common Share for the
preceding four quarters less cash dividends paid on Common Shares during those
four quarters), or (b) the shareholder equity per Common Share. These provisions
of the Articles of Incorporation can be amended by only an 80% shareholder vote,
subject to certain other limitations. The Company's obligation to repurchase
shares is limited by the IBCL and could be limited by the terms and provisions
of outstanding Preferred Shares or loan or other agreements to which the Company
might be a party. See also "--Preferred Share Purchase Rights."
Chapter 42 of the IBCL eliminates the voting rights of certain shares
("control shares") held by persons ("acquiring persons") who acquire shares
giving them one-fifth, one-third or a majority of the voting power of certain
corporations, including the Company. Control shares acquired in a control share
acquisition retain the same voting rights as were accorded the shares before the
control share acquisition only to the extent granted by resolutions approved by
the disinterested shareholders. If shareholders approve the voting rights of
control shares and a shareholder has acquired control shares with a majority or
more of the voting power, all shareholders of the corporation are entitled to
exercise statutory dissenters' rights and to demand the value of their shares in
cash from the corporation. If voting rights are not accorded to the control
shares, the corporation has the right to redeem them. In addition, if authorized
in a corporation's articles of incorporation or by-laws, the corporation may for
a period of time redeem the shares that caused a person to become an acquiring
person at their fair value unless the acquiring person provides certain
information to the corporation. The Company's By-Laws authorize such a
redemption. The provisions of Chapter 42 do not apply to acquisitions of voting
power pursuant to a merger or share exchange agreement to which the corporation
is a party.
Chapter 43 of the IBCL imposes certain restrictions on the ability of an
"interested shareholder," which includes a beneficial owner of at least 10% of
the outstanding voting shares, of a "resident domestic corporation" (such as the
Company) to engage in a "business combination," as defined in the statute, with
17
<PAGE>
the resident domestic corporation unless certain requirements are met (including
a waiting period of five years after the shareholder becomes an interested
shareholder unless the corporation's board of directors approved the acquisition
of 10% or more of the voting shares or the business combination, prior to the
share acquisition date). Following the five-year period, a business combination
may be effected with an interested shareholder only if (a) the business
combination is approved by the corporation's shareholders, excluding the
interested shareholder and any of its affiliates or associates, or (b) the
consideration to be received by shareholders in the business combination meets
certain fairness criteria set forth in Chapter 43. Chapter 43 broadly defines
the term "business combination" to include mergers, sales or leases of assets,
transfers of shares of the corporation, proposals for liquidation and the
receipt by an interested shareholder of any financial assistance or tax
advantage from the corporation, except proportionately as a shareholder of the
corporation.
The overall effect of the above provisions may be to discourage, or render
more difficult, a merger, tender offer, proxy contest, the assumption of control
of the Company by a holder of a large block of the Company's shares or other
person, or the removal of incumbent management, even if such actions may be
beneficial to the Company's shareholders generally.
PREFERRED SHARE PURCHASE RIGHTS
Each outstanding Common Share includes one Right (individually a "Right" and
collectively the "Rights") to purchase one one-hundredth of a Series C Preferred
Share, which series currently consists of 500,000 Preferred Shares, all of which
have been reserved for issuance upon exercise of the Rights. The terms and
conditions of the Rights are governed by a Rights Agreement dated as of May 29,
1986, as amended by amendments dated as of February 23, 1989, November 10, 1994
and May 10, 1996 (the "Rights Agreement"), between the Company and Harris Trust
and Savings Bank. The description of the Rights contained herein is qualified in
its entirety by reference to the Rights Agreement which is filed as part of the
Company's Current Report on Form 8-K dated June 16, 1986 and the amendments
thereto which are filed with the Company's Current Reports on Form 8-K dated
February 23, 1989 and May 10, 1996 and with its Quarterly Report on Form 10-Q
for the quarter ended October 2, 1994.
Currently, the Rights are not exercisable, certificates representing Rights
have not been issued and the Rights automatically trade with the Common Shares.
However, ten days after a person or group either acquires beneficial ownership
of 20% or more of the outstanding Common Shares (such person or group being
called an "Acquiring Person") or makes an offer to acquire 20% or more of the
outstanding Common Shares, the Rights become exercisable, certificates
representing the Rights will be issued as soon as practicable thereafter and the
Rights will begin to trade independently from the Common Shares. At no time will
the Rights have any voting power. When the Rights become exercisable, a holder
thereof will become entitled to buy one one-hundredth of a newly-issued Series C
Preferred Share for each Right at an exercise price of $90, subject to certain
anti-dilution adjustments. Each Series C Preferred Share will be entitled to one
vote per share, voting together with the Common Shares and to certain other
voting rights. See "Preferred Shares." Holders of Series C Preferred Shares also
have special rights to participate in the election of two additional directors
in the event of certain dividend arrearages. Each Series C Preferred Share, if
and when issued upon the exercise of a Right, will be entitled to a minimum
preferential quarterly dividend at the rate of $25 per share, but subject to
certain adjustments will be entitled to an aggregate dividend of 100 times the
dividend declared per Common Share in the preceding quarter. The holders of the
Series C Preferred Shares will receive a preferred liquidation payment of $100
per share, but will be entitled to receive an aggregate liquidation payment
equal to 100 times the payment made per Common Share.
In the event that any person or group becomes an Acquiring Person or in the
event a transaction occurs that increases the Acquiring Person's proportionate
ownership of the Common Shares, each Right (other than those held by an
Acquiring Person) will become exercisable, at the current exercise price of the
Right, for that number of Common Shares having, at the time of such event, a
market value of two times
18
<PAGE>
the exercise price of the Right. Furthermore, if following the acquisition by a
person or group of 20% or more of the outstanding Common Shares, the Company is
involved in a merger or other business combination transaction or the Company
sells or transfers assets or earnings power aggregating more than 50% of the
assets or earning power of the Company, each Right will become exercisable, at
the current exercise price of the Right, for that number of shares of common
stock of the acquiring company having, at the time of such event, a market value
of two times the exercise price of each Right.
The Rights are subject to redemption by the Board of Directors for $.10 per
Right (subject to adjustment) until a person or group becomes an Acquiring
Person. Any redemption is effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion establishes. The
Rights expire on June 13, 2006, unless earlier redeemed.
The purchase price payable, and the number of Series C Preferred Shares or
other securities or property issuable upon exercise of the Rights, are subject
to adjustment from time to time to prevent dilution under certain circumstances.
So long as the Rights are attached to the Common Shares, the Company will
issue one Right with each new Common Share so that all Common Shares issued will
have attached Rights. The Company will also issue one Right with each new Common
Share (a) issuable upon conversion of any convertible security issued prior to
such time, if any, that the Rights are no longer attached to the Common Shares
and (b) issued upon exercise of options to purchase the Common Shares granted by
the Company prior to such time, if any, that the Rights are no longer attached
to the Common Shares.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person who attempts to acquire the Company without
conditioning his offer on a substantial number of the Rights being acquired. The
Rights will also adversely affect a person who desires to obtain control of the
Company. The Rights will not affect a transaction approved by the Board of
Directors of the Company prior to the existence of an Acquiring Person because
the Rights can be redeemed.
PREFERRED SHARES
The following description of Preferred Shares sets forth certain general
terms and provisions of any series of Preferred Shares to which any Prospectus
Supplement may relate. The specific terms of a particular series of Preferred
Shares will be described in the Prospectus Supplement relating to such series of
Preferred Shares. If so indicated in the related Prospectus Supplement, the
terms of any such series of Preferred Shares may differ from the terms set forth
below. The description of Preferred Shares set forth below and the description
of a particular series of Preferred Shares set forth in the Prospectus
Supplement relating thereto do not purport to be complete and are qualified in
their entirety by reference to the Articles of Incorporation, and any amendments
thereto relating to such series of Preferred Shares, which are filed or
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part.
Under the Articles of Incorporation the Board of Directors of the Company is
authorized to issue Preferred Shares in one or more series and with rights,
preferences, privileges and restrictions, including dividend rights, voting
rights, conversion rights, terms of redemption and liquidation preferences, that
may be fixed or designated by the Board of Directors without any further vote or
action by the Company's stockholders.
The specific terms of a particular series of Preferred Shares offered hereby
will be described in the applicable Prospectus Supplement, which will specify
the terms of the Preferred Shares as follows:
(a) the maximum number of shares to constitute the series and the
distinctive designations thereof;
19
<PAGE>
(b) the annual dividend rate, if any, on shares of the series and the
date or dates from which dividends shall commence to accrue or accumulate,
and whether the dividends shall be cumulative, and the dividend preference,
if any, applicable to the shares of the series;
(c) the price and the terms and conditions on which the shares of the
series may be redeemed, including the time during which shares of the series
may be redeemed, and any accumulated dividends thereon that the holders of
shares of the series shall be entitled to receive upon the redemption
thereof;
(d) the liquidation preference, if any, applicable to the shares of the
series;
(e) whether the shares of the series will be subject to the operation of
a retirement or sinking fund, and if so, the extent and manner in which any
such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of the series for retirement or for other corporate
purposes, and the terms and provisions relative to the operations of such
retirement or sinking fund;
(f) the terms and conditions, if any, on which the shares of the series
shall be convertible into, or exchangeable for, shares of any other class or
classes of capital stock of the Company or any series of any other class or
classes, or of any other series of the same class, including the price or
prices or the rate or rates of conversion or exchange and the method, if
any, of adjusting the same, provided that shares of such series may not be
convertible into shares of a series or class that has prior or superior
rights and preferences as to dividends or distribution of assets of the
Company upon voluntary or involuntary dissolution or winding up of the
affairs of the Company;
(g) the voting rights, if any, of the shares of the series;
(h) whether fractional interest in shares of the series will be offered
in the form of Depositary Shares as described below under "Description of
Depositary Shares;" and
(i) any or all other preferences and relative, participating, optional,
or other special rights, or qualifications, limitations or restrictions
thereof.
Any Prospectus Supplement that specifies the terms of Preferred Shares will also
describe any restriction on the repurchase or redemption of shares by the
Company while there is any arrearage in the payment of dividends or, if
applicable, sinking fund installments, or, if there is no such restriction, will
so state.
In addition to such voting rights as may be provided for in any series of
Preferred Shares established by the Board of Directors of the Company, under the
Articles of Incorporation, the holders of at least two-thirds of the total
number of outstanding Preferred Shares, voting together as a single class, must
approve any amendment to the Articles of Incorporation which would authorize any
class of shares, or of securities convertible into shares, which would rank
prior to the then outstanding Preferred Shares as to payment of dividends, or as
to distribution of assets upon liquidation, dissolution or winding up of the
Company or any amendment to the Articles of Incorporation which would change the
designation, rights or preferences of such outstanding Preferred Shares so as to
affect them adversely. If any such change would adversely affect any particular
series of then outstanding Preferred Shares, no change may be made without, in
addition, the approval of the holders of at least two-thirds of the then
outstanding shares of the particular series that would be so affected, voting
separately as a series. The Articles of Incorporation also provide that
additional Preferred Shares may not be authorized and that a class of shares
that would rank on parity with outstanding Preferred Shares as to assets or
dividends may not be authorized without the consent of the holders of at least a
majority of the total number of outstanding Preferred Shares, voting separately
as a class, without regard to series.
The holders of Preferred Shares also have the right, voting separately as a
class or series, to cast one vote per share upon each question or matter in
respect of which, under the IBCL, such holders are entitled to vote by class or
series.
20
<PAGE>
In addition to any series of Preferred Shares that may be described in the
applicable Prospectus Supplement, the Articles of Incorporation authorize
500,000 preferred shares designated Series C Preferred Shares to be issued upon
exercise of the Rights in accordance with the Rights Agreement. See "Preferred
Share Purchase Rights" for a description of the Rights and the rights and
preferences of the Series C Preferred Shares.
DESCRIPTION OF DEPOSITARY SHARES
The descriptions set forth below and in any Prospectus Supplement of certain
provisions of any Deposit Agreement, Depositary Shares and Depositary Receipts
(each as defined below) do not purport to be complete and are subject to and
qualified in their entirety by reference to the forms of Deposit Agreement and
Depositary Receipts relating to each series of Preferred Shares, which are filed
or incorporated by reference as exhibits to the Registration Statement.
GENERAL
The Company may, at its option, elect to offer fractional interests in
Preferred Shares, rather than whole Preferred Shares. In that event, the Company
expects to provide for the issuance by a Depositary of receipts for depositary
shares ("Depositary Shares"), each of which will represent a fractional interest
in Preferred Shares of a particular series, as set forth in the Prospectus
Supplement relating to the Depositary Shares and the particular series of
Preferred Shares.
The shares of any series of Preferred Shares underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (a "Deposit
Agreement") between the Company, a bank or trust company selected by the Company
having its principal office in the United States and having a combined capital
and surplus of at least $50,000,000 (a "Depositary") and the holders of the
Depositary Shares. The Prospectus Supplement relating to a series of Depositary
Shares will set forth the name and address of the Depositary. Subject to the
terms of the Deposit Agreement, each holder of Depositary Shares will be
entitled, in proportion to the applicable fractional interest in the Preferred
Shares underlying such Depositary Shares, to the rights and preferences of the
underlying Preferred Shares (including any dividend, voting, redemption,
conversion, exchange and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement (the "Depositary Receipts"). Depositary
Receipts will be distributed to those persons purchasing the fractional
interests in shares of the related series of Preferred Shares in accordance with
the terms of the offering described in the related Prospectus Supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
Whenever the Depositary receives any cash dividend or other cash
distribution on the Preferred Shares, except cash received upon redemption of
any Preferred Shares, the Depositary will distribute all such cash dividends or
other cash distributions received to the record holders of Depositary Receipts
relating to such Preferred Shares in proportion, as nearly as practicable, to
the respective numbers of such Depositary Shares evidenced by such Depositary
Receipts, but without attributing to any holder of Depositary Shares a fraction
of one cent. Any balance not so distributed shall be held by the Depositary
(without liability for interest thereon) and treated as a part of the next sum
received by the Depositary for distribution to record holders of the Depositary
Receipts.
In the event of a distribution on the Preferred Shares other than in cash,
the Depositary will distribute to the record holders of Depositary Receipts
entitled thereto such amounts of the property so received in proportion, as
nearly as practicable, to the respective numbers of Depositary Shares evidenced
by such receipts. If the Depositary determines, after consultation with the
Company, that such distribution cannot be made proportionately among such
holders or is otherwise not feasible, the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds to such holders.
21
<PAGE>
The Deposit Agreement will also contain provisions relating to the manner in
which any subscription or similar rights offered by the Company to holders of
the Preferred Shares shall be made available to the holders of Depositary
Receipts.
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Shares underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary from the redemption, in whole or in part, of such
Preferred Shares held by the Depositary. The Depositary shall mail notice of
redemption not less than 30 nor more than 60 days prior to the date fixed for
redemption to the record holders of the Depositary Receipts to be so redeemed at
their respective addresses appearing in the Depositary's books. The redemption
price per Depositary Share being redeemed will be equal to the applicable
fraction of the redemption price per share payable with respect to such of the
Preferred Shares as are redeemed. Whenever the Company redeems Preferred Shares
held by the Depositary, the Depositary will redeem as of the same redemption
date the number of Depositary Shares relating to the Preferred Shares so
redeemed. If less than all of the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or pro rata as may be
determined by the Company.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights (except the
right to receive the redemption price) of the holders of the Depositary Shares
will cease and terminate.
VOTING THE PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Receipts
relating to such Preferred Shares. Upon the written request of a holder of a
Depositary Receipt on such record date, the Depositary shall, to the extent
practicable, vote or cause to be voted the amount of Preferred Shares
represented by such holder's Depositary Shares in accordance with the
instructions set forth in such request. In the absence of specific instructions
from the holder of a Depositary Receipt, the Depositary will abstain from voting
to the extent of Preferred Shares represented by the Depositary Shares evidenced
by such Depositary Receipt.
AMENDMENT AND TERMINATION OF DEPOSITARY AGREEMENT
The form of Depositary Receipt and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Depositary.
However, any amendment which (i) materially and adversely alters the rights of
the existing holders of Depositary Shares or (ii) would be materially and
adversely inconsistent with the rights granted to the holders of Preferred
Shares will not be effective unless such amendment has been approved by the
holders of at least a majority of the Depositary Shares then outstanding.
A Deposit Agreement may be terminated by the Company on not less than 30
days' notice to the Depositary, in which case, upon surrender of Depositary
Receipts, the Depositary will distribute to the holders thereof the whole number
of Preferred Shares represented thereby. The Deposit Agreement will terminate
automatically if (i) all outstanding Depositary Shares relating thereto have
been redeemed or converted, (ii) if applicable, each underlying Preferred Share
has been converted into or exchanged for Common Shares or other securities or
(iii) there has been a final distribution in respect of the underlying Preferred
Shares in connection with any liquidation, dissolution or winding up of the
Company and such distribution has been made to the holders of the related
Depositary Shares.
CHANGES 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 pay charges of the Depositary in connection
22
<PAGE>
with the initial deposit of the Preferred Shares and any redemption of the
Preferred Shares. 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.
The Depositary may resign at any time by notice to the Company, and the
Company may remove the Depositary at any time, any such resignation or removal
to take effect upon the appointment of a successor Depositary and its acceptance
of such appointment. Such successor Depositary must be appointed within 60 days
after the notice of resignation or removal and must be a bank or trust company
having it principal office in the United States and having a combined capital
and surplus of at least $50,000,000. If a successor Depositary is not appointed
within 60 days, the resigning or removed Depositary may petition a court to
appoint a successor Depositary.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Receipts all
reports and notices from the Company which are delivered to the Depositary and
which the Company is required to furnish to the holders of the Preferred Shares.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstances 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
Shares unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or information provided by persons believed to
be competent and on documents believed to be genuine.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants") and Warrants to purchase Common Shares, Preferred
Shares or Depositary Shares ("Equity Warrants"). Warrants may be issued
independently of or together with any other Securities and may be attached to or
separate from such Securities. Each series of Warrants will be issued under a
separate Warrant Agreement (each a "Warrant Agreement") to be entered into
between the Company and a Warrant Agent ("Warrant Agent"). The Warrant Agent
will act solely as an agent of the Company in connection with the Warrant of
such series and will not assume any obligation or relationship of agency for or
with holders or beneficial owners of Warrants. The following sets forth certain
general terms and provisions of the Warrants offered hereby. Further terms of
the Warrants and the applicable Warrant Agreement will be set forth in the
applicable Prospectus Supplement.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of any Debt
Warrants, including the following:
(i) the title and aggregate number of such Debt Warrants;
(ii) the offering price of such Debt Warrants, if any;
(iii) whether such Debt Warrants are to be issued with any Debt
Securities and, if so, the title, aggregate principal amount and terms of
any such Debt Securities; the number of Debt Warrants to be issued with each
$1,000 principal amount of such Debt Securities (or such other principal
amount as is provided by the Company); and the date, if any, on and after
which such Debt Warrants and such Debt Securities will be separately
transferable;
23
<PAGE>
(iv) the title, aggregate principal amount, ranking and terms (including
any subordination and conversion provisions) of the underlying Debt
Securities that may be purchased upon exercise of such Debt Warrants;
(v) the time or times at which, or period or periods during which, such
Debt Warrants may be exercised, the minimum or maximum amount of Debt
Warrants which may be exercised at any one time and the final date on which
such Debt Warrants may be exercised;
(vi) the principal amount of Underlying Debt Securities that may be
purchased upon exercise of each Debt Warrant and the price, or the manner of
determining the price, at which such principal amount may be purchased upon
such exercise;
(vii) the terms of any right to redeem or call such Debt Warrants; and
(viii) information with respect to book-entry procedures, if any;
(ix) the currency or currency units in which the offering price, if any,
and the exercise price are payable;
(x) if applicable, a discussion of certain United States federal income
tax considerations;
(xi) any other terms of such Debt Warrants not inconsistent with the
provisions of the Debt Warrant Agreement.
EQUITY WARRANTS
The applicable Prospectus Supplement will describe the terms of any Equity
Warrants, including the following:
(i) the title and aggregate number of such Equity Warrants;
(ii) the offering price of such Equity Warrants, if any;
(iii) the designation and terms of any Preferred Shares that are
purchasable on exercise of such Equity Warrants or that underlie Depositary
Shares purchasable on such exercise;
(iv) if applicable, the designation and terms of the Securities with
which such Equity Warrants are issued and the number of such Equity Warrants
issued with each such Security;
(v) if applicable, the date from and after which such Equity Warrants
and any Securities issued therewith will be separately transferrable;
(vi) the number of Common Shares, Preferred Shares or Depositary Shares
purchasable upon exercise of an Equity Warrant and the price at which such
shares may be purchased upon exercise;
(vii) the time or times at which, or period or periods during which, such
Equity Warrants may be exercised and the final date on which such Equity
Warrants may be exercised, and the terms of any right of the Company to
accelerate such final date upon the occurrence of certain events;
(viii) if applicable, the minimum or maximum amount of such Equity
Warrants which may be exercised at any one time;
(ix) the currency or currency units in which the offering price, if,
any, and the exercise price are payable;
(x) any applicable antidilution provisions of such Equity Warrants;
(xi) if applicable, a discussion of certain United States federal income
tax considerations;
(xii) the redemption or call provisions, if any, applicable to such
Equity Warrants; and
(xiii) any additional terms of such Equity Warrants, not inconsistent with
the provisions of the Equity Warrant Agreement.
24
<PAGE>
PLAN OF DISTRIBUTION
Arvin may sell the Securities: (i) through underwriters or dealers; (ii)
directly to a limited number of purchasers or to a single purchaser; or (iii)
through agents. The Prospectus Supplement with respect to the Securities will
set forth the terms of the offering, the purchase price of the Securities and
the proceeds to the Company from such sale, any underwriters, dealers or agents,
any delayed delivery arrangements, any fees, underwriting discounts and other
items constituting underwriters' compensation, any initial public offering price
and any discounts or concessions allowed or reallowed or paid to dealers. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If 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 one
or more managing underwriters or directly by one or more firms acting as
underwriters. The underwriter or underwriters with respect to a particular
underwritten offering of Securities to be named in the Prospectus Supplement
relating to such offering or, if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement. Unless otherwise set forth in the Prospectus Supplement relating
thereto, the obligations of the underwriters to purchase the Securities will be
subject to conditions precedent and the underwriters will be obligated to
purchase all the Securities offered by the Prospectus Supplement if any are
purchased.
If dealers are utilized in the sale of Securities in respect of which this
Prospectus is delivered, the Company will sell such Securities to the dealers as
principals. The dealers may then resell such Securities to the public at varying
prices to be determined by such dealers at the time of resale. The names of the
dealers and the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.
The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Securities in respect to which this Prospectus is delivered will be
named, and any commissions payable by Arvin to such agent will be set forth in
the Prospectus Supplement relating thereto. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
The Securities may be sold directly by the Company to institutional
investors or others, who may be deemed to be underwriters within the meaning of
the Securities Act with respect to any resale thereof. The terms of any such
sales will be described in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents, dealers 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 which such agents, dealers or underwriters may be
required to make in respect thereof. Agents, dealers and underwriters may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
Other than the Common Shares, which will be approved for listing upon notice
of issuance on the New York Stock Exchange and the Chicago Stock Exchange, the
Securities may or may not be listed on a national securities exchange. No
assurances can be given that there will be a market for the Securities.
25
<PAGE>
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Company by Schiff Hardin & Waite, Chicago, Illinois, and, unless otherwise
specified in the Prospectus Supplement, for any underwriters or agents by Mayer,
Brown & Platt, Chicago, Illinois. The opinions with respect to the Securities
may be conditioned upon, and subject to certain assumptions regarding, future
action to be taken by the Company and the applicable Trustee, depositary or
Warrant Agent in connection with the issuance and sale of particular Securities,
the specific terms of Securities and other matters that may affect the validity
of Securities but that cannot be ascertained on the date of such opinions.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended December 28, 1997, have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITERS OR DEALERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
The Company........................................ S-2
Capitalization..................................... S-4
Summary Financial Information...................... S-5
Use of Proceeds.................................... S-6
Ratio of Earnings to Fixed Charges................. S-6
Description of Notes............................... S-6
Underwriting....................................... S-8
PROSPECTUS
Available Information.............................. 2
Incorporation of Certain Documents by Reference.... 2
The Company........................................ 3
Use of Proceeds.................................... 3
Ratios of Earnings to Fixed Charges and Earnings to
Combined Fixed Charges and Preferred Dividends... 3
Description of Debt Securities..................... 3
Description of Capital Shares...................... 16
Description of Depositary Shares................... 21
Description of Warrants............................ 23
Plan of Distribution............................... 25
Legal Opinions..................................... 26
Experts............................................ 26
</TABLE>
$100,000,000
[LOGO]
ARVIN INDUSTRIES, INC.
6 3/4% NOTES DUE 2008
-------------------
PROSPECTUS SUPPLEMENT
-------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
March 18, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
