<PAGE>
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
REEBOK INTERNATIONAL LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2678061
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
100 TECHNOLOGY CENTER DRIVE
STOUGHTON, MASSACHUSETTS 02072
(617) 341-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN B. DOUGLAS III, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
REEBOK INTERNATIONAL LTD.
100 TECHNOLOGY CENTER DRIVE
STOUGHTON, MASSACHUSETTS 02072
(617) 341-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF COMMUNICATIONS TO:
DAVID B. WALEK, ESQ. LOUIS A. GOODMAN, ESQ.
ROPES & GRAY SKADDEN, ARPS, SLATE, MEAGHER & FLOM
ONE INTERNATIONAL PLACE ONE BEACON STREET
BOSTON, MASSACHUSETTS 02110 BOSTON, MASSACHUSETTS 02108
(617) 951-7388 (617) 573-4800
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pur-
suant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or inter-
est reinvestment plans, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
% Debentures Due
2005.................. $100,000,000 100%(1) $100,000,000(1) $34,483
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</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee pur-
suant to Rule 457 under the Securities Act of 1933.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRA-
TION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION
8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SEC-
TION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 31, 1995
$100,000,000
[REEBOK Logo]
Reebok International Ltd.
% Debentures Due 2005
Interest payable and Due , 2005
--------
The Debentures will not be redeemable prior to maturity and will not be subject
to any sinking fund.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Company (1)(2)
---------- ------------- --------------
<S> <C> <C> <C>
Per Debenture........................... % % %
Total................................... $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 1995.
(2) Before deducting expenses payable by the Company estimated at $205,000.
--------
The Debentures are offered by the several Underwriters when, as and if issued
by the Company, delivered to and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that delivery
of the Debentures, in book-entry form, will be made through the facilities of
The Depository Trust Company on or about , 1995.
CS First Boston
The date of this Prospectus is , 1995
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
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
The Company has filed with the Securities and Exchange Commission (the "Com-
mission") a Registration Statement (of which this Prospectus is a part) under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Debentures offered hereby. This Prospectus does not contain all of the in-
formation set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference to such contract or document. For further information regarding
the Company and the Debentures offered hereby, reference is hereby made to the
Registration Statement and the exhibits and schedules thereto which may be ob-
tained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the Com-
mission. The Registration Statement, the exhibits and schedules forming a part
thereof, and the reports, proxy statements and other information filed by the
Company with the Commission in accordance with the Exchange Act can be in-
spected and copied at the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional of-
fices of the Commission: Seven World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Company's Common Stock is listed on the New York Stock
Exchange and similar information concerning the Company can be inspected and
copied at the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1994;
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995
and June 30, 1995; and
3. Current Report on Form 8-K dated May 17, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering of the Debentures offered hereby shall be deemed
incorporated herein by reference, and such documents shall be deemed to be a
part hereof from the date of filing such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this Pro-
spectus to the extent that a statement contained herein or in any other subse-
quently filed document which also is or is deemed to be incorporated by refer-
ence herein modifies or supersedes such statement. Any such statement so modi-
fied or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this Prospec-
tus is delivered, on the request of any such person, a copy of any or all of
the above documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by refer-
ence into the documents that this Prospectus incorporates). Requests should be
directed to Reebok International Ltd., 100 Technology Center Drive, Stoughton,
Massachusetts 02072, Attention: Office of Investor Relations, Telephone
(617) 341-5000.
2
<PAGE>
THE COMPANY
Reebok International Ltd. ("Reebok" or the "Company") is a global company
engaged primarily in the design and marketing of sports and fitness products,
including footwear and apparel, as well as the design and marketing of foot-
wear and apparel for non-athletic "casual" use. The Company has two major
business groups: the Reebok Division, which is primarily responsible for the
REEBOK (R) brand, and the Specialty Business Group, which is responsible for
other major brands, including Boks (R) casual footwear, the GREG NORMAN (TM)
brand, and the Company's subsidiaries, AVIA Group International, Inc. ("Avia")
and The Rockport Company, Inc. ("Rockport"), as well as REEBOK golf products,
Reebok's retail operations and its licensing and equipment business. During
1994, the Company generated net sales of $3.280 billion and net income of
$254.5 million.
The Company's principal executive offices are located at 100 Technology Cen-
ter Drive, Stoughton, Massachusetts 02072, telephone (617) 341-5000.
REEBOK DIVISION
The Reebok Division designs, markets and distributes sports and fitness
footwear, apparel and accessories that combine the attributes of athletic per-
formance with style. Reebok has targeted as its primary customer base, ath-
letes and others who believe that technical and other performance features are
the critical attributes of athletic footwear and apparel. Although much of the
Company's historical growth has been due to its strength in athletic footwear
and other products for the fitness market, in recent years the Company has
taken various strategic actions towards increasing Reebok's presence in the
sports market, gaining increased visibility on playing fields and sports are-
nas worldwide with the introduction of cleated footwear in 1993 and through
endorsement arrangements with such prominent athletes as Shaquille O'Neal of
the Orlando Magic, Emmitt Smith of the Dallas Cowboys and Frank Thomas of the
Chicago White Sox.
The Company places significant emphasis on technology in its products, high-
lighted by its development of THE PUMP (TM) inflatable technology, an inte-
grated system of one or more inflatable chambers that are adjustable to help
provide custom fit and support in footwear and other products, and its evolu-
tion into INSTAPUMP (TM) technology, which brings the benefits of THE PUMP
technology to lightweight performance shoes through the use of an INSTAPUMP
carbon dioxide inflator cartridge used to inflate the chambers instantly. In
addition to THE PUMP and INSTAPUMP technologies, Reebok continues to emphasize
its HEXALITE (R) technology, which provides lightweight cushioning, and DY-
NAMIC CUSHIONING (R) technology, which utilizes compressible rearfoot and
forefoot chambers in the outer sole to provide cushioning. The Company has
also recently introduced a new evolution of the DYNAMIC CUSHIONING technology
called DynaMax (TM) which utilizes a dynamic airflow system in the midsole to
provide heel and forefoot cushioning and comfort; walking shoes incorporating
this technology are currently being offered at retail.
The Company devotes substantial resources to advertising its products to a
wide variety of audiences through television, radio and print media and util-
izes its relationships with major sports figures in a variety of sports to
gain visibility for the REEBOK brand. The Company has entered into several key
sports sponsorships, including a multi-year deal with National Football League
Properties and an arrangement under which Reebok has been designated as the
official footwear and apparel sponsor of the Russian Olympic Committee and the
approximately 25 associated Russian sports federations through 1996. The Com-
pany has also entered into sponsorship agreements with the International Ama-
teur Athletic Federation, the International Triathlon Union and the U.S. Gym-
nastics Federation, as well as sponsorships of the soccer federations of Bra-
zil and Uruguay and various U.K., French and German club soccer teams. In ad-
dition, Reebok will have a major presence at the 1996 Atlanta Summer Olympic
games through sponsorship agreements with the National Olympic Committees of
Russia, Poland, Ireland, Brazil, Jamaica, New Zealand and South Africa, and
the track and field federations of China, Belgium, the Netherlands, Portugal,
Spain and Sweden. Reebok is also a supplier to the 1996 Atlanta Olympic games
and will be an official sponsor of NBC's broadcast of the 1996 Summer Olympic
games.
In the United States, REEBOK footwear is distributed primarily through spe-
cialty athletic retailers, sporting goods stores, department stores and Compa-
ny-operated retail stores and REEBOK apparel is distributed primarily through
pro shops, health clubs and department, sporting goods and specialty stores.
Internationally,
3
<PAGE>
REEBOK footwear and apparel products are currently marketed in approximately
120 countries and territories worldwide through an international distribution
network consisting of wholly owned subsidiaries, joint ventures and independent
distributors.
SPECIALTY BUSINESS GROUP
The Company established the Specialty Business Group to provide a focus for
the Company's non-Reebok brands and to pursue more aggressively markets outside
Reebok's primary focus. The Specialty Business Group includes the ROCKPORT (R)
brand, the Boks casual footwear line and apparel marketed under the GREG
NORMAN (TM) brand, as well as the Company's Avia subsidiary. The group is also
responsible for the Company's golf products, its retail operations and its li-
censing and equipment business.
Rockport designs, develops and markets lightweight and comfortable casual,
dress, outdoor performance and fitness walking shoes. The Boks brand is de-
signed to appeal to the 16-24 year old market with a line of casual, fashion-
able and comfortable footwear.
The Specialty Business Group also includes Avia, which designs, develops and
markets athletic footwear and apparel under the AVIA (R) and TINLEY (R) brands,
golf footwear and apparel, including a REEBOK line of golf products and a col-
lection of apparel marketed under the GREG NORMAN (TM) name and logo, and the
Company's retail operations, including concept stores in Boston, Santa Monica
and New York City, as well as approximately 80 factory direct stores.
In addition, the Specialty Business Group is responsible for Reebok's equip-
ment business which has expanded its product scope by developing and marketing
sports and fitness products, such as sports and fitness videos, programming and
equipment, including the STEP REEBOK (R) program and adjustable platform and
the SLIDE REEBOK (TM) lateral motion training device. The Company has also es-
tablished a strategic licensing program under which certain of the Company's
technologies and trademarks are licensed to third parties for sporting goods
and related products in order to enhance brand awareness and gain credibility
for the Company's technologies.
The foregoing summary of certain aspects of the Company's business is quali-
fied by, and should be read in conjunction with, the information set forth in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994,
and the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1995 and June 30, 1995, which are incorporated herein by reference.
4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data are derived from the con-
solidated financial statements of Reebok International Ltd. This data should
be read in conjunction with the consolidated financial statements, related
notes and other financial information incorporated by reference herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------ ----------------
1990 1991 1992 1993 1994 1994 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF INCOME DATA:
Net sales.............. $2,159,243 $2,734,474 $3,022,627 $2,893,900 $3,280,418 $1,634,119 $1,724,170
Other income (ex-
pense)................ (893) 2,893 39,719(2) 33 7,165 (1,046) 2,053
---------- ---------- ---------- ---------- ---------- ---------- ----------
2,158,350 2,737,367 3,062,346 2,893,933 3,287,583 1,633,073 1,726,223
---------- ---------- ---------- ---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales.......... 1,288,314 1,644,635 1,809,304 1,719,869 1,966,138 988,823 1,029,244
Selling, general and
administrative
expenses.............. 556,335 666,275 807,078 769,744 889,590 442,619 523,312
Special charges(1)..... -- -- 155,000 8,449 -- -- 18,034
Amortization of intan-
gibles................ 15,646 16,354 16,587 10,052 4,345 2,214 2,056
Minority interest...... -- 1,311 1,787 8,261 8,896 3,681 4,820
Interest expense....... 18,857 29,295 20,080 25,021 16,515 9,242 12,287
Interest income........ (15,637) (10,389) (5,454) (10,710) (6,373) (1,888) (3,692)
---------- ---------- ---------- ---------- ---------- ---------- ----------
1,863,515 2,347,481 2,804,382 2,530,686 2,879,111 1,444,691 1,586,061
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes................. 294,835 389,886 257,964 363,247 408,472 188,382 140,162
Income taxes........... 118,229 155,175 143,146 139,832 153,994 71,585 52,841
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............. $ 176,606 $ 234,711 $ 114,818 $ 223,415 $ 254,478 $ 116,797 $ 87,321
========== ========== ========== ========== ========== ========== ==========
Net income per common
share................. $ 1.54 $ 2.37 $ 1.24 $ 2.53 $ 3.02 $ 1.38 $ 1.07
========== ========== ========== ========== ========== ========== ==========
Dividends per common
share................. $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.15 $ 0.15
========== ========== ========== ========== ========== ========== ==========
Weighted average common
and common equivalent
shares outstanding.... 114,654 98,958 92,697 88,348 84,311 84,863 81,625
========== ========== ========== ========== ========== ========== ==========
Ratio of earnings to
fixed charges(3)
Actual................. 12.9x 11.7x 10.0x 11.6x 16.2x 14.0x 9.1x
[Pro forma(4)].........
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------------------------------------ ----------------------
1990 1991 1992 1993 1994 1994 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Working capital........ $ 705,303 $ 564,072 $ 682,342 $ 730,757 $ 831,856 $ 800,274 $ 925,222
Total assets........... 1,392,076 1,422,283 1,345,346 1,391,711 1,649,461 1,563,004 1,891,775
Long-term debt......... 104,647 169,613 116,037 134,207 131,799 135,898 237,528
Stockholders' equity... 996,729 823,537 838,656 846,617 990,505 917,450 994,880
</TABLE>
- ------------
(1) Financial data for 1993 includes a special charge ($7,037 after-tax) re-
lated to the sale of Ellesse U.S.A., Inc. and Boston Whaler, Inc. Finan-
cial data for 1992 includes special charges ($135,439 after-tax) princi-
pally related to the write-down of the Company's subsidiary, Avia Group
International, Inc., to estimated fair value and estimated losses from the
planned sales of Ellesse U.S.A., Inc. and Boston Whaler, Inc. Financial
data for the six months ended June 30, 1995 includes a special charge
($11,235 after-tax) principally related to severance and other costs asso-
ciated with the streamlining of certain segments of the Company's opera-
tions.
(2) Includes a gain of $29,648 ($17,967 after-tax) from the sale of CML Group,
Inc. common stock.
(3) Earnings included in the calculation of the ratio of earnings to fixed
charges represent income before income taxes plus fixed charges (other
than capitalized interest). Fixed charges include interest expense, capi-
talized interest and portion of rent expenses representative of interest.
Interest expense includes interest on letters of credit, used for the pur-
chase of footwear and apparel, that is included in cost of sales in the
Company's financial statements.
[(4) The pro forma ratio of earnings to fixed charges for the year ended De-
cember 31, 1994 and the six months ended June 30, 1995 assumes that the
net proceeds from the sale of the Debentures are used to redeem the 9
3/4% Debentures and that the sale of the Debentures offered hereby oc-
curred on January 1, 1994 and January 1, 1995, respectively. The ratio
has been computed using an interest rate on the Debentures of %.]
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS
First Six Months 1995 Compared to First Six Months 1994
Net sales for the six months ended June 30, 1995 increased $90.1 million,
5.5% over the level reported for the first six months of 1994. The Reebok Di-
vision's worldwide sales were $1.494 billion, an increase of 6.6% from $1.401
billion(A) in 1994. The Reebok Division's U.S. footwear sales decreased 0.2%
to $728.2 million from $729.8 million in 1994. The decrease is due primarily
to decreases in the classic, outdoor and running categories, which were offset
in part by increases in the children's, baseball and basketball categories.
The Reebok Division's U.S. apparel sales increased by 24.1% to $79.9 million
from $64.4 million(A) in 1994. The increase reflected strong sales in core ba-
sics offset by a general decline in the licensed apparel business. The Reebok
Division's International sales (including footwear and apparel) were $686.0
million in 1995, an increase of 13.0% from $606.8 million in 1994. The Inter-
national sales increase benefited from the weaker U.S. dollar used in transla-
tion. Approximately one half of the International sales gain can be attributed
to the impact of the weaker dollar. On a local currency basis, eliminating the
impact of foreign currency exchange changes, France and Spain had increases in
sales whereas Germany, Japan and Austria experienced decreased sales.
Rockport sales increased by 11.4% to $163.3 million from $146.6 million in
1994. All Rockport collections, except outdoor, increased in comparison with
the prior year. Avia sales decreased by 22.8% to $66.8 million from $86.5
million(A) in 1994. The decrease in Avia's sales is attributed primarily to
decreases in the aerobics, cross-training and walking categories.
Gross margin increased from 39.5% in the first six months of 1994 to 40.3%
in the first six months of 1995. International margins were favorably impacted
by the effect of exchange rates. U.S. margins were favorably impacted by the
growth of the Company's retail outlet business where the overall margins tend
to be higher.
Selling, general and administrative expenses increased from 27.1% in the
first six months of 1994 to 30.4% in the first six months of 1995, primarily
as a result of increased advertising and distribution costs. In June 1995, the
Company announced its plans to reduce the annual spending rate of SG&A ex-
penses by $75 million in 1996. In an effort to make such a reduction, the Com-
pany recorded special charges of $18,034,000 in the second quarter principally
related to severance and other costs associated with the streamlining of cer-
tain segments of its operations.
Minority interest represents the minority shareholders' proportionate share
of the net income of certain of the Company's subsidiaries.
Interest expense for the six months ended June 30, 1995 increased 32.9% over
the first six months of 1994 as a result of increased borrowings to finance
working capital needs and the Company's stock repurchase program.
The effective tax rate decreased from 38.0% in the first six months of 1994
to 37.7% in the first six months of 1995 due to a change in the geographic mix
of worldwide income.
Year-to-year earnings per share comparisons benefited from the share repur-
chase program. Weighted average common shares outstanding for the six months
ended June 30, 1995 declined to 81.6 million shares, compared to 84.9 million
shares for the first six months of 1994.
1994 Compared to 1993
Net sales for the year increased by 13.4%, or $386.5 million, to $3.280 bil-
lion in 1994 from $2.894 billion in 1993. The Reebok Division's worldwide
sales were $2.813 billion, an increase of 13.4% from $2.48 billion in
- ------------
(A) The 1994 sales were adjusted on a pro-forma basis to reflect Tinley ap-
parel sales in Avia sales. The Tinley division was transferred to the Avia
group from Reebok effective June 1, 1994. In order to present amounts on a
comparable basis, Tinley's apparel sales prior to June 1, 1994 have been
reclassified to Avia.
6
<PAGE>
1993. This increase was due to growth in Reebok U.S. footwear and apparel
sales as well as International sales. Reebok U.S. footwear sales increased
10.9% to $1.410 billion from $1.271 billion in 1993. The increase in Reebok
Division's U.S. footwear sales was attributed to increases in the outdoor,
Classics, PRESEASON, cleated and walking categories, which were partially off-
set by decreases in the children's and basketball categories. The Reebok Divi-
sion's U.S. apparel sales increased by 19.7% to $150.1 million from $125.4
million in 1993. The Reebok Division's International sales (including both
footwear and apparel) were $1.253 billion in 1994, an increase of 15.7% from
$1.083 billion in 1993, primarily due to increases in all countries except for
France and the Netherlands which experienced small decreases in sales. Changes
in foreign exchange rates increased Reebok Division's International net sales
by $9.3 million, or .9%.
Rockport sales reached a record level of $314.5 million in 1994, a 11.3% in-
crease from $282.7 million in 1993. This increase was due to an increase in
the number of pairs shipped both in the U.S. and internationally. Avia sales
increased by 16.5% to $152.6 million from $131.0 million in 1993. The increase
in Avia's net sales was due to increases in both domestic and international
net sales, primarily attributed to increases in the walking and cross training
categories.
Other income increased mainly due to increased income from partially-owned
distributors as well as recognized gains of $.5 million on foreign exchange
transactions in 1994 compared to recognized losses of $4.6 million in 1993.
The decrease in gross margin from 40.6% in 1993 to 40.1% in 1994 was due to
lower margins in the Reebok Division's International business as a result of
the poor economic conditions in certain countries. The decrease was partially
offset by slightly increased margins in the Reebok Division's U.S. footwear
business.
Selling, general and administrative expenses increased as a percentage of
sales from 26.6% in 1993 to 27.1% in 1994 due in part to the continuing in-
creased investments in information systems as well as higher distribution
costs mainly associated with the opening of a new apparel distribution facil-
ity in Memphis, Tennessee. The increased investments in information systems
are expected to continue over the next few years.
Net income in 1994 was higher than net income in 1993 partially as a result
of an additional pre-tax special charge of $8.5 million related to the comple-
tion of the sales of Boston Whaler, Inc. ("Boston Whaler") and Ellesse U.S.A.,
Inc. ("Ellesse"), which charge was recorded in 1993. This special charge was
in addition to losses previously recorded in December 1992, when the Company
announced its intention to sell these businesses.
Amortization of intangibles decreased because many of the intangible assets
attributable to the acquisition of Rockport in 1986 had a useful life of seven
years or less and became fully amortized in 1993.
Minority interest represents minority shareholders' proportionate share of
the net income of the Company's Japanese, Spanish and South African subsidiar-
ies.
Interest expense decreased in 1994 due to interest paid in 1993 on certain
prior year's state tax matters, as well as lower average interest rates. Simi-
larly, interest income decreased in 1994 due to interest received in 1993 from
the successful settlement of certain state tax matters.
The effective tax rate decreased from 38.5% in 1993 to 37.7% in 1994 due
primarily to a geographic change in the mix of worldwide income.
Year-to-year earnings per share comparisons benefited from the share repur-
chase programs announced in July 1992 and July 1993. Weighted average common
shares outstanding for the year ended December 31, 1994 declined to 84.3 mil-
lion shares, compared to 88.3 million shares for the year ended December 31,
1993.
The Company's footwear and apparel production operations are subject to the
usual risks of doing business abroad, such as import duties, quotas and other
threats to free trade, foreign currency fluctuations, labor unrest and politi-
cal instability. The Company believes that it has the ability to develop, over
time, adequate substitute sources of supply for the products obtained from
present foreign suppliers. If, however, events should prevent the Company from
acquiring products from its suppliers in Indonesia, China or Thailand, or sig-
nificantly increase
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<PAGE>
the cost to the Company of such products, the Company's operations could be
seriously disrupted until alternative suppliers were found, with a significant
negative financial impact.
In this regard, the European Union ("EU") imposed import quotas on footwear
from China in 1994. The effect of such quota scheme on the Company has not
been significant because only a small portion of REEBOK footwear sold in the
EU is produced in China and because the Company has taken steps to prepare for
imposition of such quotas. Moreover, the quota scheme provides an exemption
for certain higher-priced special technology athletic footwear, which is
available for most REEBOK and AVIA products. In 1995, this quota scheme is ex-
pected to continue, but with an expanded exemption which will allow continued
supply of the European market.
The EU initiated a dumping case during 1995 against footwear from China, In-
donesia and Thailand. However, a broad exception for athletic footwear has
been incorporated in such action significantly reducing the potential exposure
to the Company. Nevertheless, if dumping duties are imposed, certain of the
Company's product lines could be affected adversely, although it does not be-
lieve that its products will be more severely restricted than those of its ma-
jor competitors. Moreover, any such duties are unlikely to be imposed before
the second quarter of 1996.
Various other countries have taken steps to restrict footwear imports, which
actions affect the Company as well as other footwear importers. Although such
actions have in some cases had an adverse effect on the Company's sales in
such countries, they have not had a material adverse effect on the Company as
a whole.
BACKLOG
The Company's backlog of customer orders at December 31, 1994 was approxi-
mately 10.1% higher than the prior year's levels. The backlog position is not
necessarily indicative of future sales because the ratio of future orders to
"at once" shipments may vary from year to year.
LIQUIDITY AND SOURCES OF CAPITAL
The Company's financial position remains strong. Working capital increased
by $124.9 million, or 15.6% from June 30, 1994 to June 30, 1995. The current
ratio at June 30, 1995 was 2.5 to 1, as compared to 2.6 to 1 at December 31,
1994 and 2.6 to 1 at June 30, 1994.
Accounts receivable increased from June 30, 1994 to June 30, 1995 by $63.6
million, or 11.3%, well above the sales increase for the second quarter. A
portion of the increase is due to the timing of sales in the quarter and the
mix of sales between different International subsidiaries which can impact
these comparisons at a point in time. Approximately $17.1 million of the year-
to-year increase was due to changes in foreign currency exchange rates.
Inventory increased by $169.5 million from June 30, 1994 to June 30, 1995,
reflecting increases in most divisions. Approximately $22.1 million of the
year-to-year increase was due to changes in foreign currency exchange rates.
Approximately $16.9 million of the increase reflected inventories held by sub-
sidiaries that the Company acquired since the end of the second quarter of
1994. Also, the increase in inventory can be partly attributed to the growth
in the Company's retail business. As more business is done through Company-
owned factory-direct outlets, inventory will increase relative to sales
growth. The Company believes that current inventory levels are too high rela-
tive to sales and plans to reduce inventory levels by the end of 1995.
On October 4, 1994 the Board of Directors authorized the repurchase of up to
an additional $200 million in Reebok common stock in open market or privately-
negotiated transactions. This authorization was in addition to the $200 mil-
lion repurchase programs adopted by the Company in July 1992 and in July 1993.
As of June 30, 1995, the Company had repurchased 14,623,300 shares at an aver-
age price of $32.28 since the share repurchase program began in July 1992,
which left $127.9 million of authorized share repurchases remaining as of such
date.
During the twelve months ended June 30, 1995, cash and cash equivalents in-
creased by $21.4 million, and outstanding borrowings increased by $200 mil-
lion, while $158.0 million of common stock was repurchased. Cash used for op-
erations during 1995's first six months was $47.8 million. Cash generated from
operations, together with the Company's presently available financing sources,
is expected to adequately finance the Company's
8
<PAGE>
current and planned cash requirements, including the remaining share repur-
chases authorized by the Board of Directors.
The Company enters into forward currency exchange contracts to hedge its ex-
posure for merchandise purchased in U.S. dollars that will be sold to custom-
ers in other currencies. Realized and unrealized gains and losses on these
contracts are included in net income except that gains and losses on contracts
which hedge specific foreign currency commitments are deferred and accounted
for as a part of the transaction.
The Company also uses forward currency exchange contracts to hedge signifi-
cant intercompany assets and liabilities denominated in other than the func-
tional currency. Contracts used to hedge intercompany balances are marked to
market and the resulting transaction gain or loss is included in the determi-
nation of net income. Foreign currency gains or losses included in net income
for the years ended December 31, 1994, 1993 and 1992 were not significant.
At December 31, 1994, the Company had forward currency exchange contracts,
all having maturities of less than one year, with a notional amount aggregat-
ing $306 million. Deferred gains on these contracts at December 31, 1994 and
1993, approximated $2 million and $2.9 million, respectively.
EFFECTS OF CHANGING PRICES
The Company has generally been able to adjust selling prices and control ex-
penses in the environment of cost escalation that has existed in the recent
past. Product purchases require relatively short lead times (4-6 months) and
the Company sells a large part of its product for future delivery on similar
lead times, which generally permits a matching of committed costs with commit-
ted revenues. The Company anticipates that this matching ability will contin-
ue.
USE OF PROCEEDS
The net proceeds from the sale of the Debentures will be used to redeem in
full on September 15, 1995, at par (plus accrued interest), the $100,000,000
aggregate principal amount of the Company's 9 3/4% Debentures due 1998 (the "9
3/4% Debentures").
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<PAGE>
DESCRIPTION OF DEBENTURES
The Debentures will be issued under an Indenture, dated as of September 15,
1988, as amended and restated by the First Supplemental Indenture dated as of
January 22, 1993 (as so amended and restated, the "Indenture"), between the
Company and Citibank, N.A., as Trustee (the "Trustee"), a copy of which is in-
cluded as an exhibit to the Registration Statement of which this Prospectus is
a part. The following summaries of certain provisions of the Indenture do not
purport to be complete and where particular provisions of the Indenture are
referred to, such provisions, including the definitions of certain terms, are
incorporated by reference as a part of such summaries or terms, which are
qualified in their entirety by reference to the provisions of the Indenture.
The section references appearing below are to sections in the Indenture.
The Indenture does not limit the amount of debentures, notes, bonds or other
evidences of indebtedness that can be issued thereunder. The Indenture pro-
vides that debt securities may be issued from time to time in one or more se-
ries. The Debentures will constitute one such series. On September 15, 1988,
the Company issued and sold the 9 3/4% Debentures under the Indenture as then
in effect. The 9 3/4% Debentures will be redeemed in full with the proceeds
from the sale of the Debentures. During the period from January 1993 through
June 1995, the Company also issued $150,000,000 aggregate principal amount of
Medium-Term Notes, Series A (the "Notes") under the Indenture, all of which
Notes remain outstanding as of the date of this Prospectus.
GENERAL
The Debentures will be unsecured obligations of the Company, will mature on
, 2005 and will be limited to $100,000,000 aggregate principal amount and
will rank on a parity with all other unsecured and unsubordinated indebtedness
of the Company. The Debentures are not redeemable prior to maturity by the
Company and do not provide for any sinking fund. The Debentures will bear in-
terest at the rate per annum stated on the cover page of this Prospectus from
the date of issuance, payable semi-annually on and of each year,
commencing , to the person in whose name such Debenture is registered
at the close of business on the or , respectively, prior to the in-
terest payment date.
Principal of and interest on the Debentures will be payable, and the Deben-
tures will be exchangeable and transfers thereof will be registrable, at the
corporate trust office of the Trustee in New York, New York, provided that, at
the option of the Company, payment of any interest may be made by check mailed
to the address of the person entitled thereto as it appears in the Security
Register. Payment of any interest due on any Debenture will be made to the
person in whose name such Debenture is registered at the close of business on
the Regular Record Date for such interest. (Sections 301, 305, 307 and 1002).
FORM OF DEBENTURES
The Debentures will be represented by one or more global securities (collec-
tively, a "Global Security") registered in the name of The Depository Trust
Company (the "Depositary"). Except as set forth below, a Global Security may
be transferred in whole and not in part, only to the Depositary or another
nominee of the Depositary or to a successor of the Depositary or its nominee.
Upon the issuance of a Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Debentures represented by such Global Security to the accounts of in-
stitutions that have accounts with the Depositary or its nominee ("Partici-
pants"). The accounts to be credited will be designated by the Underwriters,
dealers or agents. Ownership of beneficial interests in a Global Security will
be limited to Participants or persons that may hold interests through Partici-
pants. Ownership of interests in such Global Security will be shown on, and
the transfer of those ownership interests will be effected only through, rec-
ords maintained by the Depositary (with respect to Participants' interests)
and such Participants (with respect to the owners of beneficial interest in
such Global Security). The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in defini-
tive form. Such limits and laws may impair the ability to transfer or pledge
beneficial interests in a Global Security.
So long as the Depositary, or its nominee, is the registered holder and
owner of such Global Security, the Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the related Debentures for
all purposes of such Debentures and for all purposes under the Indenture. Ex-
cept as set forth
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<PAGE>
below, owners of beneficial interests in a Global Security will not be enti-
tled to have the Debentures represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Debentures in definitive form and will not be considered to be the owners or
holders of any Debentures under the Indenture or such Global Security.
Accordingly, each person owning a beneficial interest in a Global Security
must rely on the procedures of the Depositary and, if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest, to exercise all rights of a holder of Debentures under the
Indenture or such Global Security. The Company understands that under existing
industry practice, in the event the Company requests any action of holders of
Debentures or an owner of a beneficial interest in a Global Security desires
to take any action that the Depositary, as the holder of such Global Security,
is entitled to take, the Depositary would authorize the Participants to take
such action, and that the Participants would authorize beneficial owners own-
ing through such Participants to take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
Payment of principal and interest on Debentures represented by a Global Se-
curity will be made to the Depositary or its nominee, as the case may be, as
the registered owner and holder of such Global Security.
The Company expects that the Depositary, upon receipt of any payment of
principal or interest, will immediately credit the accounts of the Partici-
pants with such payment in amounts proportionate to their respective holdings
in principal amount of beneficial interest in the Global Security as shown in
the records of the Depositary. Payments by Participants to owners of benefi-
cial interests in a Global Security held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in "street
name", and will be the responsibility of such Participants. The Company and
the Trustee will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in a Global Security for any Debentures or for maintaining, super-
vising or reviewing any records relating to such beneficial ownership inter-
ests or for any other aspect of the relationship between the Depositary and
its Participants or the relationship between such Participants and the owners
of beneficial interests in such Global Security owned through such Partici-
pants.
Unless and until it is exchanged in whole or in part for Debentures in de-
finitive form, a Global Security may not be transferred except as a whole by
the Depositary to a nominee of such Depositary, by a nominee of such Deposi-
tary to such Depositary or another nominee of such Depositary, or to a succes-
sor of the Depositary or its nominee.
Debentures represented by a Global Security will be exchangeable for Deben-
tures in definitive form of like tenor as such Global Security in denomina-
tions of $1,000 and in any greater amount that is an integral multiple thereof
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or the Depositary ceases to be
a clearing agency registered under the Exchange Act, (ii) the Company executes
and delivers to the Trustee a Company Order that such Global Security shall be
so transferable, registrable and exchangeable and such transfers shall be reg-
istrable or (iii) there shall have occurred and be continuing an Event of De-
fault with respect to the Debentures evidenced by such Global Security. Any
Global Security that is exchangeable pursuant to the preceding sentence is ex-
changeable for Debentures issuable in authorized denominations and registered
in such names as the Depositary shall direct and an owner of a beneficial in-
terest in a Global Security will be entitled to physical delivery of such Se-
curity in definitive form. Subject to the foregoing, a Global Security is not
exchangeable except for a Global Security or Global Securities of the same ag-
gregate denominations to be registered in the name of the Depositary or its
nominee.
The Depositary has advised the Company and the Underwriters as follows: The
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Bank-
ing Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary was created to hold securities of Participants and to fa-
cilitate the clearance and settlement of securities transactions among the
Participants, thereby eliminating the need for physical delivery of securities
and certificates. Participants include securities brokers and dealers (includ-
ing the Underwriters), banks, trust companies, clearing corporations and cer-
tain other organizations, some
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<PAGE>
of which (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also available to others such as banks, bro-
kers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participants, either directly or indirectly ("Indirect
Participants"). Persons who are not Participants may beneficially own securi-
ties held by the Depositary only through Participants or Indirect Partici-
pants. The rules applicable to the Depositary and the Participants are on file
with the Commission. The Depositary currently accepts only notes denominated
and payable in U.S. dollars.
CERTAIN COVENANTS OF THE COMPANY
Restrictions On Secured Debt
The Company will not, and will not permit any Subsidiary to, incur, assume
or guarantee any Indebtedness secured by any Lien on its property without
equally and ratably securing the Debentures, provided, however,
that this restriction does not require the equal and ratable securing of the
Debentures in respect of certain permitted Liens described in the Indenture,
including (1) Liens on any property acquired, constructed, repaired or im-
proved by the Company or a Subsidiary after the date of the latest consoli-
dated balance sheet of the Company and its Subsidiaries published by the Com-
pany prior to the issuance of the Debentures and created or committed prior to
or contemporaneously with, or within 360 days after, such acquisition or the
completion of construction, repair or improvement and commencement of full op-
eration of the property, whichever is later, securing Indebtedness in an
amount not exceeding the cost of such acquisition, construction, repair or im-
provement, (2) Liens on property existing at the time it is acquired by the
Company or a Subsidiary, and conditional sales and similar agreements, (3) the
extension, renewal or refunding of permitted Liens or any Lien securing In-
debtedness of the Company or any Subsidiary existing at such balance sheet
date or Indebtedness of a corporation at the time such corporation becomes a
Subsidiary and the extension, renewal or refunding of any of the foregoing,
(4) Liens on accounts receivable arising from the sale of goods in the ordi-
nary course of business and securing Indebtedness in an aggregate amount not
exceeding 90% of the book value of such accounts receivable, (5) any Lien on
the Company's warehouse, distribution and retail facility located at Stough-
ton, Massachusetts, or (6) other Liens not otherwise specifically permitted
securing Indebtedness which does not exceed 10% of stockholders' equity as
shown on the latest consolidated balance sheet of the Company and its Subsidi-
aries published by the Company. (Section 1006(b)).
"Indebtedness" means (a) all items of Indebtedness for money borrowed and
all Capitalized Leases, whether now existing or hereafter created, and (b) all
items of Indebtedness for money borrowed and Capitalized Leases of another
which are guaranteed through any agreement or other arrangement, even if not
designated as a guarantee, designed to provide funds for or to secure payment
or performance of such Indebtedness of money borrowed or Capitalized Leases of
another. "Capitalized Lease" means any lease which is, in accordance with gen-
erally accepted accounting principles, capitalized on the balance sheet of the
lessee. The amount of Indebtedness represented by a Capitalized Lease shall be
the amount reflected on such balance sheet in respect of such Capitalized
Lease. (Section 101)
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
(Section 101)
Limitation on Sale and Leaseback Transactions
The Company will not, and will not permit any Subsidiary to, enter into any
sale and leaseback transactions with respect to any of their respective prop-
erties (except a sale and leaseback transaction having a lease term not longer
than three years) unless (i) the Company or such Subsidiary would be permitted
under the provisions described under the heading "Restrictions on Secured
Debt" above to subject such properties to a Lien to secure Indebtedness, in an
amount equal to the value of such sale and leaseback transaction, without also
securing any Debentures by such Lien; (ii) the sale and leaseback transaction
is between the Company and a Subsidiary or between Subsidiaries; or (iii)
within 180 days of such sale and leaseback transaction, the Company applies an
amount equal to the greater of (a) the fair value of such property as deter-
mined in good faith by the Board of
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<PAGE>
Directors of the Company and (b) the proceeds from the sale of such property,
to the voluntary repayment or retirement of Indebtedness, which may include
the Debentures (other than Indebtedness that is subordinate in right of pay-
ment to the Debentures). For purposes of clause (i) of the preceding sentence,
the value of any sale and leaseback transaction as of any particular time
shall be an amount equal to the greater of the amounts specified in clauses
(iii) (a) and (iii) (b) of the preceding sentence, in either case divided by
the number of years in the original lease term and multiplied by the number of
years of such term remaining at the time of determination. (Section 1007(b))
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to the
Debentures: (a) failure to pay principal of or premium, if any, on any Deben-
tures when due; (b) failure to pay any interest on any Debentures when due,
continued for 30 days; (c) failure to perform any other covenant of the Com-
pany in the Indenture (other than a covenant included in the Indenture solely
for the benefit of a series of securities other than the Debentures), contin-
ued for 90 days after written notice as provided in the Indenture; (d) the ac-
celeration, or failure to pay at maturity (including any applicable grace pe-
riod), any indebtedness for money borrowed of the Company exceeding
$10,000,000 in aggregate principal amount, which acceleration is not rescinded
or annulled or which unpaid indebtedness is not paid within 10 days after the
date on which written notice thereof shall have first been given to the Com-
pany as provided in the Indenture; and (e) certain events in bankruptcy, in-
solvency or reorganization in respect of the Company. (Section 501)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default (as defined) shall occur and be continu-
ing, the Trustee will be under no obligation to exercise its rights or powers
under the Indenture at the request or direction of any holder of Debentures,
unless such holder shall have offered to the Trustee reasonable indemnity.
(Section 603) Subject to such provisions for the indemnification of the Trust-
ee, the holders of a majority in aggregate principal amount of the Outstanding
Debentures will have the right to direct the time, method and place of con-
ducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, with respect to the Debentures.
(Section 512)
If an Event of Default with respect to the Debentures at that time Outstand-
ing occurs and is continuing, either the Trustee or the holders of at least
25% in aggregate principal amount of the Outstanding Debentures may declare
the principal amount of all Debentures to be due and payable immediately; pro-
vided, however, that after such acceleration but before a judgment or decree
based on acceleration has been obtained, the holders of a majority in aggre-
gate principal amount of the Outstanding Debentures may, under certain circum-
stances, rescind and annul such acceleration if all Events of Default, other
than the non-payment of accelerated principal, have been cured or waived as
provided in the Indenture. (Section 502) For information as to waiver of de-
faults, see "Modification and Waiver".
No holder of any Debenture will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such holder
shall have previously given to the Trustee written notice of a continuing
Event of Default (as defined) and unless also the holders of at least 25% in
aggregate principal amount of the Outstanding Debentures shall have made writ-
ten request, and offered reasonable indemnity, to the Trustee to institute
such proceeding as trustee, and the Trustee shall not have received from the
holders of a majority in aggregate principal amount of the Outstanding Deben-
tures a direction inconsistent with such request and shall have failed to in-
stitute such proceeding within 60 days. (Section 507) However, such limita-
tions do not apply to a suit instituted by a holder of Debentures for the en-
forcement of payment of the principal of or interest on such Debentures on or
after the respective due dates set forth in such Debentures. (Section 508)
The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of certain of its obligations under the Inden-
ture and as to any default in such performance. (Section 1008)
MODIFICATION AND WAIVER
The Indenture provides that the Company and the Trustee, with the consent of
the holders of not less than a majority in aggregate principal amount of the
Outstanding Debentures, may execute supplemental indentures adding any provi-
sions to, or changing or eliminating any of the provisions of, the Indenture
or modifying the
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<PAGE>
rights of the holders of the Outstanding Debentures; provided, however, that
no such modification or amendment may, without the consent of the holder of
each Outstanding Debenture, (a) change the Stated Maturity of the principal
of, or any installment of principal of, or interest on, any Debenture, (b) re-
duce the principal amount of, or the premium, if any, or the rate of interest
on, any Debenture, (c) change the place or currency of payment of principal
of, or premium, if any, or the interest on, any Debenture, (d) impair the
right to institute suit for the enforcement of any payment on or with respect
to any Debenture, (e) reduce the above-stated percentage of Outstanding Deben-
tures necessary to modify or amend the Indenture or (f) reduce the percentage
of aggregate principal amount of Outstanding Debentures necessary for waiver
of compliance with certain provisions of the Indenture or for waiver of cer-
tain defaults. (Section 902)
The holders of not less than a majority in aggregate principal amount of the
Outstanding Debentures may, on behalf of the holders of all Debentures, waive,
insofar as the Debentures are concerned, compliance by the
Company with certain restrictive provisions of the Indenture. (Section 1009)
The holders of a majority in aggregate principal amount of the Outstanding De-
bentures may, on behalf of the holders of all Debentures, waive any past de-
fault under the Indenture with respect to the Debentures, except a default in
the payment of the principal of or interest on any Debenture or in respect of
a provision which under the Indenture cannot be modified or amended without
the consent of the holder of each Outstanding Debenture. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may, without the consent of any holders of Outstanding Deben-
tures, consolidate or merge with or into, or transfer or lease its assets sub-
stantially as an entirety to, any Person, and any other Person may consolidate
or merge with or into, or transfer or lease its assets substantially as an en-
tirety to, the Company, provided that (i) the Person formed by such consolida-
tion or into which the Company is merged, or the Person which acquires or
leases the assets of the Company substantially as an entirety, is organized
under the laws of any United States jurisdiction and assumes the Company's ob-
ligations on the Debentures and under the Indenture, (ii) after giving effect
to the transaction, no Event of Default, and no event related to such transac-
tion which, after giving effect to the transaction, no Event of Default, and
no event related to such transaction which, after giving notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing, and (iii) certain other conditions are met. (Sections 801 and 802)
The Indenture does not restrict, or require the Company to redeem or permit
holders to cause a redemption of Debentures in the event of, (i) a consolida-
tion, merger, sale of assets or other similar transaction that may adversely
affect the creditworthiness of the Company or the Successor or combined enti-
ty, (ii) a change in control of the Company or (iii) a highly leveraged trans-
action involving the Company whether or not involving a change in control.
DEFEASANCE
The Company will be discharged from any and all obligations in respect of
the Debentures (except for certain obligations to register the transfer or ex-
change of Debentures, to replace stolen, lost or mutilated Debentures, to
maintain paying agencies and hold monies for payment in trust and to pay the
principal of and interest, if any, on Debentures), upon the irrevocable de-
posit with the Trustee, in trust, of money and/or U.S. Government Obligations
which through the payment of interest and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay any installment
of principal and interest, if any, in respect of the Debentures on the dates
on which such payments are due in accordance with the terms of the Indenture
and the Debentures. Such a trust may only be established if establishment of
the trust would not cause any Debentures listed on any nationally recognized
securities exchange to be de-listed as a result thereof. Also, such establish-
ment of such a trust will be conditioned on the delivery by the Company to the
Trustee of an Opinion of Counsel (who may be counsel to the Company) to the
effect that, based upon applicable U.S. Federal income tax law or a ruling
published by the United States Internal Revenue Service, such a defeasance and
discharge will not be deemed, or result in, a taxable event with respect to
holders of Debentures. (Article 13)
The Company may also omit to comply with the restrictive covenants described
under "Restrictions On Secured Debt" and "Limitation on Sale and Leaseback
Transactions" above (together with certain other covenants set forth in the
Indenture) and any such omission shall not be an Event of Default with respect
to the
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<PAGE>
Debentures, upon the deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations which through the payment of interest and principal in
respect thereof in accordance with their terms will provide money in an amount
sufficient to pay any installment of principal and interest in respect of the
Debentures on the dates on which such payments are due in accordance with the
terms of the Indenture and the Debentures. The obligations of the Company un-
der the Indenture and the Debentures other than with respect to such covenants
shall remain in full force and effect. Such a trust may only be established if
establishment of the trust would not cause any Debentures listed on any na-
tionally recognized securities exchange to be de-listed as a result thereof.
Also, such establishment of such a trust will be conditioned on the delivery
by the Company to the Trustee of an Opinion of Counsel (who may be counsel to
the Company) to the effect that such a defeasance and discharge will not be
deemed, or result in, a taxable event with respect to holders of Debentures.
(Article 13)
In the event the Company exercises its option to omit compliance with cer-
tain covenants as described in the preceding paragraph with respect to the De-
bentures and the Debentures are declared due and payable because of the occur-
rence of any Event of Default, then the amount of money and U.S. Government
Obligations on deposit with the Trustee will be sufficient to pay amounts due
on the Debentures at the time of their Stated Maturity but may not be suffi-
cient to pay amounts due on the Debentures at the time of the acceleration re-
sulting from such Event of Default. The Company shall in any event remain lia-
ble for such payments as provided in the Indenture.
CONCERNING THE TRUSTEE
Citibank, N.A. and its affiliates have in the past and may in the future
perform commercial banking and investment banking services for the Company.
Citibank, N.A. will also act under the Indenture in connection with the Deben-
tures as registrar, paying agent and authenticating agent, and acts in such
capacities and as Trustee under the Indenture in connection with the 9 3/4%
Debentures and the Notes.
15
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated September , 1995 (the "Underwriting Agreement"), the under-
writers named below (the "Underwriters"), for whom CS First Boston Corporation
is acting as representative (the "Representative"), have severally but not
jointly agreed to purchase from the Company the following respective principal
amounts of the Debentures:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
------------------------------------------------------------- ------------
<S> <C>
CS First Boston Corporation.................................. $
------------
Total................................................... $100,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all the Debentures, if any are purchased. The Underwrit-
ing Agreement provides that, in the event of a default by an Underwriter, in
certain circumstances the purchase commitments of non-defaulting Underwriters
may be increased or the Underwriting Agreement may be terminated.
The Company has been advised by the Representative that the Underwriters
propose to offer the Debentures to the public initially at the public offering
price set forth on the cover page of this Prospectus and, through the Repre-
sentative, to certain dealers at such price less a concession of % of the
principal amount per Debenture, and the Underwriters and such dealers may al-
low a discount of % of such principal amount per Debenture on sales to cer-
tain other dealers. After the initial public offering, the public offering
price and concession and discount to dealers may be changed by the Representa-
tive.
The Debentures are a new issue of securities with no established trading
market. The Representative has advised the Company that one or more of the Un-
derwriters currently intends to act as a market maker for the Debentures. How-
ever, the Underwriters are not obligated to do so and may discontinue any mar-
ket making at any time without notice. No assurance can be given as to the li-
quidity of the trading market for the Debentures.
The Company has agreed to indemnify the Underwriters against certain liabil-
ities, including civil liabilities under the Securities Act, or contribute to
payments which the Underwriters may be required to make in respect thereof.
CS First Boston Corporation and its affiliates have provided investment
banking, commercial banking, brokerage and financial advisory services to the
Company from time to time. CS First Boston Corporation and its affiliates re-
ceived customary fees and underwriting commissions in connection with provid-
ing such services.
16
<PAGE>
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Debentures in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file
a prospectus with the securities regulatory authorities in each province where
trades of Debentures are effected. Accordingly, any resale of the Debentures
in Canada must be made in accordance with applicable securities laws which
will vary depending on the relevant jurisdiction, and which may require re-
sales to be made in accordance with available statutory exemptions or pursuant
to a discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of the Debentures.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Debentures in Canada who receives a purchase confirmation
will be deemed to represent to the Company and the dealer from whom such pur-
chase confirmation is received that (i) such purchaser is entitled under ap-
plicable provincial securities laws to purchase such Debentures without the
benefit of a prospectus qualified under such securities laws, (ii) where re-
quired by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale Re-
strictions".
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario pur-
chasers will not receive the contractual right of action prescribed by section
32 of the Regulation under the Securities Act (Ontario). As a result, Ontario
purchasers must rely on other remedies that may be available, including common
law rights of action for damages or rescission or rights of action under the
civil liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possi-
ble for Ontario purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the is-
suer and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Debentures to whom the Securities Act (British Columbia) ap-
plies is advised that such purchaser is required to file with the British Co-
lumbia Securities Commission a report within ten days of the sale of any De-
bentures acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #88/5, a copy of which may be obtained from the Company. Only one
such report must be filed in respect of Debentures acquired on the same date
and under the same prospectus exemption.
VALIDITY OF DEBENTURES
The validity of the Debentures will be passed upon for the Company by Ropes
& Gray, Boston, Massachusetts, and for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom, Boston, Massachusetts.
EXPERTS
The consolidated financial statements and financial statement schedule of
the Company at December 31, 1994 and for each of the three years in the period
then ended appearing in the Company's Annual Report on Form 10-K for the year
then ended have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon dated January 31, 1995 included therein and
incorporated herein by reference. Such consolidated financial statements and
financial statement schedule referred to above are incorporated herein by ref-
erence in reliance upon such report given upon the authority of said firm as
experts in accounting and auditing.
17
<PAGE>
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMA- TION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURIS- DICTION TO ANY PERSON TO WHOM IT IS UN-
LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS COR- RECT AS OF ANY TIME SUBSE-
QUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE SUCH DATE.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 2
Incorporation of Certain Documents by Reference.......................... 2
The Company.............................................................. 3
Selected Consolidated Financial Data..................................... 5
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 6
Use of Proceeds.......................................................... 9
Description of Debentures................................................ 10
Underwriting............................................................. 16
Notice to Canadian Residents............................................. 17
Validity of Debentures................................................... 17
Experts.................................................................. 17
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REEBOK [LOGO]
$100,000,000
% Debentures Due 2005
PROSPECTUS
CS First Boston
[LOGO OF CS FIRST BOSTON APPEARS HERE]
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
issuance and distribution of the securities being registered, other than un-
derwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
SEC registration fee............................................. $ 34,483
Blue Sky fees and expenses....................................... 20,000
Printing and engraving expenses.................................. 30,000
Legal fees and expenses.......................................... 30,000
Accounting fees and expenses..................................... 25,000
Trustee, Transfer Agent and Registrar Fees....................... 3,500
Rating agency fees............................................... 60,000
Miscellaneous.................................................... 2,017
--------
Total....................................................... $205,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 67 of Chapter 156B of the Massachusetts General Laws provides that
indemnification of directors and officers of the Registrant may be provided to
the extent specified or authorized by its articles of organization or a by-law
provision adopted by the stockholders.
Under Section 9 of the By-laws of the Registrant, the Registrant shall, to
the extent legally permissible, indemnify each of its directors and officers
(including persons who serve at its request as directors, officers or trustees
of another organization or in any capacity with respect to any employee bene-
fit plan) against all liabilities and expenses, including amounts paid in sat-
isfaction of judgments, in compromise or as fines and penalties, and counsel
fees, reasonably incurred by him in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which
he may be involved or with which he may be threatened, while in office or
thereafter, by reason of his being or having been such a director or officer,
except with respect to any matter as to which he shall have been adjudicated
in any proceeding not to have acted in good faith in the reasonable belief
that his action was in the best interests of the Registrant (any person serv-
ing another organization in one or more of the indicated capacities at the re-
quest of the Registrant who shall have acted in good faith in the reasonable
belief that his action was in the best interests of such other organization to
be deemed as having acted in such manner with respect to the Registrant) or,
to the extent that such matter relates to service with respect to any employee
benefit plan, in the best interests of the participants or beneficiaries of
such employee benefit plan; provided, however, that as to any matter disposed
of by a compromise payment by such director or officer, pursuant to a consent
decree or otherwise, no indemnification either for said payment or for any
other expenses shall be provided unless such compromise shall be approved as
in the best interests of the Registrant, after notice that it involves such
indemnification: (a) by a disinterested majority of the directors then in of-
fice; or (b) by a majority of the disinterested directors then in office, pro-
vided that there has been obtained an opinion in writing of independent legal
counsel to the effect that such director or officer appears to have acted in
good faith in the reasonable belief that his action was in the best interests
of the Registrant; or (c) by the holders of a majority of the outstanding
stock at the time entitled to vote for directors, voting as a single class,
exclusive of any stock owned by any interested director or officer. Expenses,
including counsel fees, reasonably incurred by any director or officer in con-
nection with the defense or disposition of any such action, suit or other pro-
ceeding may be paid from time to time by the Registrant in advance of the fi-
nal disposition thereof upon receipt of an undertaking by such director or of-
ficer to repay the amounts so paid to the Registrant if it is ultimately de-
termined that indemnification of such expenses is not authorized under Section
9. The right of indemnification
II-1
<PAGE>
provided by Section 9 of the By-laws is not to be exclusive of and is not to
affect any other rights to which any director or officer may be entitled. As
used in said Section 9, the terms "director" and "officer" include their re-
spective heirs, executors and administrators, and an "interested" director or
officer is one against whom in such capacity the proceedings in question or
another proceeding on the same or similar grounds is then pending. Nothing
contained in Section 9 shall affect any rights to indemnification to which
corporate personnel other than directors and officers may be entitled by con-
tract or otherwise under law.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- --------------------------------------------------------------------
<C> <S>
1 Form of Underwriting Agreement.
4.1 Indenture dated as of September 15, 1988, as amended and restated by
the First Supplemental Indenture dated as of January 22, 1993
(including table of contents and cross-reference sheet) --
incorporated by reference to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993.
4.2 Form of Debenture -- included in Exhibit 4.1.
5 Opinion of Ropes & Gray with respect to the legality of the
securities being registered.
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Ropes & Gray -- included in Exhibit 5.
24 Power of Attorney -- included at page II-6.
25 Statement of Eligibility and Qualification on Form T-1 of Citibank,
N.A. to act as Trustee under the Indenture.
</TABLE>
ITEM 17. UNDERTAKINGS
(a) Filing incorporating subsequent Exchange Act documents by reference.
The undersigned Registrant hereby undertakes that, for purposes of determin-
ing any liability under the Securities Act of 1933, each filing of the Regis-
trant's annual report pursuant to Section 13(a) or Section 15(d) of the Secu-
rities Exchange Act of 1934 that is incorporated by reference in this Regis-
tration Statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(b) Rule 430A undertakings.
The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(b) under the Securities Act of 1933 shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securi-
ties offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Acceleration of effectiveness.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise,
II-2
<PAGE>
the Registrant has been advised that in the opinion of the Securities and Ex-
change Commission such indemnification is against public policy as expressed
in the Securities Act of 1933, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the pay-
ment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling per-
son in connection with the securities being registered hereunder, the Regis-
trant will, unless in the opinion of its counsel the question has already been
settled by controlling precedent, submit to a court of appropriate jurisdic-
tion the question of whether such indemnification by it is against public pol-
icy as expressed in the Securities Act of 1933 and will be governed by the fi-
nal adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHO-
RIZED, IN THE TOWN OF STOUGHTON, THE COMMONWEALTH OF MASSACHUSETTS, AS OF THE
31ST DAY OF AUGUST, 1995.
Reebok International Ltd.
/s/ Kenneth I. Watchmaker
By
-----------------------------------
KENNETH I. WATCHMAKER
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
We, the undersigned officers and directors of Reebok International Ltd.,
hereby severally constitute Kenneth I. Watchmaker, John B. Douglas III and
Randi S. Ingerman, and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names
in the capacities indicated below, the Registration Statement filed herewith
and any and all amendments to said Registration Statement (including post-ef-
fective amendments), and generally to do all such things in our name and be-
half in our capacities as officers and directors to enable Reebok Interna-
tional Ltd. to comply with the provisions of the Securities Act of 1933, and
all requirements of the Securities and Exchange Commission, hereby ratifying
and confirming our signatures as they may be signed by our said attorneys, or
any of them, to said Registration Statement and any and all amendments there-
to.
Witness our hands and common seal on the date set forth below.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRA-
TION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES IN-
DICATED ON THE 31ST DAY OF AUGUST, 1995.
SIGNATURE CAPACITY
--------- --------
/s/ Paul B. Fireman President, Chief
- ------------------------------------ Executive Officer
PAUL B. FIREMAN (Principal
Executive Officer)
and Chairman of the
Board of Directors
/s/ Kenneth I. Watchmaker Executive Vice
- ------------------------------------ President and Chief
KENNETH I. WATCHMAKER Financial Officer
(Principal
Financial and
Accounting Officer)
/s/ Paul R. Duncan Executive Vice
- ------------------------------------ President, Chief
PAUL R. DUNCAN Operating Officer
and Director
/s/ Robert Meers Executive Vice
- ------------------------------------ President and
ROBERT MEERS Director
/s/ Jill E. Barad Director
- ------------------------------------
JILL E. BARAD
II-4
<PAGE>
SIGNATURE CAPACITY
--------- --------
/s/ Daniel E. Gill Director
- -------------------------------------
DANIEL E. GILL
/s/ William F. Glavin Director
- -------------------------------------
WILLIAM F. GLAVIN
/s/ Bertram M. Lee, Sr. Director
- -------------------------------------
BERTRAM M. LEE, SR.
/s/ Richard G. Lesser Director
- -------------------------------------
RICHARD G. LESSER
/s/ William M. Marcus Director
- -------------------------------------
WILLIAM M. MARCUS
/s/ Geoffrey Nunes Director
- -------------------------------------
GEOFFREY NUNES
/s/ John A. Quelch Director
- -------------------------------------
JOHN A. QUELCH
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE NO.
------- ---------------------------------------------------------- --------
<C> <S> <C>
1 Form of Underwriting Agreement............................
5 Opinion of Ropes & Gray with respect to the legality of
the securities being registered...........................
12 Computation of Ratio of Earnings to Fixed Charges.........
23.1 Consent of Ernst & Young LLP..............................
23.2 Consent of Ropes & Gray -- included in Exhibit 5..........
24 Power of Attorney -- included at page II-6................
25 Statement of Eligibility and Qualification on Form T-1 of
Citibank, N.A. to act as Trustee under the Indenture......
</TABLE>
<PAGE>
EXHIBIT 1
REEBOK INTERNATIONAL LTD.
$100,000,000 ___% Debentures Due 2005
UNDERWRITING AGREEMENT
----------------------
September __, 1995
CS FIRST BOSTON CORPORATION,
As Representative ("Representative") of the
Several Underwriters named in Schedule A hereto,
Park Avenue Plaza,
New York, N.Y. 10055
Ladies and Gentlemen:
1. Introductory. Reebok International Ltd., a Massachusetts
corporation ("Company"), proposes to issue and sell $100,000,000 principal
amount of its ___% Debentures Due 2005 ("Securities") to the Underwriters
named in Schedule A hereto ("Underwriters"), to be issued under an indenture,
dated as of September 15, 1988, as amended and restated by the First
Supplemental Indenture, dated as of January 22, 1993 (as so amended and
restated, "Indenture"), between the Company and Citibank, N.A., as Trustee.
The Company hereby agrees with the Underwriters as follows:
2. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, the Underwriters that:
(a) A registration statement on Form S-3 (File No. 33- ),
including a preliminary form of prospectus, relating to the Securities
has been filed with the Securities and Exchange Commission ("Commission")
and either (i) has been declared effective under the Securities Act
of 1933, as amended ("Act"), and is not proposed to be amended or (ii)
is proposed to be amended by amendment or post-effective amendment.
If such registration statement ("initial registration statement") has
been declared effective, either (i) an additional registration statement
("additional registration statement") relating to the Securities may
have been filed with the Commission pursuant to Rule 462(b) ("Rule
462(b)") under the Act and, if so filed, has become effective upon filing
pursuant to such Rule and the Securities all have been duly registered
under the Act pursuant to the initial registration statement and, if
applicable, the additional registration statement or (ii) such an
additional registration statement is proposed to be filed with the
Commission pursuant to Rule 462(b) and will become effective upon filing
pursuant to such Rule and upon such filing the Securities will
<PAGE>
all have been duly registered under the Act pursuant to the initial
registration statement and such additional registration statement. If the
Company does not propose to amend the initial registration statement or if
an additional registration statement has been filed and the Company does
not propose to amend it, and if any post-effective amendment to either such
registration statement has been filed with the Commission prior to the
execution and delivery of this Underwriting Agreement ("Agreement"), the
most recent amendment (if any) to each such registration statement has been
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c)("Rule 462(c)") under the Act or, in the case of
the additional registration statement, Rule 462(b). For purposes of this
Agreement, "Effective Time" with respect to the initial registration
statement or, if filed prior to the execution and delivery of this
Agreement, the additional registration statement means (i) if the Company
has advised the Representative that it does not propose to amend such
registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any)
filed prior to the execution and delivery of this Agreement, was declared
effective by the Commission or has become effective upon filing pursuant to
Rule 462(c), or (ii) if the Company has advised the Representative that it
proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as the
case may be, is declared effective by the Commission. If an additional
registration statement has not been filed prior to the execution and
delivery of this Agreement but the Company has advised the Representative
that it proposes to file one, "Effective Time" with respect to such
additional registration statement means the date and time as of which such
registration statement is filed and becomes effective pursuant to Rule
462(b). "Effective Date" with respect to the initial registration statement
or the additional registration statement (if any) means the date of the
Effective Time thereof. The initial registration statement, as amended at
its Effective Time, including all material incorporated by reference
therein, including all information contained in the additional registration
statement (if any) and deemed to be a part of the initial registration
statement as of the Effective Time of the additional registration statement
pursuant to the General Instructions of the Form on which it is filed and
including all information (if any) deemed to be a part of the initial
registration statement as of its Effective Time pursuant to Rule 430A(b)
("Rule 430A(b)") under the Act, is hereinafter referred to as the "Initial
Registration Statement". The additional registration statement, as amended
at its Effective Time, including the contents of the initial registration
statement incorporated by reference therein and including all information
(if any) deemed to be a part of the additional registration statement as of
its Effective Time pursuant to Rule 430A(b) is hereinafter referred to as
the "Additional Registration Statement". The Initial Registration Statement
and the Additional Registration Statement are herein referred to
collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the
Securities, as first filed with the Commission pursuant to and in
accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such
filing is required) as included in a Registration Statement, including all
material incorporated by reference in such
2
<PAGE>
prospectus, is hereinafter referred to as the "Prospectus". No document has
been or will be prepared or distributed in reliance on Rule 434 under the
Act.
(b) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (i) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all respects to the requirements of the Act, the
Trust Indenture Act of 1939 ("Trust Indenture Act") and the rules and
regulations of the Commission ("Rules and Regulations") and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) on the Effective Date of the Additional Registration
Statement (if any), each Registration Statement conformed, or will conform,
in all respects to the requirements of the Act, the Trust Indenture Act and
the Rules and Regulations and did not include, or will not include, any
untrue statement of a material fact and did not omit, or will not omit, to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (iii) on the date of this
Agreement the Initial Registration Statement and, if the Effective Time of
the Additional Registration Statement is prior to the execution and
delivery of this Agreement the Additional Registration Statement each
conforms, and at the time of filing of the Prospectus pursuant to Rule
424(b) or (if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included and
at all times subsequent thereto up to and at the Closing Date (as defined
below), each Registration Statement and the Prospectus and any amendments
or supplements thereto will conform, in all respects to the requirements of
the Act, the Trust Indenture Act and the Rules and Regulations, and neither
of such documents includes, or will include, any untrue statement of a
material fact or omits, or will omit, to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading. If the Effective Time of the Initial Registration Statement is
subsequent to the execution and delivery of this Agreement: on the
Effective Date of the Initial Registration Statement and at all times
subsequent thereto up to and at the Closing Date, the Initial Registration
Statement and the Prospectus and any amendments or supplements thereto
will conform in all respects to the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations, neither of such documents
will include any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and no Additional Registration Statement
has been or will be filed. The two preceding sentences do not apply to
statements in or omissions from a Registration Statement or the Prospectus
based upon written information furnished to the Company by any Underwriter
through the Representative specifically for use therein, it being
understood and agreed that the only such information is that described as
such in Section 7(b) hereof.
(c) The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of The Commonwealth of
Massachusetts with full power and authority (corporate and other) to own,
lease and operate its properties and conduct its business as described in
the Registration
3
<PAGE>
Statements; each of the Company's operating subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; each of the Company
and its subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
ownership or leasing of properties or the conduct of its business requires
such qualification, except where the failure to be so qualified would not
have a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company and its
subsidiaries taken as a whole ("Material Adverse Effect"); all of the
issued and outstanding capital stock of each operating subsidiary of the
Company has been duly authorized and validly issued and is fully paid and
nonassessable; the capital stock of each subsidiary owned by the Company,
directly or through subsidiaries, is owned free from liens, encumbrances
and defects; each of the Company and its subsidiaries is, and at the
Closing Date will be, in possession of and operating in compliance with all
licenses, certificates and permits from state, federal and other regulatory
authorities which are material to the conduct of its business (except where
the failure to possess such licenses, certificates and permits would not
have a Material Adverse Effect), all of which are valid and in full force
and effect; the Company is not in violation of its Restated Articles of
Organization, as amended to date, or by-laws, as currently in effect; no
subsidiary of the Company is in violation of its charter or by-laws, as
currently in effect; neither the Company nor any of its subsidiaries is in
breach of or default, except as set forth in the Prospectus, in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note or other evidence of indebtedness or in
any lease, contract or other agreement or instrument to which the Company
or any such subsidiary is a party or by which any of them or any of their
respective properties may be bound (including without limitation the
agreements described in the Prospectus) or in violation of any law, order,
rule, regulation, writ, injunction, judgment or decree of any court or
governmental agency or body, except for such breaches, defaults or
violations which, in the aggregate, would not have a Material Adverse
Effect.
(d) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in
connection with the issuance and sale of the Securities by the Company,
except such as have been obtained and made under the Act and the Trust
Indenture Act and such as may be required under state securities laws.
(e) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby; this
Agreement has been duly authorized, executed and delivered by the Company
and is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as the indemnification
and contribution provisions hereunder may be limited by applicable law and
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by general equi-
4
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table principles.
(f) The execution, delivery and performance of the Indenture and
this Agreement and the consummation of the transactions therein and herein
contemplated will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, (i) the Restated Articles
of Organization, as amended to date, or by-laws of the Company, as
currently in effect, or the charter or by-laws of any subsidiary of the
Company, as currently in effect; (ii) any material indenture, mortgage,
deed of trust, loan agreement, bond, debenture, note or other evidence of
indebtedness or any material lease, contract or other agreement or
instrument to which the Company of any of its subsidiaries is a party or by
which any of them or any of their respective properties may be bound; or
(iii) any law or any order, rule or regulation of any governmental agency
or body or any court having jurisdiction over the Company or any of its
subsidiaries or over the properties of the Company or any of its
subsidiaries.
(g) Except as set forth in the Prospectus, there is not any pending
or, to the Company's knowledge, any threatened action, suit, claim or
proceeding before any court or governmental agency or body or otherwise
against the Company, any of the Company's subsidiaries or any of their
respective officers or any of their respective properties, assets or rights
which would result in any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business
prospects of the Company and its subsidiaries taken as a whole or have a
material adverse effect on the properties, assets or rights of the Company
and its subsidiaries taken as a whole or prevent consummation of the
transactions contemplated herein or in the Indenture; and there are no
contracts or documents of the Company or any of its subsidiaries that are
required to be described in the Prospectus or to be filed as exhibits to a
Registration Statement by the Act, the Trust Indenture Act or by the Rules
and Regulations which have not been accurately described in all material
respects in the Prospectus or filed as exhibits to a Registration
Statement, or both, as the case may be.
(h) Ernst & Young, LLP, who have audited the financial statements,
together with the related schedules and notes, of the Company and its
subsidiaries filed with the Commission as a part of each Registration
Statement, some of which are included in the Prospectus, are, to the best
of the Company's knowledge, independent accountants within the meaning of
the Act and the Rules and Regulations; the audited financial statements of
the Company and its subsidiaries, together with the related schedules and
notes, forming part of each Registration Statement and Prospectus, fairly
present the financial position and the results of operations of the Company
at the respective dates and for the respective periods to which they
apply; all audited financial statements of the Company and its
subsidiaries, together with the related schedules and notes, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as may be
otherwise stated therein; the selected financial data included in each
Registration Statement present fairly the information shown therein and
have been compiled on a basis substantially consistent with the financial
statements presented therein; and no other financial state-
5
<PAGE>
ments or schedules or notes are required to be included in the Registration
Statements.
(i) Subsequent to the respective dates as of which information is
given in each Registration Statement and the Prospectus, except as set
forth therein or in the letter referred to in Section 6(a) below, there has
not been or occurred (i) any material adverse change in the business,
property or assets described or referred to in each Registration Statement
or the condition (financial or otherwise), earnings, operations, business
or business prospects of the Company and its subsidiaries taken as a whole,
(ii) any transaction which is material to the Company and its subsidiaries
taken as a whole, except transactions in the ordinary course of business,
(iii) any obligation, direct or contingent, incurred by the Company or any
of its subsidiaries which is material to the Company and its subsidiaries
taken as a whole, except obligations incurred in the ordinary course of
business, (iv) any change in the capital stock or outstanding indebtedness
of the Company or any of its subsidiaries which is material to the Company
and its subsidiaries taken as a whole or (v) any dividend or distribution
of any kind declared, paid or made on the capital stock of the Company.
(j) Except as otherwise stated in the Prospectus, (i) each of the
Company and its subsidiaries has good and marketable title to all
properties and material assets described in the Prospectus as owned by it,
free and clear of any pledge, lien, charge, security interest, encumbrance,
restriction, claim or equitable interest other than such as are not
material to the business of the Company, (ii) each of the Company and its
subsidiaries has sufficient interests in its properties and other assets to
conduct its business as currently conducted and as proposed to be conducted
and (iii) any agreements to which the Company or any of its subsidiaries is
a party described in the Prospectus are valid agreements, enforceable in
accordance with their terms, except as enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally or by
general equitable principles and, to the best knowledge of the Company or
such subsidiary, the other contracting party or parties thereto are not in
breach or default under any of such agreements, except, with respect to
this Section 2.(j)(iii), where the failure of such agreements to be valid
and enforceable or the occurrence of such breaches or defaults, when taken
in the aggregate, would not have a Material Adverse Effect.
(k) No labor disturbance by the employees of the Company or any of
its subsidiaries exists or to the best of the Company's knowledge, is
imminent; the Company is not aware of any existing or imminent labor
disturbance by the employees of any principal supplier, manufacturer,
authorized dealer or distributor that might be expected to result in any
material adverse change in the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company.
(l) The Company owns or possesses adequate rights to use all
material patents, patent rights, inventions, trade secrets, know-how,
trademarks, service
6
<PAGE>
marks, trade names and copyrights described or referred to in the
Prospectus as owned or used by it and which are material to the conduct of
its business as described in the Prospectus; except as described in the
Prospectus, the Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any patents, patent
rights, inventions, trade secrets, know-how, trademarks, service marks,
trade names or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(m) The Company has not distributed and will not distribute any
prospectus or other offering materials in connection with the offering and
sale of the Securities other than any related preliminary prospectus and
the Prospectus or other material permitted by the Act.
(n) The Indenture has been duly authorized and, if the Effective
Time of a Registration Statement is prior to the execution and delivery of
this Agreement, has been or otherwise upon such Effective Time will be duly
qualified under the Trust Indenture Act with respect to the Securities
registered thereby; the Securities have been duly authorized; and when the
Securities are delivered and paid for pursuant to this Agreement on the
Closing Date (as defined below), the Indenture will have been duly executed
and delivered, such Securities will have been duly executed, authenticated,
issued and delivered and will conform to the statements relating thereto
contained in each Registration Statement, the Prospectus and the Indenture
and such Securities will constitute valid and legally binding obligations
of the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(o) The Company is not and, after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(p) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Securities it commences doing such business.
3. Purchase, Sale and Delivery of Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of __% of the principal amount
thereof plus accrued interest from
7
<PAGE>
_______, 1995 to the Closing Date (as defined below), the respective principal
amounts of Securities set forth opposite the name of such Underwriter in
Schedule A hereto.
The Company will deliver against payment of the purchase price the
Securities in the form of one or more permanent global Securities in definitive
form (the "Global Securities") deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") and registered in the name of Cede & Co., as
nominee for DTC. Interests in any permanent Global Securities will be held only
in book-entry form through DTC, except in the limited circumstances described in
the Prospectus. Payment for the Securities shall be made by the Underwriters [by
certified or official bank check or checks in New York Clearing House (next day)
funds] [in Federal (same day) funds by wire transfer to an account previously
designated to the Representative by the Company at a bank acceptable to the
Representative] drawn to the order of the Company at the Boston offices of
Skadden, Arps, Slate, Meagher & Flom, at 10:00 A.M., (New York time), on the
third full business day following the date of this Agreement, or at such other
time not later than seven full business days thereafter as the Representative
and the Company determine, such time being herein referred to as the "Closing
Date", against delivery to the Trustee as custodian for DTC of the Global
Securities representing all of the Securities. The Global Securities will be
made available for checking at such office of the Representative or other
location as the Representative may reasonably request at least 24 hours prior
to the Closing Date.
4. Offering by Underwriters. It is understood that the Underwriters
propose to offer the Securities for sale to the public as set forth in the
Prospectus.
5. Certain Additional Agreements of the Company. The Company agrees
with the Underwriters that:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by the
Representative, subparagraph (4)) of Rule 424(b) not later than the earlier
of (A) the second business day following the execution and delivery of this
Agreement or (B) the fifteenth business day after the Effective Date of the
Initial Registration Statement. The Company will advise the Representative
promptly of any such filing pursuant to Rule 424(b). If the Effective Time
of the Initial Registration Statement is prior to the execution and
delivery of this Agreement and an additional registration statement is
necessary to register a portion of the Securities under the Act but the
Effective Time thereof has not occurred as of such execution and delivery,
the Company will file the additional registration statement or, if filed,
will file a post-effective amendment thereto with the Commission pursuant
to and in accordance with Rule 462(b) on or prior to 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, on or prior to the time
the Prospectus is printed and distributed to any Underwriter, or will make
such filing at such later date as shall have been consented to by the
Representative.
8
<PAGE>
(b) The Company will advise the Representative promptly of
any proposal to amend or supplement the initial or any additional
registration statement as filed or the related prospectus or the Initial
Registration Statement, the Additional Registration Statement (if any) or
the Prospectus and will not effect such amendment or supplementation
without the Representative's consent; and the Company will also advise the
Representative promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration
Statement or the Prospectus and of the institution by the Commission of any
stop order proceedings in respect of a Registration Statement and will use
its best efforts to prevent the issuance of any such stop order and to
obtain as soon as possible its lifting, if issued.
(c) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act in connection with sales by any
Underwriter or dealer, any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Prospectus to comply with the Act, the Company will promptly notify the
Representative of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Neither the Representative's consent to, nor the Underwriters'
delivery of, any such amendment or supplement shall constitute a waiver of
any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability
Date (as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Representative copies of each
Registration Statement (two of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as delivery of
a prospectus relating to the Securities is required to be delivered under
the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as the Representative
requests. The Prospectus shall be so furnished on or prior to 10:00 A.M.,
New York time, on the business day following the
9
<PAGE>
later of the execution and delivery of this Agreement or the Effective
Time of the Initial Registration Statement. All other documents shall be
so furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the
Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as the Representative
designates and will continue such qualifications in effect so long as
required for the distribution. In each jurisdiction in which the
Securities shall have been qualified as above provided, the Company will
make and file such statements and reports in each year as are or may be
reasonably required by the laws of such jurisdiction, except that such
registration or qualification shall not be required in any jurisdiction in
which the Company would, as a condition to such qualification, be required
to file a general consent to service of process.
(g) During the period of two years hereafter, the Company will
furnish to the Representative and, upon request, to each of the other
Underwriters, (i) concurrently with furnishing such reports to its
stockholders, quarterly reports of operations of the Company for each of
the first three quarters in the form furnished to the Company's
stockholders; (ii) concurrently with furnishing such reports to its
stockholders, annual reports of the Company as of the end of each fiscal
year (including financial statements audited by independent public
accountants); (iii) as soon as they are available, copies of all other
reports (financial or other) furnished to stockholders; (iv) as soon as
they are available, copies of all reports and financial statements
furnished to or filed with the Commission, any securities exchange or the
National Association of Securities Dealers, Inc. ("NASD"); (v) every
material press release and every material news item or article in respect
of the Company or its affairs (in each case, only to the extent such press
release, news item or article relates to the financial condition or
results of operations of the Company) which was released or prepared by or
on behalf of the Company; and (vi) any additional information of a public
nature concerning the Company or its business which the Representative may
reasonably request.
(h) The Company will apply the net proceeds of the offering and
sale of the Securities in the manner set forth in the Prospectus under
the caption "Use of Proceeds".
(i) The Company will pay all expenses incident to the performance
of its obligations under this Agreement and will reimburse the
Underwriters for any filing fees and other expenses (including fees and
disbursements of counsel) incurred by them in connection with
qualification of the Securities for sale and the determination of their
eligibility for investment under the laws of such jurisdictions as the
Representative designates and the printing of memoranda relating thereto,
for any fees charged by investment rating agencies for the rating of the
Securities, for any filing fee of the NASD relating to the Securities, for
10
<PAGE>
any travel expenses of the Company's officers and employees and any
other expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the Securities and for expenses
incurred in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriters.
6. Conditions of the Obligations of the Underwriters. The obligations
of the Underwriters to purchase and pay for the Securities will be subject
to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of
its obligations hereunder and to the following additional conditions precedent:
(a) The Representative shall have received a letter, dated
the date of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the date of this Agreement, shall be on
or prior to the date of this Agreement or, if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement, shall be prior to the filing of the amendment or
post-effective amendment to the registration statement to be filed shortly
prior to such Effective Time), of Ernst & Young LLP confirming that they
are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating in effect
that:
(i) in their opinion the financial statements and schedules
examined by them and included in the Registration Statements comply
in form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in Statement of Auditing
Standards No. 71, Interim Financial Information, on the unaudited
financial statements included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other
specified procedures, nothing came to the attention that caused them
to believe that:
(A) the unaudited financial statements included in the
Registration Statements do not comply in form in all material
respects with the applicable accounting requirements of the Act and
the related published Rules and Regulations or any material
modifications should be made to such unaudited financial statements
for them to be in conformity
11
<PAGE>
with generally accepted accounting principles;
(B) the unaudited consolidated net sales, net income and net
income per share amounts for the six-month period ended June 30, 1995
included in the Prospectus do not agree with the amounts set forth in
the unaudited consolidated financial statements for that same period
or were not determined on a basis substantially consistent with that
of the corresponding amounts in the audited statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more than
five days prior to the date of this Agreement, there was any change
in the capital stock or any increase in short-term indebtedness or
long-term debt of the Company and its consolidated subsidiaries or,
at the date of the latest available balance sheet read by such
accountants, there was any decrease in consolidated net assets, as
compared with amounts shown on the latest balance sheet included in
the Prospectus; or
(D) for the period from the closing date of the latest income
statement included in the Prospectus to the closing date of the
latest available income statement read by such accountants there were
any decreases, as compared with the corresponding period of the
previous year, in consolidated net sales, net operating income,
consolidated net income or in the ratio of earnings to fixed charges,
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each case to
the extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such records
by analysis or computation) with the results obtained from inquiries,
a reading of such general accounting records and other procedures
specified in such letter and have found such dollar amounts,
percentages and other financial information to be in agreement with
such results, except as otherwise specified in such letter.
For purposes of this Section 6(a), (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery
of this Agreement, "Registration Statements" shall mean the initial
registration statement as proposed to be amended by the amendment or
post-effective amendment to be
12
<PAGE>
filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statement is prior to the execution and delivery
of this Agreement but the Effective Time of the Additional Registration is
subsequent to such execution and delivery, "Registration Statements" shall
mean the Initial Registration Statement and the additional registration
statement as proposed to be filed or as proposed to be amended by the post-
effective amendment to be filed shortly prior to its Effective Time, and
(iii) "Prospectus" shall mean the prospectus included in the Registration
Statements. All financial statements and schedules included in material
incorporated by reference into the Prospectus shall be deemed included in
the Registration Statements for purposes of this Section 6(a).
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by the Representative. If the Effective Time of the Additional Registration
Statement (if any) is not prior to the execution and delivery of this
Agreement, such Effective Time shall have occurred not later than 10:00
P.M., New York time, on the date of this Agreement or, if earlier, the time
the Prospectus is printed and distributed to any Underwriter, or shall have
occurred at such later date as shall have been consented to by the
Representative. If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement, the Prospectus
shall have been filed with the Commission in accordance with the Rules and
Regulations and Section 5(a) of this Agreement. Prior to the Closing Date,
no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Company or the Representative, shall
be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters including the Representative, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Securities; (ii) any
downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating; (iii) any suspension or limitation of trading
in securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of trading
of any securities of the Company on any exchange
13
<PAGE>
or in the over-the-counter market; (iv) any banking moratorium declared by
U.S. Federal or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration
of war by Congress or any other substantial national or international
calamity or emergency if, in the judgment of a majority in interest of the
Underwriters including the Representative, the effect of any such
outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Securities.
(d) The Representative shall have received an opinion, dated the
Closing Date, of Ropes & Gray, counsel for the Company, to the effect
that:
(i) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of The
Commonwealth of Massachusetts, with full power and authority
(corporate and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus;
(ii) The Indenture has been duly authorized, executed and
delivered and has been duly qualified under the Trust Indenture Act;
the Securities delivered on the Closing Date have been duly
authorized, executed, authenticated, issued and delivered and conform
to the statements relating thereto contained in each Registration
Statement, the Prospectus and the Indenture; and the Indenture and
the Securities delivered on the Closing Date constitute valid and
legally binding obligations of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles;
(iii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by this
Agreement in connection with the issuance or sale of the Securities
by the Company, except such as have been obtained and made under the
Act and the Trust Indenture Act and such as may be required under
state securities laws;
(iv) The Company has full legal corporate power and
authority to enter into this Agreement and consummate the
transactions contemplated hereby; this Agreement has been duly
authorized, executed and delivered by the Company;
(v) The execution, delivery and performance of the
Indenture and this Agreement and the consummation of the transactions
therein and herein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, (A) the Restated
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Articles of Organization, as amended to date, or by-laws of the
Company, as currently in effect, or the charter or by-laws of any
subsidiary of the Company, as currently in effect; (B) any indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note or
other evidence of indebtedness or any lease, contract or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their
respective properties may be bound, in each case filed as an exhibit
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994; or (C) any law or any order, rule or regulation of
any governmental agency or body or any court having jurisdiction over
the Company or any of its subsidiaries or over the properties of the
Company or any of its subsidiaries; and
(vi) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statements (if any) was filed
and became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either was
filed with the Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the date specified therein or was
included in the Initial Registration Statement or the Additional
Registration Statement (as the case may be), and, to the best of the
knowledge of such counsel, no stop order suspending the effectiveness
of a Registration Statement or any part thereof has been issued and
no proceedings for that purpose have been instituted or are pending
or contemplated under the Act, and each Registration Statement and
the Prospectus, and each amendment or supplement thereto, as of their
respective effective or issue dates, complied as to form in all
material respects with the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations; in the course of the
preparation by the Company of the Registration Statements and the
Prospectus, such counsel has participated in discussions with your
representatives and those of the Company and its independent
accountants in which the business and affairs of the Company and the
contents of the Registration Statements and the Prospectus were
discussed, and on the basis of information that such counsel has
gained in the course of their representation of the Company in
connection with the Company's preparation of the Registration
Statements and the Prospectus and the participation of such counsel
in the discussions referred to above, nothing has come to the
attention of such counsel that has caused such counsel to believe
that any part of a Registration Statement or any amendment thereto,
as of its effective date or as of the Closing Date, contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any
amendment or supplement thereto, as of its issue date or as of the
Closing Date, contained any untrue statement or a material fact or
omitted to state any material fact necessary in order to make the
15
<PAGE>
statements therein, in the light of the circumstances under which
they were made, not misleading; the description in the Registration
Statements and Prospectus of statutes, legal and governmental
proceedings and contracts and other documents are accurate and fairly
present the information required to be shown; and such counsel do not
know of any legal or governmental proceedings required to be
described in a Registration Statement or the Prospectus which are not
described as required or of any contracts or documents of a character
required to be described in a Registration Statement or the
Prospectus or to be filed as exhibits to a Registration Statement
which are not described and filed as required; it being understood
that such counsel need express no opinion as to the financial
statements or other financial data contained in the Registration
Statements or the Prospectus.
(e) The Representative shall have received an opinion, dated the
Closing Date, of John B. Douglas III, Senior Vice President and General
Counsel of the Company, to the effect that:
(i) Each of the Company's operating subsidiaries has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction or incorporation;
(ii) Each of the Company and its subsidiaries is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or leasing of
properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would not
have a Material Adverse Effect;
(iii) All of the issued and outstanding capital stock of each
operating subsidiary of the Company has been duly authorized and
validly issued and is fully paid and nonassessable, and the capital
stock of each subsidiary owned by the Company, directly or through
subsidiaries, is owned free from liens, encumbrances and defects; and
(iv) The Company owns or processes adequate rights to use
all material patents, patent rights, inventions, trade secrets, know-
how, trademarks, service marks, trade names and copyrights described
or referred to in the Prospectus as owned or used by it and which are
material to the conduct of its business as described in the
Prospectus; except as described in the Prospectus, the Company has
not received any notice of infringement of or conflict with asserted
rights of others with respect to any patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade
names or copyrights which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
16
<PAGE>
(f) The Representative shall have received from Skadden, Arps,
Slate, Meagher & Flom, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to the organization of the
Company, the validity of the Securities delivered on the Closing Date, the
Registration Statements, the Prospectus and other related matters as the
Representative may require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to
pass upon such matters. In rendering such opinion, Skadden, Arps, Slate,
Meagher & Flom may rely as to the organization of the Company and the
validity of the Securities upon the opinion of Ropes & Gray referred to
above.
(g) The Representative shall have received a certificate, dated the
Closing Date, of (i) the Chief Financial Officer and (ii) the Treasurer or
any Vice President of the Company in which such officers shall state that,
to the best of their knowledge after reasonable investigation, the
representations and warranties of the Company in this Agreement are true
and correct as if made on and as of the Closing Date, that the Company has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date, that no
stop order suspending the effectiveness of any Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission, that the Additional Registration Statement
(if any) satisfying the requirements of subparagraphs (1) and (3) of Rule
462(b) was filed pursuant to Rule 462(b), including payment of the
applicable filing fee in accordance with Rule 111(a) or (b) under the Act,
prior to the time the Prospectus was printed and distributed to any
Underwriter and that, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change,
nor any development or event involving a prospective material adverse
change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a whole
except as set forth in or contemplated by the Prospectus or as described in
such certificate.
(h) The Representative shall have received a letter, dated the
Closing Date, of Ernst & Young LLP which meets the requirements of Section
6(a) hereof, except that the specified date referred to in Section 6(a)
hereof will be a date not more than five days prior to the Closing Date for
the purposes of this Section 6(h).
The Company will furnish the Representative with such conformed copies of such
opinions, certificates, letters and documents as the Representative reasonably
requests. The Representative may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder.
7. Indemnification and Contribution.
(a) The Company will indemnify and hold harmless each Underwriter
17
<PAGE>
against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company
will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representative specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in Section 7(b) hereof.
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of are based
upon the omission or the alleged omission to state therein a material fact
required to be stated herein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative specifically for use therein, and will reimburse any legal
or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
following information in the Prospectus furnished on behalf of each
Underwriter: the last paragraph at the bottom of the cover page concerning
the terms of the offering by the Underwriters, the legend concerning over-
allotments and stabilizing on the inside front cover page and the
concession and reallowance figures appearing in the third paragraph under
the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under
18
<PAGE>
Section 7(a) or 7(b), notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than under Section 7(a) or 7(b). In case any such action is
brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled
to participate therein and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of
any pending or threatened action in respect of which any indemnified party
is or could have been a party and indemnity could have been sought
hereunder by such indemnified party unless such settlement includes and
unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(B), then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in Section 7(a) or 7(b) (i) in
such proportion as is appropriate to reflect the relative benefits received
by the Company on the one had and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities as
well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducing expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact of the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 7(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection
19
<PAGE>
with investigating or defending any action or claim which is the subject of
this Section 7(d). Notwithstanding the provisions of this Section 7(d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 7(d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
control any Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section 7 shall be in addition to any
liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the
Company, to each officer of the Company who has signed a Registration
Statement and to each person, if any, who controls the Company within the
meaning of the Act.
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Securities hereunder on the Closing Date and
the aggregate principal amount of Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
principal amount of Securities that the Underwriters are obligated to purchase
on the Closing Date, the Representative may make arrangements satisfactory to
the Company for the purchase of the Securities by other persons, including any
of the Underwriters, but if no such arrangements are made by the Closing Date,
the non-defaulting Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Securities that such
defaulting Underwriters agreed but failed to purchase on the Closing Date. If
any Underwriter or Underwriters so default and the aggregate principal amount of
Securities with respect to which such default or defaults occur exceeds 10% of
the total principal amount of Securities that the Underwriters are obligated to
purchase on the Closing Date and arrangements satisfactory to the Representative
and the Company for the purchase of the Securities by other persons are not made
within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
as provided in Section 9. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 8. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and the Underwriters set forth in or made pursuant to
this
20
<PAGE>
Agreement will remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the
Securities. If this Agreement is terminated pursuant to Section 8 or if for any
reason the purchase of the Securities by the Underwriters is not consummated,
the Company shall remain responsible for the expenses to be paid or reimbursed
by it pursuant to Section 5 and the respective obligations of the Company and
the Underwriters pursuant to Section 7 shall remain in effect, and if any
Securities have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall also remain in effect. If
the purchase of the Securities by the Underwriters is not consummated for any
reason other than solely because of the termination of this Agreement pursuant
to Section 8 or the occurrence of any event specified in clause (iii), (iv) or
(v) of Section 6(c), the Company will reimburse the Underwriters for all out-of-
pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered, telecopied or telegraphed and
confirmed to the Representative at Park Avenue Plaza, New York, N.Y. 10055,
Attention: Investment Banking Department - Transactions Advisory Group, or, if
sent to the Company, will be mailed, delivered, telecopied or telegraphed and
confirmed to it at Reebok International Ltd., 100 Technology Center Drive,
Stoughton, Massachusetts 02072, Attention: General Counsel; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered, telecopied or telegraphed and confirmed to such Underwriter at its
address set forth on Schedule A hereto.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
12. Representation of Underwriters. The Representative will act for the
Underwriters in connection with this financing, and any action under this
Agreement taken by the Representative will be binding upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or
21
<PAGE>
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.
22
<PAGE>
If the foregoing is in accordance with the Representative's understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
Underwriters in accordance with its terms.
Very truly yours,
REEBOK INTERNATIONAL LTD.
By
---------------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as of
the date first above written.
CS FIRST BOSTON CORPORATION
By
---------------------------------------
Name:
Title:
Acting on behalf of itself and
as the Representative of the several Underwriters.
23
<PAGE>
SCHEDULE A
Principal Amount of Securities
------------------------------
Underwriter
- -----------
CS First Boston Corporation $
------------
Total $100,000,000
============
24
<PAGE>
[LETTERHEAD OF ROPES & GRAY APPEARS HERE]
August 31, 1995
Reebok International Ltd.
100 Technology Center Drive
Stoughton, Massachusetts 02072
Ladies and Gentlemen:
This opinion is delivered to you in connection with a registration
statement (the "Registration Statement") on Form S-3 filed today with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
for the registration of $100,000,000 principal amount of Debentures due 2005
(the "Debentures") of Reebok International Ltd. (the "Company"). The Debentures
are to be sold pursuant to an Underwriting Agreement (the "Underwriting
Agreement") to be entered into between the Company and CS First Boston
Corporation, as Representative of the several Underwriters named therein. The
Debentures are to be issued pursuant to the provisions of the Indenture dated as
of September 15, 1988, as amended and restated by the First Supplemental
Indenture dated as of January 22, 1993 (the "Indenture") between the Company and
Citibank, N.A., as Trustee. Certain terms of the Underwriting Agreement and the
Debentures remain to be fixed in accordance with the resolutions of the Board of
Directors of the Company.
We have acted as counsel for the Company in connection with the issuance
and sale of the Debentures and the preparation of the Registration Statement.
For purposes of this opinion, we have examined and relied upon the information
set forth in the Registration Statement and such other documents and records as
we have deemed necessary.
We have assumed that the definitive terms of the Underwriting Agreement
shall have been fixed, and that the Underwriting Agreement shall have been duly
executed and delivered, all in accordance with authorizing resolutions of the
Board of Directors of the Company.
Based upon the foregoing, we are of the opinion that when the Debentures
shall have been duly executed and authenticated as provided in the Indenture,
and delivered against payment therefor as provided in the Underwriting
Agreement, the Debentures will be valid and legally binding obligations of the
Company and will be entitled to the benefits of the
<PAGE>
Reebok International Ltd. August 31, 1995
Indenture, except that enforcement of rights and remedies created by the
Debentures is subject to bankruptcy, reorganization, insolvency or similar laws
of general application affecting the rights and remedies of creditors and that
the availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
We hereby consent to the filing of this opinion as part of the Registration
Statement and to the use of our name therein and in the related prospectus under
the caption "Validity of Debentures".
It is understood that this opinion is to be used only in connection with
the offer and sale of the Debentures while the Registration Statement is in
effect.
Very truly yours,
Ropes & Gray
<PAGE>
Exhibit 12
REEBOK INTERNATIONAL LTD.
(Amounts in Thousands)
Exhibit 12 - Statement RE: Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------- Six Months Ended
1990 1991 1992 1993 1994 June 30, 1994 June 30, 1995
-------- -------- -------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings
Pretax Income $ 294,835 $ 389,886 $ 257,964 $ 363,247 $ 408,472 $ 188,382 $ 140,162
Add:
Interest on indebtedness 18,857 29,295 20,080 25,021 16,515 9,242 12,287
Amortization of debt discount
issuance costs 96 1,741 1,914 1,368 816 477 246
Interest on letters of credit 1,503 87 4 0 0 0 0
Portion of rent representative
of the interest factor 4,297 5,393 6,764 7,876 9,625 4,812 4,826
------- ------- ------- ------- ------- ------- -------
Income as adjusted $ 319,588 $ 426,402 $ 286,762 $ 397,512 $ 435,428 $ 202,913 $ 157,521
======== ======== ======= ======= ======= ======= =======
Fixed Charges
Interest on indebtedness $ 18,857 $ 29,295 $ 20,080 $ 25,021 $ 16,515 $ 9,242 $ 12,287
Amortization of debt discount
and issuance costs 96 1,741 1,914 1,368 816 477 246
Interest on letters of credit 1,503 87 4 0 0 0 0
Portion of rent representative
of the interest factor 4,297 5,393 6,764 7,876 9,625 4,812 4,826
------- ------- ------- ------- ------- ------- -------
Fixed charges $ 24,753 $ 36,516 $ 28,798 $ 34,265 $ 26,956 $ 14,531 $ 17,359
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 12.9 11.7 10.0 11.6 16.2 14.0 9.1
</TABLE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Reebok International
Ltd. for the registration of $100,000,000 Debentures and to the incorporation by
reference therein of our report dated January 31, 1995, with respect to the
consolidated financial statements and schedule of Reebok International Ltd.
included in its Annual Report (Form 10-K) for the year ended December 31, 1994,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Boston, Massachusetts
August 30, 1995
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305 (b)(2) ____
________________________
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
Identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
_______________________
REEBOK INTERNATIONAL LTD.
(Exact name of obligor as specified in its charter)
Massachusetts 04-2678061
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification no.)
100 Technology Center Drive
Stoughton, Massachusetts 02072
(Address of Principal Executive Offices) (Zip Code)
_________________________
Debt Securities
(Title of the indenture securities)
<PAGE>
1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now in
effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to commence
business. (Exhibit 2 to T-1 to Registration Statement No. 2-29577).
Exhibit 3 - Copy of authorization of the Trustee to exercise corporate
trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1 to
Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section 321(b) of the
Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration
Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A. (as
of June 30, 1995 - attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
2
<PAGE>
__________________
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 30th day
of August, 1995.
CITIBANK, N.A.
By: /s/ Carol Ng
-----------------------
Assistant Vice President
3
<PAGE>
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
CITIBANK, N.A.
of New York in the State of New York, at the close of business on June 30, 1995,
published in response to call made by Comptroller of the Currency, under Title
12, United States Code, Section 161. Charter Number 1461 Comptroller of the
Currency Northeastern District.
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C> <C>
Cash and balances due from de-
pository institutions:
Noninterest - bearing balances
and currency and coin................$ 7,397,000
Interest - bearing balances.......... 9,242,000
Securities:
Held - to - maturity securities....... 4,013,000
Available - for - sale securities...... 12,199,000
Federal funds sold and securities
purchased under agreements to
resell in domestic offices of the
bank and of its Edge and Agree-
ment subsidiaries and in IBFs:
Federal funds sold.................... 3,468,000
Securities purchased under
agreements to resell.................. 519,000
Loans and leases financing receiv-
ables:
Loans and leases, net of un-
earned income.....$136,294,000
LESS: Allowance for loan
and lease losses.. 4,401,000
-----------
Loans and leases, net of un-
earned income, allowance,
and reserve.......................... 131,893,000
Trading assets......................... 33,328,000
Premises and fixed assets (includ-
ing capitalized leases)............... 3,463,000
Other real estate owned................ 1,299,000
Investments in unconsolidated
subsidiaries and associated com-
panies................................ 1,039,000
Customers liability to this bank
on acceptances outstanding............ 1,408,000
Intangible assets...................... 14,000
Other assets........................... 7,825,000
-----------
TOTAL ASSETS...........................$ 217,107,000
===========
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits:
In domestic offices...................$ 33,302,000
Noninterest-
bearing..........$11,799,000
Interest-
bearing......... 21,503,000
-----------
In foreign offices, Edge and
Agreement subsidiaries, and
IBFs.................................. 116,776,000
Noninterest-
bearing............8,429,000
Interest-
bearing..........108,347,000
-----------
Federal funds purchased and se-
curities sold under agreements
to repurchase in domestic offices
of the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased.............. 1,756,000
Securities sold under agree-
ments to repurchase.................. 675,000
Trading liabilities.................... 22,079,000
Other borrowed money:
With original maturity of one
year or less......................... 8,224,000
With original maturity of more
than one year........................ 4,321,000
Mortgage indebtedness and obli-
gations under capitalized leases...... 107,000
Bank's liability on acceptances ex-
ecuted and outstanding................ 1,418,000
Subordinated notes and
debentures............................. 5,700,000
Other liabilites....................... 7,752,000
------------
TOTAL LIABILITIES......................$ 202,110,000
============
<CAPTION>
EQUITY CAPITAL
<S> <C>
Common stock...........................$ 751,000
Surplus................................ 6,686,000
Undivided profits and capital re-
serves................................ 7,855,000
Net unrealized holding gains (losses)
on available - for - sale securities. 246,000
Cumulative foreign currency
translation adjustments............... (541,000)
-----------
TOTAL EQUITY CAPITAL...................$ 14,997,000
-----------
TOTAL LIABILITIES, LIMITED-
LIFE PREFERRED STOCK, AND
EQUITY CAPITAL........................$ 217,107,000
===========
</TABLE>
