Filed Pursuant to Rule 424(b)(2)
Registration No. 33-59691
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 28, 1995
$305,000,000
FEDERATED DEPARTMENT STORES, INC.
5% CONVERTIBLE SUBORDINATED NOTES DUE 2003
-------------------
The Notes are convertible at any time prior to maturity, unless previously
redeemed or otherwise repurchased, into shares of the Common Stock ("Common
Stock") of Federated Department Stores, Inc. at a conversion rate of 29.2547
shares per $1,000 principal amount of Notes (equivalent to a conversion price of
approximately $34.1825 per share), subject to certain adjustments. The Common
Stock is listed on the New York Stock Exchange (the "NYSE") under the symbol
"FD". On September 21, 1995, the last reported sales price of the Common Stock
on the NYSE was $28.25 per share.
Interest on the Notes is payable on October 1 and April 1 of each year,
commencing April 1, 1996. The Notes will be redeemable at the Company's option,
in whole or in part, at any time on or after October 1, 1998, at the redemption
prices set forth herein, plus accrued interest to the date of redemption. In the
event of a Change in Control (as hereinafter defined), each holder of the Notes
may require the Company to repurchase all or a portion of such holder's Notes at
100% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of repurchase. There is no sinking fund for the Notes. See
"Description of the Notes".
The Notes are unsecured and subordinated in right of payment to all existing
and future Senior Debt of the Company and will be effectively subordinated in
right of payment to all indebtedness and other liabilities of the Company's
subsidiaries. As of July 29, 1995, as adjusted for this Offering and certain
other transactions described herein, the Senior Debt of the Company and the
aggregate indebtedness of its subsidiaries, on a consolidated basis, totalled
$5,447.4 million (excluding accrued interest). See "Description of the Notes--
Subordination".
The Notes will be represented by a Global Security registered in the name of
the nominee of DTC, which will act as Depository. Beneficial interests in the
Global Security will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its direct and indirect participants.
Except as described herein, Notes in definitive form will not be issued. See
"Description of the Notes--Book-Entry System".
SEE "RISK FACTORS" BEGINNING ON PAGE S-3 HEREIN AND PAGE 3 IN THE
ACCOMPANYING PROSPECTUS FOR A DESCRIPTION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
<TABLE><CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) DISCOUNT (2) COMPANY (1)(3)
-------------------- ------------------------ ------------------------
<S> <C> <C> <C>
Per Note..................... 100% 2.50% 97.50%
Total (4).................... $305,000,000 $7,625,000 $297,375,000
</TABLE>
- ------------
(1) Plus accrued interest, if any, from September 27, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $250,000 payable by the Company.
(4) The Company has granted the Underwriters an option, which the Underwriters
have exercised in full, to purchase up to an additional $45,000,000
aggregate principal amount of Notes at the initial public offering price
shown above, less the underwriting discount, solely to cover
over-allotments. Giving effect to the exercise of such option, the total
initial public offering price, underwriting discount, and proceeds to
company will be $350,000,000, $8,750,000 and $341,250,000, respectively. See
"Underwriting".
----------------------
The Notes offered hereby are offered by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that the Notes will be
ready for delivery in book-entry form only through the facilities of DTC in New
York, New York, on or about September 27, 1995.
GOLDMAN, SACHS & CO. CS FIRST BOSTON
The date of this Prospectus Supplement is September 22, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AND THE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NYSE, IN THE
OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
-------------------
The distribution of this Prospectus Supplement and the accompanying
Prospectus and the offering and sale of the Notes in certain jurisdictions may
be restricted by law. Persons into whose possession this Prospectus Supplement
and the accompanying Prospectus come are required by the Company and the
Underwriters to inform themselves about and to observe any such restrictions.
See "Underwriting". This Prospectus Supplement and the accompanying Prospectus
do not constitute an offer to sell or the solicitation of an offer to buy the
Notes in any jurisdiction in which such offer or solicitation is unlawful.
S-2
<PAGE>
RISK FACTORS
The Notes are subject to a number of material risks, including those
enumerated below and in the accompanying Prospectus. Investors should carefully
consider the risk factors enumerated below and in the accompanying Prospectus
together with all of the information set forth or incorporated by reference in
this Prospectus Supplement or the accompanying Prospectus in determining whether
to purchase any of the Notes.
SUBORDINATION
The payment of principal of and interest on, and any premium or other
amounts owing in respect of, the Notes will be subordinated to the prior payment
in full of all existing and future Senior Debt of the Company and indebtedness
of the Company's subsidiaries. As of July 29, 1995, as adjusted to give pro
forma effect to this offering and the transactions described under "Recent
Developments," the Senior Debt of the Company and the aggregate indebtedness of
its subsidiaries, on a consolidated basis, totalled approximately $5,447.4
million, excluding accrued interest. Consequently, in the event of any
bankruptcy, liquidation, dissolution, reorganization, or similar proceeding with
respect to the Company, assets of the Company will be available to pay
obligations on the Notes only after all Senior Debt has been paid in full, and
there can be no assurance that there will be sufficient assets to pay amounts
due on all or any of the Notes.
DIVIDEND POLICIES; RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company does not anticipate that it will pay any dividends on the Common
Stock in the foreseeable future. In addition, the Company's bank credit
agreement includes covenants restricting the Company's ability to pay dividends
or make other distributions to stockholders. Certain institutional investors may
invest only in dividend-paying equity securities or may operate under other
restrictions that may prohibit or limit their ability to invest in the Common
Stock.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
If the transactions described under "Recent Developments" are consummated,
the recipients of certain shares of Common Stock to be issued pursuant thereto
will be entitled to certain registration rights to facilitate the resale of such
shares in the open market or otherwise. Based upon certain assumptions,
including assumptions as to future market prices for the Common Stock, the
Company estimates that approximately 13.5 million shares of Common Stock could
be subject to such registration rights. No prediction can be made as to the
effect, if any, that market sales of such shares, or the availability of such
shares for market sales, could have on the market price of Common Stock
prevailing from time to time.
RECENT DEVELOPMENTS
On August 14, 1995, the Company, a wholly owned subsidiary of the Company
("Newco"), and Broadway Stores, Inc. ("Broadway") entered into an agreement (the
"Merger Agreement") pursuant to which, on the terms and subject to the
conditions set forth therein, Newco will be merged with and into Broadway (the
"Merger"), and Broadway will thereby become a subsidiary of the Company. The
Merger is intended to permit the Company to broaden its base of department store
operations in the areas in which Broadway's department stores are operated
(primarily California and the Southwestern United States).
At the effective time of the Merger (the "Effective Time"), among other
things, each outstanding share of Broadway common stock will be converted into
0.27 shares of Common Stock,
S-3
<PAGE>
resulting in the issuance of approximately 12.7 million shares of Common Stock.
In addition, the Merger will result in (i) adjustments to outstanding options to
purchase Broadway common stock so that such options will become exercisable in
the aggregate to purchase approximately 1.5 million shares of Common Stock at
prices ranging from $14.81 to $51.85 per share and (ii) adjustments to
outstanding warrants to purchase Broadway common stock, and the issuance of
Broadway preferred stock exchangeable for warrants to purchase Common Stock, so
that such adjusted warrants and such warrants issuable upon the exchange of such
preferred stock will be exercisable in the aggregate to purchase approximately
0.6 million shares of Common Stock at a price of $62.96 per share (subject to
adjustment in certain circumstances).
In connection with the Merger Agreement, the Company and Broadway's majority
stockholder entered into an agreement (the "Stock Agreement"), pursuant to
which, among other things, such stockholder agreed to vote all of the shares of
Broadway common stock owned by it in favor of the adoption of the Merger
Agreement and granted to the Company an option to purchase such shares for
consideration consisting of 0.27 shares of Common Stock for each such share of
Broadway common stock. In addition, the Company, a wholly owned subsidiary of
the Company ("FNC II"), and The Prudential Insurance Company of America
("Prudential") entered into an agreement (the "Prudential Agreement") providing
for the purchase by FNC II from Prudential of certain mortgage indebtedness of
Broadway (the "Broadway/Prudential Mortgage Debt") for consideration consisting
of a $221.1 million promissory note of FNC II and, at FNC II's option, either
$200.0 million in cash or a number of shares of the Common Stock determined in
accordance with the provisions of the Prudential Agreement. Each of Prudential
and Broadway's majority stockholder was granted certain registration rights with
respect to the shares of Common Stock issuable to it in connection with the
transactions described above.
The obligations of the Company and Broadway to consummate the Merger are
conditioned upon, among other things, (i) adoption of the Merger Agreement by
Broadway's stockholders; (ii) the absence of any order or injunction that
prohibits the consummation of the transactions contemplated by the Merger
Agreement; and (iii) all consents, authorizations, orders, and approvals of any
governmental authority required in connection with the Merger Agreement having
been obtained, other than any such consents, authorizations, orders, or
approvals which, if not obtained, would not have a material adverse effect on
the business, financial conditions, or results of operations of Broadway. The
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") frequently scrutinize the
legality under the antitrust laws of transactions such as the Merger. At any
time before or after the Effective Time, the FTC or the Antitrust Division
could, among other things, seek under the antitrust laws to enjoin the Merger or
to cause the Company to divest itself, in whole or in part, of Broadway or of
other assets owned or businesses conducted by the Company. Under certain
circumstances, private parties and state governmental authorities could also
bring legal action under the antitrust laws challenging the Merger.
The Company anticipates that a number of Broadway's stores will be disposed
of following the Merger. As of the date of this Prospectus Supplement, however,
the Company had not entered into any agreements providing for such dispositions
and there can be no assurance that the Company will do so or as to the timing or
terms thereof. If the Merger is completed, the Company anticipates that
Broadway's retained department stores will be converted into Macy's, Bullock's,
or Bloomingdale's stores commencing early in 1996.
S-4
<PAGE>
USE OF PROCEEDS
The net proceeds of the offering of the Notes (the "Offering") are estimated
to be approximately $341.0 million (giving effect to the exercise in full of the
Underwriters' over-allotment option). Of such amount, up to approximately 145.0
million is expected to be used to fund the aggregate purchase price for such of
the 6 1/4% Convertible Senior Subordinated Notes Due 2000 of Broadway (the
"Broadway Convertible Notes") that Broadway may be required to purchase pursuant
to a mandatory offer to repurchase all of the Broadway Convertible Notes
following the Merger. The remainder of such amount, together with other funds
available to the Company, is expected to be used to pay certain costs and
expenses associated with the Merger and the conversion of certain of Broadway's
stores into Macy's, Bullock's, and Bloomingdale's stores (including costs and
expenses associated with the remodelling of such stores in connection with such
conversions). Prior to the application thereof as described above, the net
proceeds of the Offering are expected to be used by the Company to temporarily
reduce revolving credit borrowings. If the Merger were to fail to occur (which
failure is not anticipated), it is anticipated that the net proceeds of the
Offering would be used for general corporate purposes, as described under "Use
of Proceeds" in the accompanying Prospectus.
DESCRIPTION OF THE NOTES
The Notes will be issued under the Indenture, as supplemented by a
Supplemental Indenture (the "Supplemental Indenture"). The following discussion
includes a summary description of material terms of the Supplemental Indenture
and the Notes (which represent a series of, and are referred to in the
accompanying Prospectus as, "Debt Securities"). The following description of the
terms of the Notes offered hereby supplements, and should be read in conjunction
with, the statements under "Description of Debt Securities" in the accompanying
Prospectus. The following summary does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all of the provisions of
the Indenture and the Supplemental Indenture. Capitalized terms not defined
herein have the meanings given to them in the Indenture and the Supplemental
Indenture.
GENERAL
The Notes will be limited to $350.0 million aggregate principal amount and
will mature on October 1, 2003. The principal amount of the Notes will be
payable in full upon maturity. The Notes will bear interest from September 27,
1995 at the rate of 5% per annum, payable in arrears on October 1 and April 1 of
each year, with payments commencing on April 1, 1996.
The Notes will be unsecured obligations of the Company and will be
subordinated in right of payment to all present and future Senior Debt (as
defined below) of the Company. Neither the Notes nor the Indenture (as
supplemented by the Supplemental Indenture) limit or restrict the amount or
terms of other indebtedness which may be incurred or issued by the Company or
its subsidiaries or contain any financial or similar covenants of, or
restrictions on, the Company or its subsidiaries. The Notes will be effectively
subordinated in right of payment to all indebtedness and liabilities of the
Company's subsidiaries.
The Notes will initially be convertible into Common Stock at the Conversion
Rate stated on the cover page hereof, subject to adjustment upon the occurrence
of certain events described under "--Conversion Rights," at any time prior to
maturity, unless previously redeemed or repurchased.
All of the Notes will be redeemable at the option of the Company, in whole
or in part, at any time on or after October 1, 1998. Any redemption will be at a
redemption price equal to 100% of the
S-5
<PAGE>
principal amount plus accrued interest, if any, to the redemption date. The
Notes will not be subject to a sinking fund.
BOOK-ENTRY SYSTEM
The Notes will initially be issued in the form of a Global Security held in
book-entry form. Accordingly, The Depository Trust Company ("DTC") or its
nominee will be the sole registered holder of the Notes for all purposes under
the Indenture (as supplemented by the Supplemental Indenture). Owners of
beneficial interests in the Notes represented by the Global Security will hold
such interests pursuant to the procedures and practices of DTC and must exercise
any rights in respect of their interests (including any right to convert or
require repurchase of their interests) in accordance with those procedures and
practices. Such beneficial owners will not be Holders, and will not be entitled
to any rights under the Global Security or the Indenture (as supplemented by the
Supplemental Indenture), with respect to the Global Security, and the Company
and the Trustee, and any of their respective agents, may treat DTC as the sole
Holder and owner of the Global Security.
DTC has advised the Company that DTC is a limited-purpose trust company
organized under the Banking Law of the State of New York, 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 under the
Exchange Act. DTC was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations, and certain other organizations some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers, and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
SUBORDINATION
The payment of the principal of and interest on the Notes will, to the
extent set forth in the Indenture, be subordinated in right of payment to the
prior payment in full of all Senior Debt. Upon any payment or distribution of
assets to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors, or marshalling of
assets, or any bankruptcy, insolvency, or similar proceedings of the Company,
the holders of all Senior Debt will first be entitled to receive payment in full
of all amounts due or to become due thereon before the Holders of the Notes will
be entitled to receive any payment in respect of the principal of or premium, if
any, or interest on the Notes. No payments on account of principal of or
premium, if any, or interest on the Notes may be made (i) so long as there shall
have occurred and be continuing a default in any payment with respect to Senior
Debt or (ii) so long as an event of default (other than a default in payment)
with respect to any Senior Debt, which default would permit the holders thereof
to accelerate the maturity thereof, shall have occurred and be continuing from
and after the 60th day after the receipt by the Company and the Trustee of
written notice of such default.
By reason of such subordination, in the event of insolvency, creditors of
the Company who are not holders of Senior Debt may recover less, ratably, than
holders of Senior Debt and may recover more, ratably, than Holders of the Notes.
"Senior Debt" is defined to mean the principal of and premium, if any, and
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on,
S-6
<PAGE>
and all fees and other amounts payable in connection with, the following,
whether absolute or contingent, secured or unsecured, due or to become due,
outstanding on the date of the Supplemental Indenture or thereafter created,
incurred, or assumed: (i) indebtedness of the Company to banks, insurance
companies, and other financial institutions evidenced by credit agreements,
notes, or other written obligations, (ii) all other indebtedness of the Company
which is (a) for money borrowed (including obligations of the Company in respect
of overdrafts, foreign exchange contracts, and currency exchange agreements,
letters of credit, bankers' acceptances, interest rate protection agreements,
and any loans or advances from banks, whether or not evidenced by notes or
similar instruments) or (b) evidenced by a note or similar instrument given in
connection with an acquisition of any businesses, properties, or assets of any
kind (other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services ("Trade Accounts")), (iii) obligations of the
Company as lessee under leases required to be capitalized on the balance sheet
of the lessee under generally accepted accounting principles, (iv) all
obligations of the Company issued or assumed as the deferred purchase price of
property (except Trade Accounts), all conditional sale obligations of the
Company, and all obligations of the Company under any title retention
agreements, (v) all indebtedness and obligations of other Persons of the types
described in clauses (i) through (iv) for the payment of which the Company is
responsible or liable as obligor or guarantor, including without limitation
obligations (contingent or otherwise) to purchase or otherwise acquire, or to
assure a creditor against loss in respect of, any such indebtedness or
obligation, and any such indebtedness or obligation secured by a lien on any
asset of the Company, whether or not such Indebtedness or obligation is assumed
by the Company, and (vi) amendments, renewals, extensions, modifications, and
refundings of any such indebtedness or obligation described in clauses (i)
through (v), unless in any case in the instrument creating or evidencing any
such indebtedness or obligation or pursuant to which the same is outstanding it
is provided that such indebtedness or obligation is not superior in right of
payment to the Notes.
At July 29, 1995, Senior Debt of the Company and the aggregate indebtedness
of its subsidiaries, on a consolidated basis, giving pro forma effect to the
Offering and the transactions described under "Recent Developments" aggregated
approximately $5,447.4 million, excluding accrued interest. The Company expects
from time to time to incur additional indebtedness constituting Senior Debt. The
Indenture (as supplemented by the Supplemental Note) does not prohibit or limit
the incurrence of additional Senior Debt.
CONVERSION RIGHTS
The Holder of any Note will have the right, at the Holder's option, to
convert any portion of the principal amount thereof that is an integral multiple
of $1,000 into Common Stock, initially at the conversion rate stated on the
cover page hereof, subject to adjustment upon the occurrence of certain events
described below, at any time prior to maturity, unless previously redeemed or
repurchased. The right to convert Notes called for redemption will terminate at
the close of business on the business day immediately preceding the redemption
date. If a Holder exercises his right to require the Company to repurchase Notes
upon the occurrence of a Change in Control (as defined below), such Holder's
right to convert those Notes will terminate at the close of business on the
business day immediately preceding the Repurchase Date (as defined below). See
"--Repurchase at Option of Holders Upon a Change in Control".
The right of conversion attaching to any Note may be exercised by the Holder
thereof by delivering the Note at the specified office of a designated
conversion agent, accompanied by a duly signed and completed notice of
conversion. The conversion date will be the date on which the Note and the duly
signed and completed notice of conversion are so delivered. As promptly as
practicable on or after the conversion date, the Company will issue and deliver
to the Trustee, for delivery to the Holder, a certificate or certificates for
the number of full shares of Common Stock
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<PAGE>
issuable upon conversion, together with payment in lieu of any fraction of a
share. Each Note surrendered for conversion during the period from the close of
business on the Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date (except a Note called for
redemption on a redemption date or to be repurchased on a repurchase date during
such period) must be accompanied by payment of an amount equal to the interest
thereon which the Holder is to receive on such Interest Payment Date. Except for
payment of such interest on Notes that are surrendered for conversion and are
accompanied by payment as described above, no interest will be payable on any
Notes surrendered for conversion in respect of any Interest Payment Date after
the date of conversion. Therefore, Holders that surrender Notes for conversion
on a date that is not an Interest Payment Date will not receive any interest for
the period from the Interest Payment Date next preceding the date of conversion
to the date of conversion or for any later period, even if the Notes are
surrendered after a notice of redemption has been issued or a Change in Control
has occurred (except for the payment of interest on Notes called for redemption
or to be repurchased during the limited period described above). No other
payment or adjustment for interest or for any dividends in respect of Common
Stock will be made upon conversion. Holders of Common Stock issued on conversion
will not be entitled to receive any dividends payable to holders of Common Stock
as of any record time before the close of business on the date of conversion.
A Holder delivering a Note for conversion will not be required to pay any
taxes or duties in respect of the issue or delivery of Common Stock on
conversion but will be required to pay any tax or duty which may be payable in
respect of (i) any transfer involved in the issue or delivery of the Common
Stock in a name other than that of the Holder of the Note and (ii) any tax
arising with respect to a United States real property interest under the
Internal Revenue Code of 1986, as amended (the "Code"), with respect thereto.
Certificates representing shares of Common Stock will not be issued or delivered
unless all taxes and duties, if any, payable by the Holder have been paid.
The initial conversion rate of 29.2547 shares of Common Stock per $1,000
principal amount is subject to adjustment in certain events, including: (i) the
declaration and payment of dividends and other distributions payable in Common
Stock on shares of capital stock of the Company, (ii) the issuance to all
holders of Common Stock of rights or warrants entitling them to subscribe for or
purchase Common Stock at less than the current market price (determined as
provided in the Supplemental Indenture) of Common Stock, (iii) subdivisions,
combinations, and reclassifications of Common Stock, (iv) the distribution to
all holders of Common Stock of evidences of indebtedness of the Company or
assets (including securities, but excluding those dividends, rights, warrants,
and distributions referred to above, dividends and distributions paid
exclusively in cash, and distributions resulting from a merger or consolidation
to which the provisions described in the next following paragraph apply), (v)
distributions (other than regular, periodic, or other dividends declared or paid
in accordance with the Company's practice as established from time to time)
consisting exclusively of cash (excluding any cash portion of distributions
referred to in clause (iv) above or cash distributed upon a merger or
consolidation to which the provisions described in the next following paragraph
apply) to all holders of Common Stock in an aggregate amount that, combined
together with (a) all other such all-cash distributions (other than regular,
periodic, or other dividends declared or paid in accordance with the Company's
practice as established from time to time) made within the preceding 12 months
in respect of which no adjustment has been made and (b) any cash and the fair
market value of other consideration payable in respect of any tender offers by
the Company or any of its Subsidiaries for Common Stock concluded within the
preceding 12 months in respect of which no adjustment has been made, exceeds
12.5% of the Company's market capitalization (being the product of the
then-current market price of the Common Stock and the number of shares of Common
Stock then outstanding) on the record date for such distribution, and (vi) the
purchase of Common Stock pursuant to a tender offer made by the
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<PAGE>
Company or any of its Subsidiaries which involves an aggregate consideration
that, together with (a) any cash and the fair market value of any other
consideration payable in any other tender offer by the Company or any of its
Subsidiaries for Common Stock expiring within the 12 months preceding such
tender offer in respect of which no adjustment has been made and (b) the
aggregate amount of any such all-cash distributions (other than regular,
periodic, or other dividends declared or paid in accordance with the Company's
practice as established from time to time) referred to in (v) above to all
holders of Common Stock within the 12 months preceding the expiration of such
tender offer in respect of which no adjustments have been made, exceeds 12.5% of
the Company's market capitalization on the expiration of such tender offer. In
addition to the foregoing adjustments, the Company will be permitted to make
such increases in the conversion rate for the remaining term of the Notes or any
shorter term, as it considers to be advisable in order that any event treated
for United States federal income tax purposes as a dividend of stock or stock
rights will not be taxable to the holders of the Common Stock. No adjustment in
the conversion rate will be made until such adjustment would require an increase
or decrease of at least 1% of such rate, provided that any adjustment that would
otherwise be made will be carried forward and taken into account in the
computation of any subsequent adjustment.
In case of certain consolidations or mergers to which the Company is a party
or the sale or transfer of all or substantially all of the assets of the
Company, each Note then Outstanding will, without the consent of any Holder of
any Note or coupon, become convertible only into the kind and amount of
securities, cash, or other property receivable upon the consolidation, merger,
sale, or transfer by a holder of the number of shares of Common Stock into which
such Notes could have been converted immediately prior to such consolidation,
merger, sale, or transfer, assuming such holder of Common Stock failed to
exercise any rights of election as to the kind or amount of securities, cash,
and other property receivable upon such consolidation, merger, sale, or transfer
and received per share the kind and amount so received per share by the holders
of a plurality of the nonelecting shares.
The Company will not be required to issue fractional shares of Common Stock
upon conversion, but, in lieu thereof, the Company may pay a cash adjustment, as
provided in the Supplemental Indenture, based upon the market price of the
Common Stock on the day of conversion.
If at any time the Company makes a distribution of property to its
stockholders or purchases Common Stock in a tender offer and such distribution
or purchase would be taxable to such stockholders as a dividend for United
States federal income tax purposes (e.g., distributions of evidences of
indebtedness or assets of the Company, but generally not stock dividends or
rights to subscribe for Common Stock) and, pursuant to the antidilution
provisions of the Supplemental Indenture, the conversion rate of the Notes is
increased, such increase may be deemed to be the payment of a taxable dividend
to Holders or beneficial owners of Notes (pursuant to Section 305 of the Code),
and may be subject to United States federal withholding tax.
REDEMPTION
The Notes may not be redeemed at the option of the Company prior to October
1, 1998. On or after such date, the Notes may be redeemed, in whole or in part,
at the option of the Company, at the redemption prices specified below, upon not
less than 30 nor more than 60 days' prior notice as provided under "--Notices"
below.
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<PAGE>
The redemption prices (expressed as a percentage of principal amount) are as
follows for the 12-month period beginning on October 1 of the following years:
REDEMPTION
YEAR PRICE
- ------------------------------------------------------------- ----------
1998......................................................... 103.125%
1999......................................................... 102.500%
2000......................................................... 101.875%
2001......................................................... 101.250%
2002......................................................... 100.625%
in each case together with accrued and unpaid interest to the date of
redemption.
If less than all the Notes are to be redeemed, the Trustee shall select the
Notes or portions thereof to be redeemed by any method the Trustee deems fair
and appropriate. There is no sinking fund for the Notes.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
The Indenture provides that if a Change in Control occurs, each Holder of
Notes shall have the right, at the Holder's option, to require the Company to
repurchase all of such Holder's Notes, or any portion of the principal amount
thereof that is an integral multiple of $1,000, on the date (the "Repurchase
Date") that is 45 days after the date of the Company Notice (as defined below),
for cash at a price equal to 100% of the principal amount thereof (the
"Repurchase Price") plus accrued and unpaid interest to the Repurchase Date.
Within 30 days after the occurrence of a Change in Control, the Company is
obligated to give to all Holders of record of such Notes a notice, as provided
in the Indenture (the "Company Notice"), of the occurrence of such Change in
Control and of the repurchase right arising as a result thereof. The Company
must also deliver a copy of the Company Notice to the Trustee. To exercise the
repurchase right, a Holder of such Notes must deliver on or before the 30th day
after the date of the Company Notice irrevocable written notice to the Trustee
of the Holder's exercise of such right, together with the Notes with respect to
which the right is being exercised, duly endorsed for transfer to the Company.
A "Change in Control" will be deemed to have occurred at such time after the
original issuance of the Notes as:
(i) any Person (including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange
Act"), other than the Company, any Subsidiary of the Company, or any
employee benefit plan of the Company or any such Subsidiary, is or becomes
the beneficial owner, directly or indirectly, through a purchase, merger, or
other acquisition transaction or series of transactions, of shares of
capital stock of the Company entitling such Person to exercise 50% or more
of the total voting power of all shares of capital stock of the Company
entitled to vote generally in the election of directors; or
(ii) there occurs any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into the
Company, or any sale or transfer of all or substantially all of the assets
of the Company to another Person (other than (a) any such transaction
pursuant to which the holders of the Common Stock immediately prior to such
transaction have, directly or indirectly, at least a majority of the common
equity of the continuing or surviving corporation immediately after such
transaction and (b) any merger (1) which does not result in any
reclassification, conversion, exchange, or cancellation of outstanding
shares of Common Stock or (2) which is effected solely to change the
jurisdiction of
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incorporation of the Company and results in a reclassification, conversion,
or exchange of outstanding shares of Common Stock into solely shares of
common stock);
provided, however, that a Change in Control shall not be deemed to have occurred
if either (a) the closing price per share of the Common Stock for any five
trading days within the period of ten consecutive trading days ending
immediately before the Change in Control shall equal or exceed 105% of the
Conversion Price in effect on each such trading day, or (b) with respect to a
Change in Control described in clause (ii) above, all of the consideration
(excluding cash payments for fractional shares) in the transaction or
transactions constituting the Change in Control consists of shares of common
stock traded on a national securities exchange or quoted on the Nasdaq National
Market and as a result of such transaction or transactions such Notes become
convertible solely into such common stock. The "Conversion Price" is equal to
$1,000 divided by the conversion rate then in effect. "Beneficial owner" shall
be determined in accordance with Rule 13d-3 promulgated by the Commission under
the Exchange Act, as in effect on the date of execution of the Supplemental
Indenture.
To the extent applicable, the Company will comply with the provisions of
Rule 13e-4 or any other tender offer rules, and will file a Schedule 13E-4 or
any other schedule required thereunder, in connection with any offer by the
Company to purchase Notes at the option of the holders thereof upon a Change in
Control. The Change in Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a takeover of the Company and,
thus, the removal of incumbent management.
If a Change in Control Offer is made, there can be no assurance that the
Company would have funds sufficient to pay the Change in Control Purchase Price
for all the Notes that might be delivered by Holders of Notes seeking to
exercise the purchase right. In addition, the Company's ability to purchase
Notes may be limited by the terms of its then-existing borrowing arrangements.
The Company's ability to purchase Notes with cash may also be limited by the
terms of its subsidiaries' then-existing borrowing arrangements due to dividend
restrictions, since the Company's source of funds for any such purchase will be
primarily from dividends and other payments from its subsidiaries.
The foregoing provisions would not necessarily afford Holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect Holders.
The Company may, to the extent permitted by applicable law, at any time
purchase Notes in the open market or by tender at any price or by private
agreement. Any Note so purchased by the Company may, to the extent permitted by
applicable law and subject to restrictions contained in the Underwriting
Agreement, be reissued or resold or may, at the Company's option, be surrendered
to the Trustee for cancellation. Any Notes surrendered as aforesaid and all
unmatured coupons attached to them or surrendered with them may not be reissued
or resold and will be cancelled promptly.
DEFEASANCE
The provisions described in clause (i) of the first sentence under
"Description of Debt Securities--Defeasance" in the accompanying Prospectus are
not applicable to the Notes.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The Company's certificate of incorporation provides that the authorized
capital stock of the Company consists of 500 million shares of Common Stock and
125 million shares of Preferred Stock, par value $0.01 per share (the "Preferred
Stock").
COMMON STOCK
The holders of the Common Stock are entitled to one vote for each share held
of record on all matters submitted to a vote of stockholders. Subject to
preferential rights that may be applicable to any Preferred Stock, holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors of the Company out of funds legally available
therefor. In the event of a liquidation, dissolution, or winding up of the
Company, holders of Common Stock will be entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
Preferred Stock. Holders of Common Stock have no preemptive rights and have no
rights to convert their Common Stock into any other securities, and there are no
redemption provisions with respect to such shares.
PREFERRED STOCK
The Board of Directors of the Company has the authority to issue 125 million
shares of Preferred Stock in one or more series and to fix the designations,
relative powers, preferences, limitations, and restrictions of all shares of
each such series, including without limitation dividend rates, conversion
rights, voting rights, redemption and sinking fund provisions, liquidation
preferences, and the number of shares constituting each such series, without any
further vote or action by the stockholders. The issuance of the Preferred Stock
could decrease the amount of earnings and assets available for distribution to
holders of Common Stock or adversely affect the rights and powers, including
voting rights, of the holders of Common Stock. The issuance of the Preferred
Stock could have the effect of delaying, deferring, or preventing a change in
control of the Company without further action by the stockholders.
PREFERRED SHARE PURCHASE RIGHTS
Each outstanding share of Common Stock issued is accompanied by one right (a
"Right") issued pursuant to a share purchase rights agreement between the
Company and The Bank of New York, as Rights Agent (the "Share Purchase Rights
Agreement"). Each Right entitles the registered holder thereof to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, par value $0.01 per share (the "Series A Preferred Shares"), of
the Company at a price (the "Purchase Price") of $62.50 per one one-hundredth of
a Series A Preferred Share, subject to adjustment.
Until the earliest to occur of the following dates (the earliest of such
dates being hereinafter called the "Rights Distribution Date"), the Rights will
be evidenced by the certificates evidencing shares of Common Stock: (i) the
close of business on the tenth business day (or such later date as may be
specified by the Board of Directors of the Company) following the first date of
public announcement by the Company that a person (other than the Company or a
subsidiary or employee benefit or stock ownership plan of the Company), together
with its affiliates and associates, has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of the outstanding Common Stock
(any such person being hereinafter called an "Acquiring Person"); (ii) the close
of business on the tenth business day (or such later date as may be specified by
the Board of Directors of the Company) following the commencement of a tender
offer or exchange offer by a person (other than the Company or a subsidiary or
employee benefit or stock ownership plan of the Company), the consummation of
which would result in beneficial ownership by such person of 20% or more of the
outstanding Common Stock; and (iii) the close of business on the tenth business
day
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<PAGE>
following the first date of public announcement by the Company that a Flip-in
Event or a Flip-over Event (as such terms are hereinafter defined) has occurred.
The Share Purchase Rights Agreement provides that, until the Rights
Distribution Date, the Rights may be transferred with and only with the Common
Stock. Until the Rights Distribution Date (or earlier redemption or expiration
of the Rights), any certificate evidencing shares of Common Stock issued upon
transfer or new issuance of Common Stock will contain a notation incorporating
the Share Purchase Rights Agreement by reference. Until the Rights Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates evidencing Common Stock will also constitute the
transfer of the Rights associated with such certificates. As soon as practicable
following the Rights Distribution Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to holders of record of Common
Stock as of the close of business on the Rights Distribution Date and such
separate Rights Certificates alone will evidence the Rights. No Right is
exercisable at any time prior to the Rights Distribution Date. The Rights will
expire on December 19, 2004 (the "Final Expiration Date") unless earlier
redeemed or exchanged by the Company as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a stockholder of
the Company, including without limitation the right to vote or to receive
dividends.
The Purchase Price payable, and the number of Series A Preferred Shares or
other securities issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination, or reclassification of, the Series A Preferred
Shares, (ii) upon the grant to holders of the Series A Preferred Shares of
certain rights or warrants to subscribe for or purchase Series A Preferred
Shares at a price, or securities convertible into Series A Preferred Shares with
a conversion price, less than the then-current market price of the Series A
Preferred Shares, or (iii) upon the distribution to holders of the Series A
Preferred Shares of evidences of indebtedness or cash (excluding regular
periodic cash dividends), assets, or stock (excluding dividends payable in
Series A Preferred Shares) or of subscription rights or warrants (other than
those referred to above). The number of outstanding Rights and the number of one
one-hundredths of a Series A Preferred Share issuable upon exercise of each
Right also is subject to adjustment in the event of a stock dividend on the
Common Stock payable in shares of Common Stock or a subdivision, combination, or
reclassification of the Common Stock occurring, in any such case, prior to the
Rights Distribution Date.
The Series A Preferred Shares issuable upon exercise of the Rights will not
be redeemable. Each Series A Preferred Share will be entitled to a minimum
preferential quarterly dividend payment equal to the greater of (i) $1.00 per
share and (ii) an amount equal to 100 times the aggregate dividends declared per
share of Common Stock during the related quarter. In the event of liquidation,
the holders of the Series A Preferred Shares will be entitled to a preferential
liquidation payment equal to the greater of (a) $100 per share and (b) an amount
equal to 100 times the liquidation payment made per share of Common Stock. Each
Series A Preferred Share will have 100 votes, voting together with the Common
Stock. In the event of any merger, consolidation, or other transaction in which
shares of Common Stock are exchanged, each Series A Preferred Share will be
entitled to receive 100 times the amount received per share of Common Stock.
These rights will be protected by customary antidilution provisions. Because of
the nature of the Series A Preferred Shares' dividend, voting, and liquidation
rights, the value of the one one-hundredth interest in a Series A Preferred
Share purchasable upon exercise of each Right should approximate the value of
one share of Common Stock.
Rights may be exercised to purchase Series A Preferred Shares only after the
Rights Distribution Date occurs and prior to the occurrence of a Flip-in Event
or Flip-over Event. A Rights Distribution Date resulting from the commencement
of a tender offer or exchange offer described in clause (ii) of the definition
of "Rights Distribution Date" could precede the occurrence of a Flip-in Event or
Flip-over Event and thus result in the Rights being exercisable to purchase
Series A
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<PAGE>
Preferred Shares. A Rights Distribution Date resulting from any occurrence
described in clause (i) or clause (iii) of the definition of "Rights
Distribution Date" would necessarily follow the occurrence of a Flip-in Event or
Flip-over Event and thus result in the Rights being exercisable to purchase
shares of Common Stock or other securities as described below.
In the event (a "Flip-in Event") that (i) any person, together with its
affiliates and associates, becomes the beneficial owner of 20% or more of the
outstanding Common Stock, (ii) any Acquiring Person merges into or combines with
the Company and the Company is the surviving corporation or any Acquiring Person
effects certain other transactions with the Company, as described in the Share
Purchase Rights Agreement, or (iii) during such time as there is an Acquiring
Person, there is any reclassification of securities or recapitalization or
reorganization of the Company which has the effect of increasing by more than 1%
the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its subsidiaries beneficially owned by the
Acquiring Person, proper provision will be made so that each holder of a Right,
other than Rights that are or were owned beneficially by the Acquiring Person
(which, from and after the later of the Rights Distribution Date and the date of
the earliest of any such events, will be void), will thereafter have the right
to receive upon exercise thereof at the then-current exercise price of the
Right, that number of shares of Common Stock (or, under certain circumstances,
an economically equivalent security or securities of the Company) that have a
market value of two times the exercise price of the Right.
In the event (a "Flip-over Event") that, following the first date of public
announcement by the Company that a person has become an Acquiring Person, (i)
the Company merges with or into any person and the Company is not the surviving
corporation, (ii) any person merges with or into the Company and the Company is
the surviving corporation, but all or part of the Common Stock is changed or
exchanged, or (iii) 50% or more of the Company's assets or earning power,
including without limitation securities creating obligations of the Company, are
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock
(or, under certain circumstances, an economically equivalent security or
securities) of such other person which at the time of such transaction would
have a market value of two times the exercise price of the Right.
Following the occurrence of any Flip-in Event or Flip-over Event, Rights
(other than any Rights which have become void) may be exercised as described
above, upon payment of the exercise price or, at the option of the holder
thereof, without the payment of the exercise price that would otherwise be
payable. If a holder of Rights elects to exercise Rights without the payment of
the exercise price that would otherwise be payable, such holder will be entitled
to receive upon the exercise of such Rights securities having a market value
equal to the exercise price of the Rights. In addition, at any time after the
later of the Rights Distribution Date and the first occurrence of a Flip-in
Event or a Flip-over Event and prior to the acquisition by any person or group
of affiliated or associated persons of 50% or more of the outstanding Common
Stock, the Company may exchange the Rights (other than any Rights which have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock per Right (subject to adjustment).
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company is not required to issue fractional Series A
Preferred Shares (other than fractions that are integral multiples of one
one-hundredth of a Series A Preferred Share, which may, at the option of the
Company, be evidenced by depositary receipts) or fractional shares of Common
Stock or other securities issuable upon the exercise of Rights. In lieu of
issuing such securities, the Company may make a cash payment, as provided in the
Share Purchase Rights Agreement.
The Company may redeem the Rights in whole, but not in part, at a price of
$0.03 per Right, subject to adjustment and, in the event that the payment of
such amount would be prohibited by
S-14
<PAGE>
loan agreements or indentures to which the Company is a party, deferral (the
"Redemption Price"), at any time prior to the close of business on the later of
(i) the Rights Distribution Date and (ii) the first date of public announcement
that a person has become an Acquiring Person. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate and the holders will
have only the right to receive the Redemption Price.
The Share Purchase Rights Agreement may be amended by the Company without
the approval of any holders of Rights, including amendments which add other
events requiring adjustment to the Purchase Price payable and the number of
Series A Preferred Shares or other securities issuable upon the exercise of the
Rights which modify procedures relating to the redemption of the Rights,
provided that no amendment may be made which decreases the stated Redemption
Price to an amount less than $0.01 per Right, decreases the period of time
remaining until the Final Expiration Date, or modifies a time period relating to
when the Rights may be redeemed at such time as the Rights are not then
redeemable.
CERTAIN CORPORATE GOVERNANCE MATTERS
The Company's certificate of incorporation and by-laws provide that the
directors of the Company are to be classified into three classes, with the
directors in each class serving for three-year terms and until their successors
are elected. Any additional person elected to the Board of Directors of the
Company will be added to a particular class of directors to be determined at the
time of such election, although in accordance with the Company's certificate of
incorporation and by-laws, the number of directors in each class will be
identical or as nearly as practicable thereto based on the total number of
directors then serving as such.
The Company's by-laws provide that nominations for election of directors by
the stockholders will be made by the Board of Directors of the Company or by any
stockholder entitled to vote in the election of directors generally. The
Company's by-laws require that stockholders intending to nominate candidates for
election as directors deliver written notice thereof to the Secretary of the
Company not later than 60 calendar days in advance of the meeting of
stockholders; provided, however, that in the event that the date of the meeting
is not publicly announced by the Company by inclusion in a report filed with the
Commission or furnished to stockholders, or by mail, press release, or otherwise
more than 75 calendar days prior to the meeting, notice by the stockholder to be
timely must be delivered to the Secretary of the Company not later than the
close of business on the tenth day following the date on which such announcement
of the date of the meeting was so communicated. The Company's by-laws further
require that the notice by the stockholder set forth certain information
concerning such stockholder and the stockholder's nominees, including their
names and addresses, a representation that the stockholder is entitled to vote
at such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, a description of all
arrangements or understandings between the stockholders and each nominee, such
other information as would be required to be included in a proxy statement
soliciting proxies for the election of the nominees of such stockholder, and the
consent of each nominee to serve as a director of the Company if so elected. The
chairman of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with these requirements.
In addition to the provisions relating to the classification of the Board of
Directors and the director nomination procedures described above, the Company's
certificate of incorporation and by-laws provide, in general, that (i) the
number of directors of the Company will be fixed, within a specified range, by a
majority of the total number of the Company's directors (assuming no vacancies)
or by the holders of at least 80% of the Company's voting stock, (ii) the
directors of the Company in office from time to time will fill any vacancy or
newly created directorship on the Board of Directors of the Company with any new
director to serve in the class of directors to which he or she is so elected,
(iii) directors of the Company may be removed only for cause by the holders of
at least 80% of the Company's voting stock, (iv) stockholder action can be taken
only at an annual or
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special meeting of stockholders and not by written consent in lieu of a meeting,
(v) except as described below, special meetings of stockholders may be called
only by the Company's Chief Executive Officer or by a majority of the total
number of directors of the Company (assuming no vacancies) and the business
permitted to be conducted at any such meeting is limited to that brought before
the meeting by the Company's Chief Executive Officer or by a majority of the
total number of directors of the Company (assuming no vacancies), and (vi)
subject to certain exceptions, the Board of Directors of the Company may
postpone and reschedule any previously scheduled annual or special meeting of
stockholders. The Company's by-laws also require that stockholders desiring to
bring any business before an annual meeting of stockholders deliver written
notice thereof to the Secretary of the Company not later than 60 calendar days
in advance of the meeting of stockholders; provided, however, that in the event
that the date of the meeting is not publicly announced by the Company by press
release or inclusion in a report filed with the Commission or furnished to
stockholders more than 75 calendar days prior to the meeting, notice by the
stockholders to be timely must be delivered to the Secretary of the Company not
later than the close of business on the tenth calendar day following the day on
which such announcement of the date of the meeting was so communicated. The
Company's by-laws further require that the notice by the stockholder set forth a
description of the business to be brought before the meeting and the reasons for
conducting such business at the meeting and certain information concerning the
stockholder proposing such business and the beneficial owner, if any, on whose
behalf the proposal is made including their names and addresses, the class and
number of shares of the Company, that are owned beneficially and of record by
each of them, and any material interest of either of them in the business
proposed to be brought before the meeting. Upon the written request of the
holders of not less than 15% of the Company's voting stock, the Board of
Directors of the Company will be required to call a meeting of stockholders for
the purpose specified in such written request and fix a record date for the
determination of stockholders entitled to notice of and to vote at such meeting
(which record date may not be later than 60 calendar days after the date of
receipt of notice of such meeting), provided that in the event that the Board or
Directors of the Company calls an annual or special meeting of stockholders to
be held not later than 90 calendar days after receipt of any such written
request, no separate special meeting of stockholders as so requested will be
required to be convened provided that the purposes of such annual or special
meeting called by the Board of Directors of the Company include (among others)
the purposes specified in such written request of the stockholders.
Under applicable provisions of Delaware law, the approval of a Delaware
company's board of directors, in addition to stockholder approval, is required
to adopt any amendment to the company's certificate of incorporation, but a
company's by-laws may be amended either by action of its stockholders or, if the
company's certificate of incorporation so provides, its board of directors. The
Company's certificate of incorporation and by-laws provide that (i) except as
described below, the provisions summarized above and the provisions relating to
the classification of the Board and nominating procedures may not be amended by
the stockholders, nor may any provision inconsistent therewith be adopted by the
stockholders, without the affirmative vote of the holders of at least 80% of the
Company's voting stock, voting together as single class, except that if any such
action (other than any direct or indirect amendments to the provision requiring
that stockholder action be taken at a meeting of stockholders rather than by
written consent in lieu of a meeting) is approved by the holders of a majority,
but less than 80%, of the then-outstanding voting stock (in addition to any
other approvals require by law, including approval by the Board of Directors of
the Company with respect to any amendment to the Company's certificate of
incorporation), such action will be effective as of one year from the date of
adoption, or (ii) the Company's by-law provisions relating to the right of
stockholders to cause special meetings of stockholders to be called and to the
composition of certain directorate committees may not be amended by the Board
without stockholder approval.
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<PAGE>
The Company is subject to Section 203 of the DGCL, which restricts the
consummation of certain business combination transactions in certain
circumstances. In addition, the Company's certificate of incorporation contains
provisions that are substantially similar to those contained in Section 203 of
the DGCL that restrict business combination transactions with (i) any person or
group that became or is deemed to have become the beneficial owner of 15% or
more of the voting stock of the Company as a result of its receipt of Common
Stock or warrants pursuant to Macy's plan of reorganization that thereafter
becomes the beneficial owner of an additional 1% or more of the voting stock of
the Company and (ii) any other person or group that becomes the beneficial owner
of 15% more of the voting stock of the Company.
The foregoing provisions of the Company's certificate of incorporation, the
provisions of its by-laws relating to advance notice of stockholder nominations,
and the provisions of the Share Purchase Rights Agreement (see "--Preferred
Share Purchase Rights") may discourage or make more difficult the acquisition of
control of the Company by means of a tender offer, open market purchase, proxy
contest, or otherwise. These provisions are intended to discourage or may have
the effect of discouraging certain types of coercive takeover practices and
inadequate takeover bids and to encourage persons seeking to acquire control of
the Company first to negotiate with the Company. The Company's management
believes that the foregoing measures, many of which are substantially similar to
the takeover-related measures in effect for many other publicly held companies,
provide benefits by enhancing the Company's potential ability to negotiate with
the proponent of an unfriendly or unsolicited proposal to take over or
restructure the Company that outweigh the disadvantages of discouraging such
proposals because, among other things, negotiation of such proposals could
result in an improvement of their terms.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the Underwriters named below, and each
of the Underwriters has severally agreed to purchase, the principal amount of
the Notes set forth opposite its name below:
<TABLE><CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER OF NOTES
- ---------------------------------------------------------------------------- ------------
<S> <C>
Goldman, Sachs & Co......................................................... $244,000,000
CS First Boston Corporation................................................. 61,000,000
------------
Total................................................................... $305,000,000
------------
------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Notes, if any are taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of 1.50% of the principal amount of the Notes. After the Notes
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.
The Company has granted the Underwriters an option, which the underwriters
have exercised in full, to purchase up to an aggregate of $45,000,000 principal
amount of Notes to cover over-allotments.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that the Underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
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<PAGE>
The Company has agreed that during the period beginning on the date of this
Prospectus Supplement and continuing to and including the date 90 days after the
date of this Prospectus Supplement, it will not offer, sell, contract to sell,
or otherwise dispose of any securities of the Company that are substantially
similar to the Notes or the Common Stock, including but not limited to any
securities that are convertible into or exchangeable for, or that represent the
right to receive, Common Stock or any such substantially similar securities
(other than pursuant to equity-based employee and director compensation plans
and plans of reorganization of the Company or Broadway or their respective
subsidiaries or any predecessors of any of the foregoing existing on, or upon
the exercise, conversion, or exchange (including successive exercises,
conversions, and/or exchanges) of warrants or convertible or exchangeable
securities of either the Company or Broadway outstanding as of, the date of this
Prospectus Supplement or issuable pursuant to the Merger Agreement, the Stock
Agreement, or the Prudential Agreement), without the prior written consent of
the Underwriters.
The Underwriters and their respective affiliates have provided investment
banking services to the Company from time to time. The Underwriters have
received customary fees in connection with providing these services. In
addition, an affiliate of CS First Boston Corporation has provided commercial
banking services to the Company. Goldman Sachs & Co. is currently engaged as
financial advisor to the Company in connection with the Merger and will receive
customary fees in connection with providing these services.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
EXPERTS
The consolidated financial statements of Federated as of January 28, 1995
and January 29, 1994, and for each of the fifty-two week periods ended January
28, 1995, January 29, 1994, and January 30, 1993, have been incorporated by
reference in this Prospectus Supplement in reliance upon the report,
incorporated by reference herein, of KPMG Peat Marwick LLP, independent
certified public accountants and upon the authority of that firm as experts in
accounting and auditing.
The consolidated financial statements of Macy's as of July 30, 1994 and July
31, 1993 and for each of the three years in the period ended July 30, 1994
incorporated by reference in this Prospectus Supplement have been audited by
Deloitte & Touche LLP, independent auditors, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of Broadway as of January 28, 1995 and
January 29, 1994 and for each of the fiscal years ended January 28, 1995 and
January 29, 1994, the seventeen weeks ended January 30, 1993, and the
thirty-five weeks ended October 3, 1992 incorporated by reference in this
Prospectus Supplement have been so incorporated in reliance on the reports of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the Company
by Jones, Day, Reavis & Pogue, New York, New York. Certain legal matters will be
passed upon for the Underwriters by Simpson Thacher & Bartlett (a partnership
which includes professional corporations), New York, New York.
S-18
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
FEDERATED DEPARTMENT STORES, INC.
DEBT SECURITIES
The Company may offer from time to time debt securities ("Debt Securities")
consisting of notes, debentures, or other evidences of indebtedness in one or
more series. The Debt Securities will be offered to the public in amounts, at
prices, and on terms determined by market conditions at the time of sale and set
forth in a supplement to this Prospectus (a "Prospectus Supplement"). The
aggregate offering price of the Debt Securities will not exceed $750,000,000 or,
if applicable, the equivalent thereof in other currencies.
The specific designation, aggregate principal amount, purchase price,
maturity, rate (or method of calculation thereof) and time of payment of
interest, if any, any conversion or exchange provisions, any redemption
provisions, any subordination provisions, and any other specific terms of the
Debt Securities offered hereby not set forth herein under the caption
"Description of Debt Securities" in this Prospectus, and any listing thereof on
a securities exchange, are set forth in the accompanying Prospectus Supplement.
Any statement contained in this Prospectus will be deemed to be modified or
superseded by any inconsistent statement contained in the accompanying
Prospectus Supplement.
SEE "RISK FACTORS" AT PAGES 3 AND 4 HEREOF FOR A DESCRIPTION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN DEBT
SECURITIES.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------
The Debt Securities will be sold either through underwriters, dealers, or
agents or directly by the Company. The accompanying Prospectus Supplement sets
forth the names of any underwriters, dealers, or agents involved in the sale of
the Debt Securities in respect of which this Prospectus is being delivered, the
proposed amounts, if any, to be purchased by underwriters, and the compensation,
if any, of such underwriters, dealers, or agents.
-------------------
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
-------------------
The Date of this Prospectus is June 28, 1995.
<PAGE>
AVAILABLE INFORMATION
Federated Department Stores, Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements, and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements, and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's Regional Offices located at 7 World Trade
Center, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such material
may also be inspected and copied at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") filed under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
-------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended January
28, 1995 (Commission File No. 1-3536) (the "1994 Form 10-K"), the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended April 29, 1995 (the
"First Quarter Form 10-Q"), and all reports and other documents filed by the
Company pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Debt Securities are incorporated herein by reference.
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified will not be deemed to
constitute a part of this Prospectus, except as so modified, and any statement
so superseded will not be deemed to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Federated Department Stores, Inc., 7 West Seventh Street, Cincinnati, Ohio
45202, Attention: Investor Relations (telephone: (513) 579-7780).
2
<PAGE>
RISK FACTORS
The Debt Securities are subject to a number of material risks, including
those enumerated below. Investors should carefully consider the risk factors
enumerated below together with all of the information set forth or incorporated
by reference in this Prospectus or the accompanying Prospectus Supplement in
determining whether to purchase any of the Debt Securities.
LEVERAGE; RESTRICTIVE COVENANTS
As of April 29, 1995, the Company's total consolidated indebtedness of
$5,197.9 million was greater than its shareholders' equity of $3,584.9 million.
As of April 29, 1995, the Company's subsidiaries had $2,138.5 million of
indebtedness (excluding guarantees of Company indebtedness) and the Company had
$2,302.0 million of secured indebtedness. The debt instruments to which the
Company is a party contain restrictive covenants, including covenants limiting
capital expenditures, incurrence of debt, and sales of assets. In addition,
under certain of its debt instruments, the Company's consolidated results of
operations and financial position are required to be in compliance with certain
financial ratios, some of which become more restrictive over time, and a
substantial portion of the Company's indebtedness is secured by the capital
stock or assets of various subsidiaries of the Company or has been incurred by
subsidiaries. Among other consequences, the leverage of the Company and such
restrictive covenants and other terms of the Company's debt instruments could
impair the Company's ability to obtain financing in the future or to take
advantage of significant business opportunities that may arise. In addition, the
Company's leverage may increase the vulnerability of the Company to adverse
general economic and retailing industry conditions and to increased competitive
pressures.
SECURITY INTERESTS
The capital stock of the Company's principal subsidiaries and substantially
all of the receivables and certain real estate of the Company and its
subsidiaries are subject to various security interests and liens securing
certain indebtedness of the Company and its subsidiaries. As of April 29, 1995,
the Company and its subsidiaries had $4,212.7 million of secured indebtedness.
If a holder of a security interest becomes entitled to exercise its rights as a
secured party, it would have the right to foreclose upon and sell or otherwise
transfer the collateral subject to its security interest, and the collateral
would be correspondingly unavailable to the Company or the subsidiary owning
such collateral and to other creditors of the Company or such subsidiary, except
to the extent, if any, that the value of the affected collateral exceeds the
amount of the indebtedness in respect of which such foreclosure rights are
exercised.
HOLDING COMPANY STRUCTURE
The Company is a holding company, substantially all of the operations of
which are conducted through subsidiaries. Consequently, the Company relies
principally on dividends or advances from its subsidiaries for the funds
necessary for, among other things, the payment of principal of and interest on
the Debt Securities and the other indebtedness of the Company. The ability of
such subsidiaries to pay dividends is subject to applicable state law and
certain other restrictions. Any right of the holders of the Debt Securities to
participate in the assets of any of the subsidiaries upon such subsidiary's
liquidation or recapitalization will be effectively subordinated to the claims
of such subsidiary's creditors and preferred stockholders (if any), except to
the extent that the Company is itself recognized as a creditor of such
subsidiary. In addition to their own indebtedness, certain of the Company's
subsidiaries have guaranteed the indebtedness of the Company under its bank
credit facility.
3
<PAGE>
CERTAIN EFFECTS OF ACQUISITIONS
The Company acquired R.H. Macy & Co., Inc. ("Macy's") on December 19, 1994
and effected other acquisitions (and dispositions) during fiscal year 1994.
Under the purchase method of accounting, the assets, liabilities, and results of
operations associated with such acquisitions have been included in the Company's
financial position and results of operations since the respective dates thereof.
Accordingly, the financial position and results of operations of the Company
(including the ratio of earnings to fixed charges data set forth elsewhere
herein) as of the end of and for fiscal year 1994 and subsequent dates and
periods are not directly comparable to the financial position and results of
operations of the Company as of and for prior dates and periods.
BUSINESS FACTORS AND COMPETITIVE CONDITIONS
The retailing industry is and will continue to be intensely competitive. The
Company's stores will face increasing competition not only with other department
stores in the geographic areas in which they operate, but also with numerous
other types of retail formats, including specialty stores, general merchandise
stores, off-price and discount stores, new and established forms of home
shopping (including mail order catalogs, television, and computer services), and
manufacturer outlets.
SEASONAL NATURE OF THE DEPARTMENT STORE BUSINESS
The department store business is seasonal in nature, with a high proportion
of sales and operating income generated in November and December. Working
capital requirements fluctuate during the year, increasing somewhat in
mid-Summer in anticipation of the Fall merchandising season and increasing
substantially prior to the Christmas season as significantly higher inventory
levels are necessary.
CERTAIN CLAIMS AGAINST THE MACY'S DEBTORS
Certain claims or portions thereof (the "Cash Payment Claims") against
Macy's and certain of its subsidiaries (collectively, the "Macy's Debtors")
which, to the extent allowed by the bankruptcy court having continuing
jurisdiction over the Macy's Debtors, will be paid in cash pursuant to the plan
of reorganization of the Macy's Debtors were disputed by the Company as of the
date of this Prospectus. The aggregate amount of disputed Cash Payment Claims
ultimately allowed may be more or less than the Company's estimate of the
aggregate allowed amount thereof. As of June 6, 1995, the aggregate face amount
of disputed Cash Payment Claims was $838.3 million, while the estimated allowed
amount thereof was $336.7 million. Although there can be no assurance with
respect thereto, the Company believes that the actual allowed amount of disputed
Cash Payment Claims will not be materially greater than the estimated allowed
amount thereof.
CERTAIN TAXATION MATTERS
The Company is subject to audits by taxing authorities with respect to
periods both before and after the Macy's acquisition. As of the date of this
Prospectus, the Company was a party to certain disputes with the Internal
Revenue Service (the "IRS") in which the IRS was seeking to disallow certain
deductions claimed by, and certain loss carryforwards utilized by, Federated and
its predecessors. Although there can be no assurance with respect thereto, the
Company does not expect the ultimate resolution of such disputes to have a
material adverse effect on the Company's financial position or results of
operations.
4
<PAGE>
ABSENCE OF PUBLIC MARKET FOR THE DEBT SECURITIES
All Debt Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the Company
for public offering and sale may make a market in such Debt Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the secondary market for any Debt Securities.
THE COMPANY
The Company is one of the leading operators of full-line department stores
in the United States, with 354 department stores in 31 states as of April 29,
1995. As of April 29, 1995, the Company also operated 137 specialty and
clearance stores and a mail order catalog business. The Company's department
stores sell a wide range of merchandise, including men's, women's and children's
apparel and accessories, cosmetics, home furnishings, and other consumer goods,
and are diversified by size of store, merchandising character, and character of
community served. The Company's department stores are located at urban or
suburban sites, principally in densely populated areas across the United States.
In connection with the Macy's acquisition, among other things, the Company has
(i) realigned operating management; (ii) discontinued the operations of Macy's
12-store I. Magnin specialty chain; (iii) commenced the consolidation of the
Company's Abraham & Straus/Jordan Marsh division with the Macy's East division;
(iv) commenced the consolidation of the Company's Lazarus and Rich's divisions;
(v) commenced the consolidation of certain buying, support, and certain
centralized functions; (vi) announced that it intends to close all 14 of its
Macy's close-out stores by the end of fiscal 1995; and (vii) announced that it
intends to explore the possibility of selling the specialty store operations
that were acquired in the Macy's acquisition.
The Company believes that the department store business will continue to
consolidate. Accordingly, the Company intends from time to time to consider
actions to increase efficiency and provide greater value to customers and to
consider the possible acquisition of department store assets and companies.
The Company's principal executive offices are located at 151 West 34th
Street, New York, New York 10001 and 7 West Seventh Street, Cincinnati, Ohio
45202. The Company's telephone numbers at such offices are (212) 695-4400 and
(513) 579-7000, respectively.
USE OF PROCEEDS
The principal reason for this offering is to make funds available for
general corporate purposes, which may include the repayment of indebtedness
outstanding from time to time, acquisitions, new store construction, store
expansions, and further investments in technology. Other reasons, if any, for
this offering are set forth in the accompanying Prospectus Supplement.
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods set forth
below has been computed on a consolidated basis and should be read in
conjunction with the Company's Consolidated Financial Statements (including the
notes thereto) set forth in the 1994 Form 10-K and the First Quarter Form 10-Q.
As a result of the Company's emergence from reorganization proceedings and its
adoption of fresh-start reporting as of February 1, 1992, the Company's
financial information for periods ending after February 1, 1992 is generally not
comparable to financial information for periods ending on or before February 1,
1992 and is separated by a black line. As a result of the Company's acquisition
of Macy's and other transactions, the Company's financial position and results
of operations as of and for the year ended January 28, 1995 and subsequent dates
and periods are not directly comparable to its financial position and results of
operations as of and for prior dates and periods. See "Risk Factors--Certain
Effects of Acquisitions."
<TABLE><CAPTION>
FISCAL QUARTER FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
APRIL 29, JANUARY 28, JANUARY 29, JANUARY 30, FEBRUARY 1, FEBRUARY 2,
1995 1995 1994 1993 1992 1991
-------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Consolidated ratio of
earnings to fixed
charges
(unaudited)(a)....... -- 1.99x 2.33x 1.72x -- --
Consolidated deficiency
of earnings to fixed
charges (in millions)
(unaudited)(a)....... $ 87.4 -- -- -- $ 1,850.1(b) $ 548.8(c)
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) For purposes of computing the ratio (or deficiency) of earnings to fixed charges,
earnings consist of income before income taxes and extraordinary items plus fixed
charges (excluding capitalized interest). Fixed charges represent interest incurred,
amortization of debt expense, and that portion of rental expense on operating leases
deemed to be the equivalent of interest.
(b) Excludes interest on unsecured prepetition indebtedness of $301.6 million and dividends
on preferred stock of $47.4 million.
(c) Excludes interest on unsecured prepetition indebtedness of $291.0 million and dividends
on preferred stock of $47.4 million.
</TABLE>
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities will be issued under an Indenture, dated as of December
15, 1994 (the "Indenture"), which is incorporated by reference as an exhibit to
the Registration Statement, between the Company and The First National Bank of
Boston, as Trustee (the "Trustee"). The statements under this caption are brief
summaries of the material provisions of the Indenture, do not purport to be
complete, and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the Indenture. Except as otherwise defined herein,
capitalized terms used herein have the meanings given to them in the Indenture.
The Indenture does not limit the aggregate amount of Debt Securities which
may be issued thereunder. The Debt Securities may be issued from time to time in
one or more series. Reference is made to the accompanying Prospectus Supplement
for the following terms and other information with respect to the Debt
Securities being offered hereby: (i) the title of such Debt Securities; (ii) any
limit on the aggregate principal amount of such Debt Securities; (iii) the
persons to whom any interest on such Debt Securities will be payable, if other
than the registered holders thereof on the Regular Record Date therefor; (iv)
the date or dates (or manner of determining the same) on which the principal of
such Debt Securities will be payable; (v) the rate or rates (or manner of
determining the same) at which such Debt Securities will bear interest, if any,
and the date or dates from which such interest will accrue; (vi) the dates (or
manner of determining the same) on which such interest will be payable and the
Regular Record Dates for such Interest Payment Dates; (vii) the place or places
where the principal of and any premium and interest on such Debt Securities will
be payable; (viii) the period or periods, if any, within which, and the price or
prices at which, such Debt Securities may be redeemed, in whole or in part, at
the option of the Company; (ix) any mandatory or optional sinking fund or
analogous provisions; (x) the denominations in which any Debt Securities will be
issuable if other than denominations of $1,000 and any integral multiple
thereof; (xi) the currency or currencies or currency units, if other than
currency of the United States of America, in which payment of the principal of
and any premium or interest on such Debt Securities will be payable, and the
terms and conditions of any elections that may be made available with respect
thereto; (xii) any index or formula used to determine the amount of payments of
principal of and any premium or interest on such Debt Securities; (xiii) whether
the Debt Securities are to be issued in whole or in part in the form of one or
more global securities ("Global Securities"), and, if so, the identity of the
depositary, if any, for such Global Security or Securities; (xiv) the terms and
conditions, if any, pursuant to which such Debt Securities are convertible into
or exchangeable for Common Stock or other securities; (xv) the applicability of
the provisions described in "-- Defeasance"; (xvi) any subordination provisions
applicable to such Debt Securities; and (xvii) any other terms of the Debt
Securities.
Debt Securities may be issued at a discount from their stated principal
amount. Certain federal income tax considerations and other special
considerations applicable to any Debt Security issued with original issue
discount (an "Original Issue Discount Security") may be described in an
applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms, and
other information with respect to such issue of Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be set forth in an
applicable Prospectus Supplement.
Unless otherwise indicated in an applicable Prospectus Supplement, (i) the
Debt Securities will be issued only in fully registered form in denominations of
$1,000 or integral multiples thereof
7
<PAGE>
and (ii) payment of principal, premium (if any), and interest on the Debt
Securities will be payable, and the exchange, conversion, and transfer of Debt
Securities will be registerable, at the office or agency of the Company
maintained for such purposes and at any other office or agency maintained for
such purpose. No service charge will be made for any registration of transfer or
exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (a "Depositary") or its nominee identified in an applicable
Prospectus Supplement. In such a case, one or more Global Securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal amount of Debt Securities of the series to be represented by
such Global Security or Securities. Unless and until it is exchanged in whole or
in part for Debt Securities in registered form, a Global Security may not be
registered for transfer or exchange except as a whole by the Depositary for such
Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any nominee to a successor Depositary or a nominee of such
successor Depositary and except in any other circumstances described in an
applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in an applicable Prospectus Supplement. The Company expects that the
following provisions will apply to depositary arrangements.
Unless otherwise specified in an applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such depositary or its nominee
("Participants"). The accounts to be credited will be designated by the
underwriters or agents of such Debt Securities or by the Company, if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in such Global Securities will be limited to Participants or Persons
that may hold interests through participants. Ownership of beneficial interests
by Participants in such Global Security will be shown on, and the transfer of
that ownership interest will be effected only through, records maintained by the
Depositary or its nominee for such Global Security. Ownership of beneficial
interests in such Global Security by Persons that hold through Participants will
be shown on, and the transfer of that ownership interest within such Participant
will be effected only through, records maintained by such Participants. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture. Unless otherwise specified in an applicable Prospectus Supplement,
owners of beneficial interests in such Global Securities will not be entitled to
have Debt Securities of the series represented by such Global Security
registered in their names, will not receive or be entitled to receive physical
delivery of Debt Securities of such series in certificated form, and will not be
8
<PAGE>
considered the owners or Holders thereof for any purpose under the Indenture.
Accordingly, each Person owning a beneficial interest in such 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 any rights of a Holder under the Indenture. The
Company understands that, under existing industry practices, if the Company
requests any action of Holders or an owner of a beneficial interest in such
Global Security desires to give any notice or take any action a Holder is
entitled to give or take under Indenture, the Depositary would authorize the
Participants to give such notice or take such action, and Participants would
authorize beneficial owners owning through such Participants to give such notice
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in an applicable Prospectus Supplement. Payment
of principal of, and any premium or interest on, Debt Securities registered in
the name of or held by a Depository or its nominee will be made to the
Depository or its nominee, as the case may be, as the registered owner or the
holder of the Global Security representing such Debt Securities. None of the
Company, the Trustee, any Paying Agent, or the Registrar for such Debt
Securities will 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 such Debt Securities or for maintaining,
supervising, or reviewing any records relating to such beneficial ownership
interests.
CERTAIN COVENANTS
Maintenance of Office or Agency. The Company will be required to maintain an
office or agency in each place of payment for each series of Debt Securities for
notice and demand purposes and for the purposes of presenting or surrendering
Debt Securities for payment, registration of transfer, or exchange.
Paying Agents, Etc. If the Company acts as its own paying agent with respect
to any series of Debt Securities, on or before each due date of the principal
of, or interest on any of the Debt Securities of that series, it will be
required to segregate and hold in trust for the benefit of the persons entitled
thereto a sum sufficient to pay such amount due and to notify the Trustee
promptly of its action or failure so to act. If the Company has one or more
paying agents for any series of Debt Securities, prior to each due date of the
principal of or interest on any Debt Securities of that series, it will deposit
with a paying agent a sum sufficient to pay such amount, and the Company will
promptly notify the Trustee of its action or failure so to act (unless such
paying agent is the Trustee). All moneys paid by the Company to a paying agent
for the payment of principal of and interest on any Debt Securities that remain
unclaimed for two years after such principal or interest has become due and
payable may be repaid to the Company, and thereafter the holder of such Debt
Securities may look only to the Company for payment thereof.
Payment of Taxes and Other Claims. The Company will be required to pay and
discharge, before the same become delinquent, (i) all taxes, assessments, and
governmental charges levied or imposed upon the Company or any Subsidiary of the
Company or their properties and (ii) all claims that if unpaid would result in a
lien on their property and have a material adverse effect on the business,
assets, financial condition, or results of operations of the Company and its
Subsidiaries, taken as a whole (a "Material Adverse Effect"), unless the same is
being contested by proper proceedings.
Maintenance of Properties. The Company will be required to cause all
properties used in the business of the Company or any Subsidiary of the Company
to be maintained and kept in good condition, repair, and working order, except
to the extent that the failure to do so would not have a Material Adverse
Effect.
9
<PAGE>
Existence. The Company will be required to, and also will be required to
cause its Subsidiaries to, preserve and keep in full force their existence,
charter rights, statutory rights, and franchises, except to the extent that
failure to do so would not have a Material Adverse Effect.
Compliance with Laws. The Company will be required to and to cause its
Subsidiaries to comply with all applicable laws to the extent the failure to do
so would have a Material Adverse Effect.
Restrictive Covenants. Any restrictive covenants applicable to any series of
Debt Securities will be described in an applicable Prospectus Supplement.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to Debt
Securities of any series: (i) default in the payment of the principal of (or
premium, if any, on) any Debt Security of that series when it becomes due and
payable; (ii) default in the payment of any interest on any Debt Security of
that series when it becomes due and payable, and continuance of such default for
a period of 30 calendar days; (iii) default in the making of any sinking fund
payment as and when due by the terms of any Debt Security of that series; (iv)
default in the performance, or breach, of any other covenant or warranty of the
Company in the Indenture (other than a covenant included in the Indenture solely
for the benefit of a series of Debt Securities other than that series), and
continuance of such default for a period of 60 calendar days after written
notice thereof has been given to the Company as provided in the Indenture; (v)
any nonpayment at maturity or other default (beyond any applicable grace period)
under any agreement or instrument relating to any other indebtedness of the
Company the principal amount of which is not less than $100 million, which
default results in such indebtedness becoming due prior to its stated maturity
or occurs at the final maturity thereof; (vi) certain events of bankruptcy,
insolvency, or reorganization involving the Company; and (vii) any other Event
of Default provided with respect to Debt Securities of that series. Pursuant to
the Trust Indenture Act, the Trustee is required, within 90 calendar days after
the occurrence of a default in respect of any series of Debt Securities, to give
to the Holders of the Debt Securities of such series notice of all such uncured
defaults known to it (except that, in the case of a default in the performance
of any covenant of the character contemplated in clause (iv) of the preceding
sentence, no such notice to Holders of the Debt Securities of such Series will
be given until at least 30 calendar days after the occurrence thereof), except
that, other than in the case of a default of the character contemplated in
clause (i), (ii), or (iii) of the preceding sentence, the Trustee may withhold
such notice if and so long as it in good faith determines that the withholding
of such notice is in the interests of the Holders of the Debt Securities of such
series.
If an Event of Default with respect to Debt Securities occurs and is
continuing, either the Trustee or the Holders of at least 25% in principal
amount of the Debt Securities of that series by notice as provided in the
Indenture may declare the principal amount (or, if the Debt Securities of that
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all Debt Securities
of that series to be due and payable immediately. However, at any time after a
declaration of acceleration with respect to Debt Securities of any series has
been made, but before a judgment or decree based on such acceleration has been
obtained, the Holders of a majority in principal amount of the Debt Securities
of that series may, under certain circumstances, rescind and annul such
acceleration. See "-- Modification and Waiver" below. If an Event of Default
under clause (vi) above occurs, then the principal of, premium on, if any, and
accrued interest on the Debt Securities of that series will become immediately
due and payable without any declaration or other act on the part of the Trustee
of any holder of the Debt Securities of that series.
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The Indenture provides that, subject to the duty of the Trustee thereunder
during an Event of Default to act with the required standard of care, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable security or indemnity.
Subject to certain provisions, including those requiring security or
indemnification of the Trustee, the Holders of a majority in principal amount of
the Debt Securities of any series will have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Debt Securities of that series.
No Holder of a Debt Security of any series 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, and unless the Holders of at least 25% in
aggregate principal amount of the outstanding Debt Securities of the same series
have also made written request, and offered reasonable indemnity, to the Trustee
to institute such proceeding as trustee, and the Trustee has received from the
Holders of a majority in aggregate principal amount of the outstanding Debt
Securities of the same series a direction inconsistent with such request and has
failed to institute such proceeding within 60 calendar days. However, such
limitations do not apply to a suit instituted by a Holder of a Debt Security for
enforcement of payment of the principal of and interest on such Debt Security on
or after the respective due dates expressed in such Debt Security.
The Company is required to furnish to the Trustee annually a statement as to
the performance by the Company of its obligations under the Indenture and as to
any default in such performance.
Any additional Events of Default with respect to any series of Debt
Securities, and any variations from the foregoing Events of Default applicable
to any series of Debt Securities, will be described in an applicable Prospectus
Supplement.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities of each series affected
thereby, except that no such modification or amendment may, without the consent
of the Holder of each Debt Security affected thereby, (i) change the Stated
Maturity of, or any installment of principal of, or interest on, any Debt
Security; (ii) reduce the principal amount of, the rate of interest on, or the
premium, if any, payable upon the redemption of, any Debt Security; (iii) reduce
the amount of principal of an Original Issue Discount Security payable upon
acceleration of the Maturity thereof; (iv) change the place or currency of
payment of principal of, or premium, if any, or interest on any Debt Security;
(v) impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security on or after the Stated Maturity or Prepayment
Date thereof; or (vi) reduce the percentage in principal amount of Debt
Securities of any series, the consent of the Holders of which is required for
modification or amendment of the applicable Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults.
The Holders of at least a majority in aggregate principal amount of the Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive, insofar as that series is concerned, compliance by the
Company with certain covenants of the Indenture. The Holders of not less than a
majority in principal amount of the Debt Securities of any series may, on behalf
of the Holders of all Debt Securities of that series, waive any past default
under the Indenture with respect to that series, except a default in the payment
of the principal of, or premium, if any, or interest on, any Debt Security of
that series or in respect of a provision which under the Indenture
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cannot be modified or amended without the consent of the Holder of each Debt
Security of that series affected thereby.
DEFEASANCE
Unless otherwise specified in a Prospectus Supplement applicable to a
particular series of Debt Securities, the Company, at its option, (i) will be
deemed to have been discharged from its obligations with respect to the Debt
Securities of such series (except for certain obligations, including obligations
to register the transfer or exchange of Debt Securities of such series, to
replace destroyed, stolen, lost, or mutilated Debt Securities of such series,
and to maintain an office or agency in respect of the Debt Securities and hold
moneys for payment in trust) or (ii) will be released from its obligations to
comply with the covenants that are under "Certain Covenants" above with respect
to the Debt Securities of such series, and the occurrence of an event described
in clause (iv) under "Events of Default" above with respect to any defeased
covenant and clauses (iii), (v), and (vii) of the "Events of Default" above will
no longer be an Event of Default if, in either case, the Company irrevocably
deposits with the Trustee, in trust, money or direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged or obligations of an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable at the issuer's
option ("U.S. Government Obligations") or certain depositary receipts therefor
that through the payment of interest thereon and principal thereof in accordance
with their terms will provide money in an amount sufficient to pay all the
principal of (and premium, if any) and any interest on the Debt Securities of
such series on the dates such payments are due in accordance with the terms of
such Debt Securities. Such defeasance may be effected only if, among other
things, (a) no Event of Default or event which with the giving of notice or
lapse or time, or both, would become an Event of Default under the Indenture
shall have occurred and be continuing on the date of such deposit, (b) no Event
of Default described under clause (vi) under "--Events of Default" above or
event that with the giving of notice or lapse of time, or both, would become an
Event of Default described under such clause (vi) shall have occurred and be
continuing at any time on or prior to the 90th calendar day following such date
of deposit, (c) in the event of defeasance under clause (i) above, the Company
has delivered an Opinion of Counsel, stating that (1) the Company has received
from, or there has been published by, the IRS a ruling, or (2) since the date of
the Indenture there has been a change in applicable federal law, in either case
to the effect that, among other things, the holders of the Debt Securities of
such series will not recognize gain or loss for United States federal income tax
purposes as a result of such deposit or defeasance and will be subject to United
States federal income tax in the same manner as if such defeasance had not
occurred, and (d) in the event of defeasance under clause (ii) above, the
Company has delivered an Opinion of Counsel to the effect that, among other
things, the Holders of the Debt Securities of such series will not recognize
gain or loss for United States federal income tax purposes as a result of such
deposit or defeasance and will be subject to United States federal income tax in
the same manner as if such defeasance had not occurred. In the event the Company
fails to comply with its remaining obligations under the applicable Indenture
after a defeasance of such Indenture with respect to the Debt Securities of any
series as described under clause (ii) above and the Debt Securities of such
series are declared due and payable because of the occurrence of any undefeased
Event of Default, the amount of money and U.S. Government Obligations on deposit
with the Trustee may be insufficient to pay amounts due on the Debt Securities
of such series at the time of the acceleration resulting from such Event of
Default. However, the Company will remain liable in respect of such payments.
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SATISFACTION AND DISCHARGE
The Company, at its option, may satisfy and discharge the Indenture (except
for certain obligations of the Company and the Trustee, including, among others,
the obligations to apply money held in trust) when (i) either (a) all Debt
Securities previously authenticated and delivered (other than (1) Debt
Securities that were destroyed, lost, or stolen and that have been replaced or
paid and (2) Debt Securities for the payment of which money has been deposited
in trust or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust) have been delivered to the Trustee
for cancellation or (b) all such Debt Securities not theretofore delivered to
the Trustee for cancellation (1) have become due and payable, (2) will become
due and payable at their Stated Maturity within one year, or (3) are to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the name and at
the expense of the Company, and the Company has deposited or caused to be
deposited with the Trustee as trust funds in trust for such purpose an amount
sufficient to pay and discharge the entire indebtedness on such Debt Securities
not previously delivered to the Trustee for cancellation, for principal and any
premium and interest to the date of such deposit (in the case of Debt Securities
which have become due and payable) or to the stated maturity or redemption date,
as the case may be, (ii) the Company has paid or caused to be paid all other
sums payable under the Indenture by the Company, and (iii) the Company has
delivered to the Trustee an Officer's Certificate and an Opinion of Counsel,
each to the effect that all conditions precedent relating to the satisfaction
and discharge of the Indenture have been satisfied.
LIMITATIONS ON MERGER AND CERTAIN OTHER TRANSACTIONS
Prior to the satisfaction and discharge of the Indenture, the Company may
not consolidate with or merge with or into any other person, or transfer all or
substantially all of its properties and assets to another person unless (i)
either (a) the Company is the continuing or surviving person in such a
consolidation or merger or (b) the person (if other than the Company) formed by
such consolidation or into which the Company is merged or to which all or
substantially all of the properties and assets of the Company are transferred
(the Company or such other person being referred to as the "Surviving Person")
is a corporation organized and validly existing under the laws of the United
States, any state thereof, or the District of Columbia, and shall expressly
assume, by an indenture supplement, all the obligations of the Company under the
Debt Securities and the Indenture, (ii) immediately after the transaction and
the incurrence or anticipated incurrence of any indebtedness to be incurred in
connection therewith, no Event of Default will exist, and (iii) an officer's
certificate has been delivered to the Trustee to the effect that the conditions
set forth in the preceding clauses (i) and (ii) have been satisfied and an
opinion of counsel has been delivered to the Trustee to the effect that the
conditions set forth in the preceding clause (i) have been satisfied. The
Surviving Person will succeed to and be substituted for the Company with the
same effect as if it has been named in the Indenture as a party thereto, and
thereafter the predecessor corporation will be relieved of all obligations and
covenants under the Indenture and the Debt Securities.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company within three months of, or subsequent
to, a default by the Company to make payment in full of principal of or interest
on any series of Debt Securities when and as the
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same becomes due and payable, to obtain payment of claims, or to realize for its
own account on property received in respect of any such claim as security or
otherwise, unless and until such default is cured. However, the Trustee's rights
as a creditor of the Company will not be limited if the creditor relationship
arises from, among other things: the ownership or acquisition of securities
issued under any indenture or having a maturity of one year or more at the time
of acquisition by the Trustee; certain advances authorized by a receivership or
bankruptcy court of competent jurisdiction or by the Indenture; disbursements
made in the ordinary course of business in its capacity as indenture trustee,
transfer agent, registrar, custodian, or paying agent or in any other similar
capacity; indebtedness created as a result of goods or securities sold in a cash
transaction or services rendered or premises rented; or the acquisition,
ownership, acceptance, or negotiation of certain drafts, bills of exchange,
acceptances, or other obligations. The Indenture does not prohibit the Trustee
from serving as trustee under any other indenture to which the Company may be a
party from time to time or from engaging in other transactions with the Company.
If the Trustee acquires any conflicting interest and there is an Event of
Default with respect to any series of Debt Securities, it must eliminate such
conflict or resign.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any one or more of the following
ways: (i) through one or more underwriters, (ii) through one or more dealers or
agents (which may include one or more underwriters), or (iii) directly to one or
more purchasers.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. In
connection with the sale of the Debt Securities, underwriters, dealers, and
agents may receive compensation from the Company or from purchasers of the Debt
Securities in the form of discounts, concessions, or commissions. Underwriters,
dealers, and agents who participate in the distribution of the Debt Securities
may be deemed to be underwriters, and any discounts or commissions received by
them from the Company and any profit on the resale of Debt Securities by them
may be deemed to be underwriting discounts and commissions under the Securities
Act. Any such underwriter, dealer, or agent will be identified and any such
compensation received from the Company will be described in an applicable
Prospectus Supplement. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time to
time.
Under agreements which may be entered into by the Company, underwriters,
dealers, and agents who participate in the distribution of the Debt Securities
may be entitled to indemnification by the Company against certain liabilities,
including under the Securities Act, or contribution from the Company to payments
which the underwriters, dealers, or agents may be required to make in respect
thereof. The underwriters, dealers, and agents may engage in transactions with,
or perform services for, the Company in the ordinary course of business.
The Company currently anticipates that, in connection with any distribution
of Debt Securities effected through underwriters or agents, Goldman, Sachs & Co.
would serve as the managing underwriter or the principal placement agent, as the
case may be. However, the Company reserves the right to select any other firm to
serve as managing underwriter or principal placement agent in connection with
any such distribution, and reference should be made to the applicable Prospectus
Supplement for information regarding the specific plan of distribution for such
Debt Securities.
All Debt Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the Company
for public offering and sale may make a market in such Debt Securities, but such
underwriters will not be obligated to do so and may
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discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the secondary market for any Debt Securities.
VALIDITY OF DEBT SECURITIES
Unless otherwise indicated in an applicable Prospectus Supplement relating
to the Debt Securities, the validity of the Debt Securities offered hereby will
be passed upon for the Company by Jones, Day, Reavis & Pogue, New York, New
York.
EXPERTS
The consolidated financial statements of the Company as of January 28, 1995
and January 29, 1994, and for each of the 52-week periods ended January 28,
1995, January 29, 1994, and January 30, 1993, have been incorporated herein by
reference in reliance upon the report of KPMG Peat Marwick LLP, independent
public accountants, and upon the authority of said firm as experts in accounting
and auditing. The financial statements incorporated herein by reference to
reports and documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14, and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold, or which deregisters all securities then remaining unsold, are or
will be so incorporated in reliance upon the reports of KPMG Peat Marwick LLP,
or any other independent public accountants, relating to such financial
statements and upon the authority of such independent public accountants as
experts in accounting and auditing in giving such reports to the extent that the
particular firm has audited such financial statements and consented to the use
of their reports thereon.
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NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS SUPPLEMENT $305,000,000
OR IN THE ACCOMPANYING PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT AND THE FEDERATED DEPARTMENT
ACCOMPANYING PROSPECTUS DO NOT STORES, INC.
CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS SUPPLEMENT
OR THE ACCOMPANYING PROSPECTUS OR AN 5% CONVERTIBLE SUBORDINATED
OFFER TO SELL OR THE SOLICITATION OF AN NOTES DUE 2003
OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
PROSPECTUS SUPPLEMENT
Risk Factors.......................... S-3
Recent Developments................... S-3 ---------------------
Use of Proceeds....................... S-5
Description of the Notes.............. S-5
Description of Capital Stock.......... S-12
Underwriting.......................... S-17
Experts............................... S-18
Legal Matters......................... S-18 GOLDMAN, SACHS & CO.
PROSPECTUS
Available Information................. 2 CS FIRST BOSTON
Incorporation of Certain Documents by
Reference........................... 2
Risk Factors.......................... 3
The Company........................... 5
Use of Proceeds....................... 5
Ratio of Earnings to Fixed Charges.... 6
Description of Debt Securities........ 7
Plan of Distribution.................. 14
Validity of Debt Securities........... 15
Experts............................... 15
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