<PAGE>
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED OCTOBER 8, 1993
$150,000,000
[LOGO]
UNUM CORPORATION
8.80% MONTHLY INCOME DEBT SECURITIES* (MIDS-SM-)
(JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES, SERIES A)
--------------
The Series A Junior Subordinated Debentures will mature on May 31, 2025.
Interest on the Series A Junior Subordinated Debentures will accrue from the
date of original issuance and is payable monthly in arrears on the last day of
each calendar month, commencing May 31, 1995. The Series A Junior Subordinated
Debentures will be redeemable at the option of the Company, in whole or in part,
on or after May 11, 2000 at 100% of the principal amount redeemed together with
accrued interest to the redemption date. The Series A Junior Subordinated
Debentures will be represented by one or more Global Securities registered in
the name of the nominee of The Depository Trust Company. Except as described
herein, Series A Junior Subordinated Debentures in definitive form will not be
issued. Series A Junior Subordinated Debentures will be issued only in
denominations of $25 and integral multiples thereof. See "Certain Terms of the
Series A Junior Subordinated Debentures."
The obligations of the Company under the Series A Junior Subordinated
Debentures are subordinate and junior in right of payment to Senior Indebtedness
of the Company.
The Series A Junior Subordinated Debentures have been approved for listing
on the New York Stock Exchange, subject to official notice of issuance.
---------------------
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE SERIES A JUNIOR SUBORDINATED DEBENTURES, INCLUDING THE PERIOD
AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT OF INTEREST ON THE SERIES A
JUNIOR SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME
TAX CONSEQUENCES.
---------------------
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 DISCOUNT(1) COMPANY(2)(3)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Series A Junior Subordinated Debenture............ 100% 3.15% 96.85%
Total................................................. $150,000,000 $4,725,000 $145,275,000
<FN>
- ----------
(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended.
(2) Before deducting estimated expenses of $300,000 payable by the Company.
(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional $22,500,000 principal amount of Series A Junior
Subordinated Debentures at the initial public offering price shown above,
less the underwriting discount, solely to cover over-allotments. If such
option is exercised in full, the total initial public offering price,
underwriting discount and proceeds to Company will be $172,500,000,
$5,433,750 and $167,066,250, respectively. See "Underwriting."
</TABLE>
---------------------
The Series A Junior Subordinated Debentures are offered severally 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 Series A Junior Subordinated Debentures will be ready for delivery in
book-entry form only through the facilities of The Depository Trust Company in
New York, New York, on or about May 11, 1995.
* MIDS is a service mark of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
SMITH BARNEY INC.
--------------
The date of this Prospectus Supplement is May 4, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A JUNIOR
SUBORDINATED DEBENTURES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
--------------
INVESTMENT CONSIDERATIONS
Prospective purchasers of Series A Junior Subordinated Debentures should
carefully review the information contained elsewhere in this Prospectus
Supplement and in the accompanying Prospectus and should particularly consider
the following matters:
SUBORDINATION OF SERIES A JUNIOR SUBORDINATED DEBENTURES. The obligations
of UNUM Corporation (the "Company") under the Series A Junior Subordinated
Debentures are subordinate and junior in right of payment to Senior Indebtedness
of the Company. As of March 31, 1995, outstanding Senior Indebtedness of the
Company aggregated approximately $620 million. The Company is an insurance
holding company whose principal assets are its interests in its subsidiaries.
The Company's sources of funds, including funds to pay interest on the Series A
Junior Subordinated Debentures, include cash dividends and other payments from
such subsidiaries and borrowings by the Company. The rights of the creditors of
the Company, including holders of Series A Junior Subordinated Debentures, to
participate in the assets of any subsidiary upon the subsidiary's liquidation or
reorganization would be subject to the prior claims of such subsidiary's
creditors, including its insureds. There are no terms in the Series A Junior
Subordinated Debentures that limit the Company's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Series A Junior
Subordinated Debentures, or the ability of its subsidiaries to incur additional
indebtedness. See "Certain Terms of the Series A Junior Subordinated
Debentures--Subordination" in this Prospectus Supplement and "Description of
Debt Securities-- Subordination" in the accompanying Prospectus.
NON-APPLICABILITY OF CERTAIN COVENANTS AND EVENTS OF DEFAULT. The Indenture
covenant provisions described in the accompanying Prospectus under the caption
"Description of Debt Securities--Certain Covenants in Indenture", and the
Indenture provisions regarding events of default relating to cross acceleration
and to bankruptcy, insolvency or reorganization of any Restricted Subsidiary,
shall not apply to the Series A Junior Subordinated Debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD. The Company has the right under
the Indenture to extend the interest payment period from time to time on the
Series A Junior Subordinated Debentures to a period not exceeding 60 consecutive
months, and, as a consequence, monthly interest payments on the Series A Junior
Subordinated Debentures would be deferred (but would continue to accrue with
interest thereon) during any such extended interest payment period. In the event
that the Company exercises this right, the Company may not declare or pay
dividends on, or redeem, purchase or acquire, any of its capital stock, which
includes the Company's common stock, during any such extended interest payment
period. Therefore, the Company believes that the extension of an interest
payment period on the Series A Junior Subordinated Debentures is unlikely. Prior
to the termination of any such extension period, the Company may further extend
the interest payment period. Any extension period together, if extended, with
all such previous and further extensions thereof, (i) will terminate on an
Interest Payment Date and (ii) may not exceed 60 consecutive months or extend
beyond the maturity of the Series A Junior Subordinated Debentures. Upon the
termination of any extension period and the payment of all amounts then due, the
Company may select a new extension period, subject to the above requirements.
See "Certain Terms of the Series A Junior Subordinated Debentures--Option to
Extend Interest Payment Period."
Should an extended interest payment period occur, a holder of the Series A
Junior Subordinated Debentures will continue to accrue income for United States
federal income tax purposes even though interest is not being paid on a current
basis. As a result, such holder will include such interest in gross income for
United States federal income tax purposes in advance of the receipt of cash, and
will not receive the cash from the Company related to such income if such holder
disposes of his or her Series A Junior Subordinated Debentures prior to the
record date for payment of interest. See "United States Taxation--United States
Holders."
CERTAIN TRADING CHARACTERISTICS OF THE SERIES A JUNIOR SUBORDINATED
DEBENTURES. The Series A Junior Subordinated Debentures have been approved for
listing as an equity security on the New York Stock Exchange, subject to
official notice of issuance. Accordingly, the Series A Junior Subordinated
Debentures are expected to trade "flat"; thus, purchasers will not pay and
sellers will not receive any accrued and unpaid interest on the Series A Junior
Subordinated Debentures that is not included in the trading price. However, for
United States federal income tax purposes, interest on the Series A Junior
Subordinated Debentures is included in income as it accrues, rather than when it
is paid. See "United States Taxation--United States Holders."
S-2
<PAGE>
THE COMPANY
The Company is a Delaware corporation organized in 1985 as an insurance
holding company. The Company and its subsidiaries ("UNUM") are the leading
provider of group long term disability insurance in the United States and the
United Kingdom. UNUM is also a major provider of employee benefits, individual
disability insurance and specialty accident and health reinsurance. UNUM also
markets long term care and retirement income products.
The operations of the following subsidiaries account for substantially all
of UNUM's consolidated assets and revenues: UNUM Life Insurance Company of
America ("UNUM America"), the leading provider of group disability insurance in
the nation and a provider of employee benefits, long term care and retirement
products; First UNUM Life Insurance Company (New York state only); Commercial
Life Insurance Company, a leader in special risk insurance and professional
association insurance marketing; UNUM Limited, the leading group disability
insurance provider in the United Kingdom; Duncanson & Holt, Inc., a leading
accident and health reinsurance underwriting manager; Colonial Life & Accident
Insurance Company, the leader in payroll-deducted, voluntary employee benefits
offered to employees at their worksites; and UNUM Japan Accident Insurance
Company Limited. UNUM is based in Portland, Maine and through its affiliates has
operations in North America, the United Kingdom and the Pacific Rim.
BUSINESS SEGMENTS
UNUM reports its operations principally in four business segments:
Disability Insurance, Special Risk Insurance, Colonial Products and Retirement
Products. The Company began reporting its operations in these business segments
effective January 1, 1995. For comparative purposes, the information for periods
prior thereto appearing elsewhere in this Prospectus Supplement has been
restated to reflect reporting in these segments. The information in the
accompanying Prospectus has not been restated.
DISABILITY INSURANCE SEGMENT. The Disability Insurance segment includes
disability products offered in North America, the United Kingdom and Japan
including: group long term disability, individual disability, short term
disability, association group disability, disability reinsurance and long term
care insurance.
Group long term disability insurance ("Group LTD") is the Disability
Insurance segment's principal product. Since 1976, UNUM has been the United
States' leading provider of Group LTD according to EMPLOYEE BENEFIT PLAN REVIEW,
a recognized industry publication.
SPECIAL RISK INSURANCE SEGMENT. The Special Risk Insurance segment includes
group life, special risk accident insurance, non-disability reinsurance
operations, reinsurance underwriting management operations and other special
risk insurance products, including accidental death and dismemberment and dental
insurance.
COLONIAL PRODUCTS SEGMENT. The Colonial Products segment includes Colonial
Companies, Inc. and subsidiaries, which offer payroll-deducted, voluntary
employee benefits including personal accident and sickness, cancer and life
insurance products to employees at their worksites.
RETIREMENT PRODUCTS SEGMENT. The Retirement Products segment includes tax
sheltered annuities and products which are no longer actively marketed by UNUM
including guaranteed investment contracts, deposit administration accounts and
401(k) plans.
The Company's principal executive offices are located at 2211 Congress
Street, Portland, Maine 04122 and its telephone number is (207) 770-2211.
S-3
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- ----------------------------------------------------------------------
1995 1994(A) 1994(A) 1993 1992 1991 1990
--------- --------- --------- ------------ ------------ --------- ------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues
Premiums......................... $ 734.0 $ 652.7 $ 2,721.3 $ 2,474.1 $ 2,142.4 $ 1,938.9 $ 1,700.8
Net investment income(b)......... 202.8 203.0 815.8 839.8 850.7 811.6 751.1
Fees and other income............ 18.3 19.4 75.5 83.1 55.4 34.0 24.7
--------- --------- --------- ------------ ------------ --------- ------------
Total revenues..................... 955.1 875.1 3,612.6 3,397.0 3,048.5 2,784.5 2,476.6
Benefits and expenses
Benefits to policyholders........ 571.8 479.3 2,239.0 1,775.7 1,532.6 1,387.1 1,246.0
Interest credited................ 57.1 61.0 242.7 281.0 328.4 357.7 353.5
Operating expenses............... 171.1 163.4 713.0 675.6 590.9 554.8 453.6
Commissions...................... 92.1 87.9 355.9 326.8 298.9 258.8 211.5
Increase in deferred policy
acquisition costs............... (29.7) (30.6) (155.3) (135.1) (111.7) (104.8) (71.2)
Interest expense................. 7.3 3.3 18.7 12.7 10.9 11.3 4.5
--------- --------- --------- ------------ ------------ --------- ------------
Total benefits and expenses........ 869.7 764.3 3,414.0 2,936.7 2,650.0 2,464.9 2,197.9
--------- --------- --------- ------------ ------------ --------- ------------
Income before income taxes and
cumulative effects of accounting
changes........................... 85.4 110.8 198.6 460.3 398.5 319.6 278.7
Income taxes....................... 22.0 33.7 43.9 148.3 107.3 74.3 60.9
--------- --------- --------- ------------ ------------ --------- ------------
Income before cumulative effects of
accounting changes................ 63.4 77.1 154.7 312.0 291.2 245.3 217.8
--------- --------- --------- ------------ ------------ --------- ------------
Cumulative effects of accounting
changes........................... -- -- -- (12.1) -- -- --
--------- --------- --------- ------------ ------------ --------- ------------
Net income......................... $ 63.4 $ 77.1 $ 154.7 $ 299.9 $ 291.2 $ 245.3 $ 217.8
--------- --------- --------- ------------ ------------ --------- ------------
--------- --------- --------- ------------ ------------ --------- ------------
BALANCE SHEET DATA
(at end of period)
Assets............................. $13,416.8 $12,597.0 $13,127.2 $12,437.3 $ 11,959.8 $11,310.9 $ 10,063.4
Short-term debt.................... $ 369.6 $ 138.7 $ 246.6 $ 110.0 $ 122.7 $ 150.1 $ 39.5
Long-term debt..................... $ 180.8 $ 138.5 $ 182.1 $ 128.6 $ 77.2 $ 51.5 $ 77.2
Stockholders' equity............... $ 2,033.1 $ 2,108.6 $ 1,915.4 $ 2,102.7 $ 2,010.9 $ 1,755.5 $ 1,490.1
OTHER DATA
Earnings per share................. $ 0.87 $ 1.02 $ 2.09 $ 3.81(c) $ 3.71 $ 3.15 $ 2.73
Dividends paid per share........... $ 0.24 $ 0.20 $ 0.92 $0.76 1/2 $ 0.62 1/2 $ 0.49 $ 0.37 1/2
Book value per share............... $ 28.01 $ 27.90 $ 26.45 $ 27.67 $ 25.44 $ 22.46 $ 19.24
Number of shares (millions):
Shares outstanding............... 72.6 75.6 72.4 76.0 79.1 78.2 77.4
Weighted average shares
outstanding..................... 72.5 75.6 74.2 78.8 78.5 77.8 79.9
Ratio of earnings to fixed
charges(d)........................ 9.5 19.8 7.7 20.0 19.1 14.0 19.6
<FN>
- ------------------
(a) Certain 1994 amounts have been reclassified in 1995. Amounts for years
prior to 1994 have not been reclassified because the effects of such
reclassification would not be material.
(b) Net investment income is comprised of investment income (net of expenses)
and net realized investment gains.
(c) Earnings per share before cumulative effects of accounting changes was
$3.96. Effective January 1, 1993, the Company adopted Financial Accounting
Standard No. 106, "Employers' Accounting for Postretirement Benefits Other
than Pensions", which decreased net income by $0.40 per share, and
Financial Accounting Standard No. 109, "Accounting for Income Taxes", which
increased net income by $0.25 per share.
(d) For purposes of computing the ratio of earnings to fixed charges, earnings
as adjusted consist of income from continuing operations before income
taxes plus fixed charges. Fixed charges consist of interest expense and the
estimated interest portion of rent expense.
</TABLE>
S-4
<PAGE>
RECENT DEVELOPMENTS
Revenues for each of the Company's business segments and Corporate for the
three months ended March 31, 1995, and 1994, and the fiscal years ended December
31, 1994, and 1993, were as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
--------------- ------------------
1995 1994(A) 1994(A) 1993
------ ------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Disability Insurance.................... $559.4 $499.7 $2,116.5 $1,917.7
Special Risk Insurance.................. 180.5 158.8 647.8 594.2
Colonial Products....................... 127.0 116.4 473.9 448.8
Retirement Products..................... 86.4 97.6 369.4 430.1
Corporate(b)............................ 1.8 2.6 5.0 6.2
------ ------- -------- --------
Total revenues...................... $955.1 $875.1 $3,612.6 $3,397.0
------ ------- -------- --------
------ ------- -------- --------
<FN>
- ------------------
(a) Certain 1994 amounts have been reclassified in 1995. Amounts for 1993 have
not been reclassified because the effects of such reclassification would
not be material.
(b) Corporate includes transactions that are generally non-insurance related.
</TABLE>
Income (loss) before income taxes and cumulative effects of accounting
changes for each of the Company's business segments and Corporate for the three
months ended March 31, 1995, and 1994, and the fiscal years ended December 31,
1994, and 1993, were as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------- --------------
1995 1994 1994 1993
----- ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Disability Insurance.................... $50.8 $ 67.6 $ 56.2 $314.1
Special Risk Insurance.................. 17.0 17.7 65.9 38.9
Colonial Products....................... 17.1 15.8 62.7 70.4
Retirement Products..................... 6.7 13.4 42.0 54.3
Corporate(a)............................ (6.2) (3.7) (28.2) (17.4)
----- ------ ------ ------
Total income before income taxes and
cumulative effects of accounting
changes.............................. $85.4 $110.8 $198.6 $460.3
----- ------ ------ ------
----- ------ ------ ------
<FN>
- ------------------
(a) Corporate includes transactions that are generally non-insurance related.
</TABLE>
FIRST QUARTER 1995 RESULTS. During the first quarter 1995, UNUM reported
decreased income before income taxes, as compared with the same period in 1994,
which was primarily attributable to unfavorable claims experience in certain
disability businesses reported in the Disability Insurance segment, decreased
interest spread margins on tax sheltered annuity products as reported in the
Retirement Products segment and increased interest expense as reported in
Corporate. During the first quarter of 1995, UNUM Limited's group long term
disability business was adversely affected by the continuation of unfavorable
claims experience, which began to emerge in late 1994. Management is evaluating
this unfavorable claims experience in the United Kingdom to determine the need
for pricing actions, changes in underwriting standards or risk management
programs. Operating earnings (income before income taxes excluding net realized
investment gains and, for the fourth quarter of 1994, the restructuring charge
discussed below) for both the group long term and individual disability
businesses in the first quarter of 1995 showed improvement over the fourth
quarter of 1994.
1994 RESULTS. UNUM reported decreased income before income taxes for the
year ended December 31, 1994, compared to the prior year, primarily as a result
of unfavorable claims experience in North America of two of UNUM's largest
product lines, individual disability and Group LTD, as reported in the
Disability Insurance segment.
S-5
<PAGE>
Throughout 1994 UNUM's individual disability business in the United States
experienced a higher incidence of new claims and a disproportionate number of
large claims that management has attributed to certain geographical and
occupational segments, particularly physicians. As a result, in 1994 UNUM
increased reserves for existing claims by $83.3 million and established a
reserve for future estimated losses of $109.1 million. These increased reserves
reflect management's current expectations for morbidity trends for the existing
individual disability business, as reported in the Disability Insurance segment.
This reserve strengthening resulted in an increase to benefits to policyholders
in UNUM's consolidated statement of income of $192.4 million and a decrease in
net income of $125.1 million, or $1.69 per share, for the year ended December
31, 1994. It is not possible to predict whether morbidity trends will be
consistent with UNUM's current assumptions. In the fourth quarter of 1994, UNUM
decided to stop selling non-cancellable disability income policies in the United
States and recorded a $12.3 million restructuring charge related to such action.
UNUM's North American group long term disability results, as reported in the
Disability Insurance segment, were adversely affected in 1994 by a combination
of increased incidence of new claims and an
increased number of large claims. Management continues to address these
unfavorable claim trends by increasing prices on selected new and inforce
business, implementing more stringent underwriting guidelines, and strengthening
risk management programs. Management believes these actions will strengthen
UNUM's ability to deal with these disability claims trends, and that the level
of future earnings of the Group LTD product will be a function of the
effectiveness of these continuing actions and the time required for these
actions to take effect.
Dividends from the Company's subsidiaries, along with other funds, are used
to service the needs of the Company including: debt service, common stock
dividends, stock repurchase, administrative costs and corporate development. As
a result of the factors described in the preceding paragraphs, UNUM America's
1994 income as determined under statutory accounting rules and practices, which
differ in certain respects from generally accepted accounting principles, was
significantly reduced to $39.2 million, as compared with $165.2 million in 1993.
As a result of this reduction in UNUM America's statutory earnings, the amount
available under current law for payment of dividends to the Company from all
U.S. domiciled insurance subsidiaries during 1995, without state insurance
regulatory approval, decreased to approximately $81.3 million, as compared with
$176.8 million during 1994. The Company also has the ability to draw a dividend
of approximately $30 million from its United Kingdom based affiliate, UNUM
Limited, subject to certain U.S. tax consequences. In addition to the foregoing
subsidiary dividend capacity, as of April 26, 1995 the Company had $166.4
million available under its revolving credit facility (subject to the terms of
such facility) and, following the offering of debentures contemplated hereby,
$243.0 million of securities remaining for offer under a shelf registration
statement filed with the Securities and Exchange Commission (subject to market
conditions).
For a discussion and analysis of UNUM's financial condition and results of
operations, see the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (the "10-K"), which is incorporated by reference into
the accompanying Prospectus. As a result of the change effective January 1, 1995
in business segments described above under "The Company--Business Segments", the
business segments reported in the 10-K differ from the business segments set
forth above.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Series A
Junior Subordinated Debentures (estimated to be $145.0 million or $166.7 million
if the Underwriters over-allotment option is exercised in full) to repay
short-term debt (totaling approximately $368.6 million at April 26, 1995, at an
average interest cost of approximately 5.89%) and for general corporate
purposes.
S-6
<PAGE>
CAPITALIZATION
The following table summarizes the consolidated capital structure of the
Company at March 31, 1995, and as adjusted to give effect to (i) the issuance of
the Series A Junior Subordinated Debentures offered hereby, assuming the
over-allotment option granted to the Underwriters is not exercised and (ii) the
application of the net proceeds from the sale of the Series A Junior
Subordinated Debentures to repay short-term debt. See "Use of Proceeds."
<TABLE>
<CAPTION>
MARCH 31, 1995
---------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term debt, including current maturity....... $ 369.6 $ 224.6
-------- -----------
-------- -----------
Long-term debt:
Medium-term notes............................... $ 180.8 $ 180.8
Series A Junior Subordinated Debentures......... -- 150.0
-------- -----------
Total long-term debt........................ 180.8 330.8
-------- -----------
Stockholders' equity:
Preferred stock, par value $0.10 per share,
authorized 10,000,000 shares, none issued...... -- --
Common stock, par value $0.10 per share,
authorized 120,000,000 shares, issued
99,987,958 shares.............................. 10.0 10.0
Additional paid-in capital...................... 1,082.9 1,082.9
Unrealized gains on available for sale
securities, net of deferred taxes.............. 110.5 110.5
Unrealized foreign currency translation
adjustment..................................... (15.9) (15.9)
Retained earnings............................... 1,553.2 1,553.2
Less:
Treasury stock, at cost (27,404,320 shares)... 702.4 702.4
Restricted stock deferred compensation........ 5.2 5.2
-------- -----------
Total stockholders' equity.................. 2,033.1 2,033.1
-------- -----------
Total capitalization.............................. $2,213.9 $2,363.9
-------- -----------
-------- -----------
</TABLE>
CERTAIN TERMS OF THE SERIES A JUNIOR SUBORDINATED DEBENTURES
The following description of specific terms of the Series A Junior
Subordinated Debentures supplements and, in certain cases modifies, and should
be read in conjunction with, the description of the general terms and provisions
of the Subordinated Debt Securities set forth in the accompanying Prospectus
under the caption "Description of Debt Securities." The following summary does
not purport to be complete and is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the description in the
accompanying Prospectus (except as modified by the following summary) and the
Indenture relating to Subordinated Debt Securities, dated as of May 1, 1995,
between the Company and Mellon Bank, N.A., as Trustee, as supplemented by a
First Supplemental Indenture, dated as of May 1, 1995 (the Subordinated
Indenture, as so supplemented, is herein referred to as the "Indenture").
PRINCIPAL AMOUNT, INTEREST AND MATURITY
The Series A Junior Subordinated Debentures will be issued as a series of
Debt Securities under the Indenture. The Series A Junior Subordinated Debentures
will be limited in aggregate principal amount to $172.5 million.
The Series A Junior Subordinated Debentures are to mature on May 31, 2025
and will bear interest at the rate per annum shown in the title thereof payable
monthly on the last day of each calendar month,
S-7
<PAGE>
commencing May 31, 1995, to the persons in whose names the Series A Junior
Subordinated Debentures are registered at the close of business on the relevant
record dates, which will be one Business Day (as hereinafter defined) prior to
the relevant payment dates. The amount of interest payable for any period will
be computed on the basis of a 360-day year of twelve 30-day months. Interest
will accrue from the date of original issuance to, but not including, the
relevant payment date. In the event that any date on which interest is payable
on the Series A Junior Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York and any
other Place of Payment are authorized or obligated by law to close.
GLOBAL SECURITIES
The Series A Junior Subordinated Debentures will be represented by one or
more Global Securities registered in the name of the nominee of The Depository
Trust Company (the "Depositary"), and will be available for purchase in
denominations of $25 and any integral multiple thereof. Each Global Security
will be deposited with the Depositary or a nominee thereof or custodian therefor
and will bear a legend regarding the restrictions on exchanges and registration
of transfer thereof referred to below and any such other matters as may be
provided for pursuant to the Indenture.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") or persons that may hold beneficial interests through
participants. In addition, ownership of beneficial interests by participants in
a Global Security will be evidenced only by, and the transfer of that ownership
interest will be effected only through, records maintained by the Depositary or
its nominee. Ownership of beneficial interests in such Global Security by
persons that hold through participants will be evidenced only by, and the
transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. 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 such Global Security.
Payment of principal of and any premium and interest on Series A Junior
Subordinated Debentures represented by any Global Security will be made to the
Depositary's nominee as the registered owner and Holder of such Global Security.
Neither the Company, the Trustee, nor any agent of the Company or the Trustee
will have any responsibility or liability for any aspect of the Depositary's or
its nominee's records or any participant's records relating to or payments made
on account of beneficial ownership interests in such Global Security or for
maintaining, supervising or reviewing any of the Depositary's or its nominee's
records or any participant's records relating to such beneficial ownership
interests.
A permanent Global Security is exchangeable for definitive Series A Junior
Subordinated Debentures registered in the name of, and a transfer of a permanent
Global Security may be registered to, any Person other than the Depositary or
its nominee, only if:
(a) the Depositary notifies the Company that it is unwilling or unable
to continue as Depositary for such Global Security or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(b) the Company in its sole discretion determines that such Global
Security shall be exchangeable for definitive Series A Junior Subordinated
Debentures in registered form; or
(c) any event shall have happened and be continuing that constitutes or,
after notice or lapse of time, or both, would constitute an Event of Default
with respect to the Series A Junior Subordinated Debentures.
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The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary was created to hold securities of its participating
organizations ("participants") and to facilitate the clearance and settlement of
securities transactions, such as transfers and pledges, among its participants
in such securities through electronic computerized book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. 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 the
Depositary. Access to the Depositary'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. Persons who are not participants may beneficially own securities
held by the Depositary only through participants.
REDEMPTION
The Series A Junior Subordinated Debentures will be redeemable at the option
of the Company, as a whole or in part, at any time on or after May 11, 2000 and
prior to maturity, upon not less than 30 nor more than 60 days' notice, at 100%
of the principal amount redeemed together with accrued interest to the
redemption date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time during the term of the Series A
Junior Subordinated Debentures to extend the interest payment period from time
to time to a period not exceeding 60 consecutive months (the "Extension
Period"), at the end of which Extension Period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate
specified for the Series A Junior Subordinated Debentures); provided, that,
during any such Extension Period, the Company shall not declare or pay any
dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payments with respect
to the foregoing. Prior to the termination of any such Extension Period, the
Company may further extend the interest payment period. Any such Extension
Period together, if extended, with all such previous and further extensions
thereof, (i) will terminate on an Interest Payment Date and (ii) may not exceed
60 consecutive months or extend beyond the maturity of the Series A Junior
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may select a new Extension Period,
subject to the above requirements. No interest during an Extension Period,
except at the end thereof, shall be due and payable. The Company shall give the
holders of the Series A Junior Subordinated Debentures notice of its selection
of such Extension Period ten Business Days prior to the earlier of (i) the next
interest payment date or (ii) the date the Company is required to give notice to
holders of the Series A Junior Subordinated Debentures (or, if applicable, to
the New York Stock Exchange or other applicable self-regulatory organization) of
the record or payment date of such interest payment, but in any event not less
than two Business Days prior to such record date.
CERTAIN COVENANTS IN THE INDENTURE
The Indenture provisions described in the accompanying Prospectus under the
caption "Description of Debt Securities--Certain Covenants in the Indenture"
shall not apply to the Series A Junior Subordinated Debentures.
SUBORDINATION
The Indenture provisions described in the accompanying Prospectus under the
caption "Description of Debt Securities--Subordination of Subordinated Debt
Securities" shall apply to the Series A Junior Subordinated Debentures with the
following modification. "Senior Indebtedness" is defined to include all amounts
due on and obligations in connection with any of the following, whether
outstanding
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on the date of execution of the Indenture or thereafter incurred or created: (a)
indebtedness, obligations and other liabilities (contingent or otherwise) of the
Company for money borrowed, or evidenced by bonds, debentures, notes or similar
instruments; (b) reimbursement obligations and other liabilities (contingent or
otherwise) of the Company with respect to letters of credit, bankers'
acceptances issued for the account of the Company or with respect to interest
rate protection agreements or currency exchange or purchase agreements; (c)
obligations and liabilities (contingent or otherwise) in respect of leases by
the Company as lessee which, in conformity with generally accepted accounting
principles, are accounted for as capitalized leases on the balance sheet of the
Company; (d) all direct or indirect guarantees or similar agreements in respect
of, and obligations or liabilities (contingent or otherwise) to purchase or
otherwise acquire or otherwise to assure a creditor against loss of the Company
in respect of, indebtedness, obligations or liabilities of another Person
described in clauses (a) through (c); (e) any indebtedness described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by the Company, regardless of
whether the indebtedness secured thereby shall have been assumed by the Company;
and (f) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation or
liability of the kind described in clauses (a) through (e); unless in any case
in the instrument creating or evidencing such indebtedness, obligation,
liability, guaranty, assumption, deferral, renewal, extension or refunding it is
provided that such indebtedness, obligation, liability, guaranty, assumption,
deferral, renewal, extension or refunding involved is not senior in right of
payment to the Subordinated Debt Securities or that such indebtedness is pari
passu with the Subordinated Debt Securities. (Section 101)
EVENTS OF DEFAULT
The Indenture provisions described in the accompanying Prospectus under the
caption "Description of Debt Securities--Events of Default" relating to
cross-acceleration (I.E., clause (d) in the first paragraph in such section) and
to any bankruptcy, insolvency or reorganization of any Restricted Subsidiary
(I.E., clause (e) in the first paragraph in such section as applicable to any
Restricted Subsidiary) shall not apply to the Series A Junior Subordinated
Debentures.
DEFEASANCE
The Indenture provisions relating to satisfaction and discharge and legal
and covenant defeasance which are described in the accompanying Prospectus under
the caption "Description of Debt Securities--Satisfaction and Discharge of
Indentures" will apply to the Series A Junior Subordinated Debentures.
CONCERNING THE TRUSTEE
The Company maintains banking relationships in the ordinary course of
business with Mellon Bank, N.A.
PAYING AGENT AND REGISTRAR
Mellon Bank, N.A. will act as Paying Agent and Registrar for the Series A
Junior Subordinated Debentures.
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UNITED STATES TAXATION
GENERAL
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Series A Junior
Subordinated Debentures and represents the opinion of Sullivan & Cromwell,
special tax counsel to the Company, insofar as it relates to matters of law and
legal conclusions. This section is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), existing and proposed regulations
thereunder and current administrative rulings and court decisions, all of which
are subject to change. Subsequent changes may cause tax consequences to vary
substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Series A Junior
Subordinated Debentures. Moreover, the discussion focuses on holders of Series A
Junior Subordinated Debentures who are individual citizens or residents of the
United States that are initial purchasers and that hold the Series A Junior
Subordinated Debentures as a capital asset and has only limited application to
corporations, estates, trusts or non-resident aliens. Accordingly, each
prospective purchaser of Series A Junior Subordinated Debentures should consult,
and should depend on, his or her own tax advisor in analyzing the federal,
state, local and foreign tax consequences of the purchase, ownership or
disposition of Series A Junior Subordinated Debentures.
UNITED STATES HOLDERS
For purposes of this discussion, a "United States Holder" is a beneficial
owner who or that is (i) a citizen or resident of the United States, (ii) a
domestic corporation or (iii) otherwise subject to United States federal income
taxation on a net income basis in respect of the Series A Junior Subordinated
Debentures.
Interest on Series A Junior Subordinated Debentures will be included in the
income of a United States Holder as it accrues, rather than when it is paid,
regardless of the United States Holder's regular method of accounting for tax
purposes. United States Holders may therefore be required to include interest in
income for taxable years prior to the year in which the interest is actually
received. This should only be significant, however, during an Extension Period.
A United States Holder who includes interest in gross income in advance of the
receipt of cash may not receive the cash from the Company related to such income
if such holder disposes of his or her Series A Junior Subordinated Debentures
prior to the record date for payment of interest.
A United States Holder will generally recognize gain or loss on the sale or
retirement of a Series A Junior Subordinated Debenture equal to the difference
between the amount realized from the sale or retirement and the tax basis of the
Series A Junior Subordinated Debenture. Such gain or loss will be capital gain
or loss, and will be long-term capital gain or loss if the Series A Junior
Subordinated Debenture has been held for more than one year. The tax basis of
the Series A Junior Subordinated Debenture will generally equal the amount paid
for it, increased by the amount of any accrued but unpaid interest. A portion of
any amount realized from a sale between interest payment dates will be treated
as a receipt of interest accrued since the last payment date, consistent with
the general treatment of proceeds from the sale of debt instruments.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder who or that is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership or estate or trust, in either case not subject to
United States federal income tax on a net income basis in respect of a Series A
Junior Subordinated Debenture.
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Under current United States federal income tax law, subject to the
discussion below with respect to backup withholding:
(i) Payments by the Company or any of its paying agents to any holder
of a Series A Junior Subordinated Debenture who or that is a United States
Alien Holder will not be subject to United States federal withholding tax
provided that (a) the beneficial owner of the Series A Junior Sub-ordinated
Debenture does not actually or constructively own 10%, or more of the total
combined voting power of all classes of capital stock of the Company
entitled to vote, (b) the beneficial owner of the Series A Junior
Subordinated Debenture is not a controlled foreign corporation that is
related to the Company through stock ownership and (c) either (x) the
beneficial owner of the Series A Junior Subordinated Debenture certifies to
the Company or its agent, under penalties of perjury, that it is a United
States Alien Holder and provides its name and address or (y) the holder of
the Series A Junior Subordinated Debenture is a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution"), and such holder certifies to the Company or its agent under
penalties of perjury that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the Company or its agent with a copy thereof,
and (ii) a United States Alien Holder of a Series A Junior Subordinated
Debenture will generally not be subject to United States federal withholding
tax on any gain realized on the sale or exchange of a Series A Junior
Subordinated Debenture unless such holder is present in the United States
for 183 days or more in the taxable year of sale and either has a "tax home"
in the United States or certain other requirements are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest on a Series A Junior Subordinated Debenture, and the
proceeds of the sale of a Series A Junior Subordinated Debenture prior to
maturity within the United States, with respect to non-corporate United States
Holders, and "backup withholding" at a rate of 31% will apply to such payments
if the United States Holder fails to provide an accurate taxpayer identification
number or to report all interest and dividends required to be shown on its
federal income tax returns.
Information reporting and backup withholding will not apply to payments of
principal and interest made by the Company or a paying agent to a United States
Alien Holder on a Series A Junior Subor-dinated Debenture if the certification
described in clause (i) (c) under "United States Alien Holders" above is
received, provided that the payor does not have actual knowledge that the holder
is a United States Holder.
Payments of the proceeds from the sale by a United States Alien Holder of a
Series A Junior Subordinated Debenture made to or through a foreign office of a
broker will not be subject to information reporting or backup withholding,
except that if the broker is a United States person, a controlled foreign
corporation for United States tax purposes or a foreign person 50% or more of
whose gross income is effectively connected with a United States trade or
business for a specified three-year period, information reporting may apply to
such payments. Payments of proceeds from the sale of a Series A Junior
Subordinated Debenture to or through the United States office of a broker is
subject to information reporting and backup withholding unless the United States
Allen Holder or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and the Pricing Agreement, the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom Goldman, Sachs
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated, PaineWebber Incorporated and Smith Barney Inc. are acting as
representatives, have severally agreed to purchase, the principal amount of
Series A Junior Subordinated Debentures set forth opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------------
<S> <C>
Goldman, Sachs & Co. ............................. $ 20,812,500
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................... 20,812,500
Morgan Stanley & Co. Incorporated................. 20,812,500
PaineWebber Incorporated.......................... 20,812,500
Smith Barney Inc.................................. 20,812,500
CS First Boston Corporation....................... 2,625,000
Alex. Brown & Sons Incorporated................... 2,625,000
Dillon, Read & Co. Inc............................ 2,625,000
A.G. Edwards & Sons, Inc.......................... 2,625,000
Kemper Securities, Inc............................ 2,625,000
Lehman Brothers Inc............................... 2,625,000
Oppenheimer & Co., Inc............................ 2,625,000
Prudential Securities Incorporated................ 2,625,000
The Robinson-Humphrey Company, Inc................ 2,625,000
Salomon Brothers Inc.............................. 2,625,000
Advest, Inc....................................... 937,500
Dain Bosworth Incorporated........................ 937,500
Fahnestock & Co. Inc.............................. 937,500
Interstate/Johnson Lane Corporation............... 937,500
Janney Montgomery Scott Inc....................... 937,500
Kennedy, Cabot & Co............................... 937,500
Legg Mason Wood Walker, Incorporated.............. 937,500
McDonald & Company Securities, Inc................ 937,500
Morgan Keegan & Company, Inc...................... 937,500
Olde Discount Corporation......................... 937,500
Piper Jaffray Inc................................. 937,500
Principal Financial Securities, Inc............... 937,500
Pryor, McClendon, Counts & Co., Inc............... 937,500
Rauscher Pierce Refsnes, Inc...................... 937,500
Raymond James & Associates, Inc................... 937,500
Sutro & Co. Incorporated.......................... 937,500
Trilon International Inc.......................... 937,500
Tucker Anthony Incorporated....................... 937,500
U.S. Clearing Corp................................ 937,500
Wedbush Morgan Securities......................... 937,500
Wheat, First Securities, Inc...................... 937,500
----------------
Total......................................... $150,000,000
----------------
----------------
</TABLE>
The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus Supplement to purchase up to $22,500,000
principal amount of Series A Junior Subordinated Debentures to cover
over-allotments, if any, at the initial public offering price, less the
underwriting
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discount, as set forth in this Prospectus Supplement. If the Underwriters
exercise their over-allotment option, the Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the principal amount of Series A Junior Subordinated Debentures to
be purchased by each of them, as shown in the foregoing table, bears to the
aggregate principal amount of Series A Junior Subordinated Debentures. The
Underwriters may exercise such option only to cover over-allotments in
connection with the sale of Series A Junior Subordinated Debentures.
Under the terms and conditions of the Underwriting Agreement and the Pricing
Agreement, the Underwriters are committed to take and pay for all of the Series
A Junior Subordinated Debentures, if any are taken.
The Underwriters propose to offer the Series A Junior Subordinated
Debentures 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
dealers at such price less a concession of 2.0% of the principal amount of the
Series A Junior Subordinated Debentures. The Underwriters may allow, and such
dealers may reallow, a concession not to exceed 1.0% of the principal amount of
the Series A Junior Subordinated Debentures to certain brokers and dealers.
After the Series A Junior Subordinated Debentures are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the representatives.
The Series A Junior Subordinated Debentures are a new issue of securities
with no established trading market prior to this offering. The Series A Junior
Subordinated Debentures have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance. Trading of the Series A Junior
Subordinated Debentures on the New York Stock Exchange is expected to commence
within two business days after the initial delivery of the Series A Junior
Subordinated Debentures. The Company has been advised by the representatives
that they intend to make a market in the Series A Junior Subordinated Debentures
prior to the commencement of trading on the New York Stock Exchange, 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
Series A Junior Subordinated Debentures.
Certain of the Underwriters have provided various investment banking
services to the Company and its affiliates from time to time, for which they
have received customary compensation.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
LEGAL MATTERS
The validity of the Series A Junior Subordinated Debentures will be passed
upon for the Company by Kevin J. Tierney, Senior Vice President, Secretary and
General Counsel of the Company and by Skadden, Arps, Slate, Meagher & Flom, New
York, New York with respect to certain matters of New York law, and for the
Underwriters by Sullivan & Cromwell, New York, New York. Mr. Tierney owns less
than one percent of the Company's Common Stock.
Statements as to United States taxation in the Prospectus Supplement under
the caption "United States Taxation" have been passed upon for the Company by
Sullivan & Cromwell, who are also serving as special tax counsel to the Company,
and are stated herein on their authority.
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