Rule 424(b)(2)
Registration No. 333-03821
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 22, 1996
$100,000,000
THE PROCTER & GAMBLE COMPANY
8.75% DEBENTURES DUE JUNE 1, 2022
This Prospectus Supplement relates to $100,000,000 principal amount of
8.75% Debentures due June 1, 2022 (the "Debentures") issuable upon the exercise
of four outstanding warrants (the "Warrants"). The Warrants were originally
issued by The Procter & Gamble Company (the "Company") on June 11, 1992. Each
Warrant entitles the holder thereof to purchase $25,000,000 aggregate principal
amount of the Debentures at a purchase price equal to 100% of the principal
amount thereof. Interest on the Debentures is payable on June 1 and December 1
of each year, commencing December 1, 1997.
The Debentures will be issued in book-entry form represented by Global
Securities registered in the name of The Depository Trust Company (the
"Depository"), the Depository's nominee or a successor depository. Beneficial
interests in the Global Securities will be shown on, and transfers thereof will
be effected only through, records maintained by the Depository's participants.
Owners of beneficial interests in Debentures issued in book-entry form will be
entitled to physical delivery of Debentures in certificated form in the
principal amount of their respective beneficial interests only under limited
circumstances described herein. See "Description of Debentures."
---------------
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.
---------------
Price to Proceeds to
Public Company <F1>
-------- -----------
Per Debenture 100% 100%
Total $100,000,000 $100,000,000
- ---------------
<F1> Before deducting estimated expenses of $75,000 payable by the Company.
The date of this Prospectus Supplement is May 28, 1997
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-434)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996.
2. The Company's Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1996, December 31, 1996 and March 31,
1997.
3. The Company's Current Reports on Form 8-K dated November
18, 1996, December 3, 1996, December 16, 1996, December 20, 1996,
January 7, 1997, January 17, 1997, January 28, 1997, February 21, 1997,
March 4, 1997, March 24, 1997, April, 7, 1997, April 9, 1997, April 23,
1997, April 25, 1997 and May 2, 1997 and on Form 8-K/A dated December
3, 1996 and April 9, 1997.
4. All other documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus Supplement and prior to the termination of the
offering of the Debentures.
The Company will provide without charge to each person to whom a copy
of this Prospectus Supplement is delivered, upon the request of such person, a
copy of any or all of the documents which are incorporated by reference herein,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Linda D. Rohrer, Assistant Secretary, The Procter & Gamble Company, at One
Procter & Gamble Plaza, Cincinnati, Ohio 45202, telephone: (513) 983-8697.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratio of
earnings to fixed charges for the periods indicated:
Nine months ended
Years Ended June 30, March 31,
1995 1996 1996 1997
---- ---- ---- ----
Ratio of earnings to fixed
charges <F1> 7.7 9.0 9.7 11.0
<F1>Earnings used to compute this ratio are earnings before income taxes
and before fixed charges (excluding interest capitalized during the period) and
after deducting undistributed earnings of equity method investees. Fixed charges
consist of interest, whether expensed or capitalized, amortization of debt
discount and expense, and one-third of all rent expense (considered
representative of the interest factor).
DESCRIPTION OF WARRANTS
The Warrants were originally issued on June 11, 1992. Each Warrant, if
exercised during the Warrant Exercise Period (as hereinafter defined), entitles
the holder thereof to purchase $25,000,000 aggregate principal amount of
Debentures. The exercise price of each Warrant is 100% of the aggregate
principal amount of Debentures purchased upon such exercise.
On the terms and subject to the conditions set forth in the Warrant
Certificate representing the Warrant (the "Warrant Certificate"), each Warrant
may be exercised by the registered holder thereof, in whole, but not in part,
between May 2, 1997 and May 23, 1997 (the "Exercise Period") upon irrevocable
written notice of the exercise of the Warrant, in the form provided in the
Warrant Certificate (the "Irrevocable Exercise Notice"), given to the Company
during the Exercise Period. The Company will issue and deliver the Debentures
through the facilities of the Depository on or about June 2, 1997 (the
"Settlement Date") to each holder of a Warrant who has given an Irrevocable
Exercise Notice during the Exercise Period and who has provided payment by
certified or official bank check or by bank wire transfer in New York Clearing
House funds in full for the Warrant exercised by such holder to the Company in
accordance with the terms of the Warrant Certificate.
DESCRIPTION OF DEBENTURES
The following description of the particular terms of the Debentures
offered hereby (referred to in the accompanying Prospectus as the "Offered Debt
Securities") supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt Securities set forth
in the Prospectus, to which description reference is hereby made. Certain
defined terms in the Indenture, dated as of September 28, 1992 (the
"Indenture"), with respect to the Offered Debt Securities are capitalized
herein. Whenever a defined term is referred to and not herein defined, the
definition thereof is contained in the Indenture.
GENERAL
The Debentures offered hereby will be limited to $100,000,000 aggregate
principal amount and will be issued under the Indenture. The Debentures will
mature on June 1, 2022. The Debentures will bear interest from June 1, 1997 at
the rate per annum shown on the front cover of this Prospectus Supplement
payable semi-annually on June 1 and December 1 of each year and at maturity
(each such date is herein called an "Interest Payment Date"), commencing
December 1, 1997, to the person in whose name the Debenture (or one or more
predecessor Debentures) is registered at the close of business on the May 15 or
November 15, as the case may be, next preceding such Interest Payment Date.
The Debentures are not entitled to any sinking fund. The Debentures are
subject to defeasance and covenant defeasance as described under "Description of
Debt Securities--Defeasance" in the accompanying Prospectus. The Debentures are
not redeemable at the option of the Company.
The Debentures will be issued only in registered, book-entry form, in
denominations of $1,000 and any integral multiple thereof.
In the case where any Interest Payment Date or the maturity date of the
Debentures does not fall on a Business Day, payment of interest or principal
otherwise payable on such day need not be made on such day, but may be made on
the next succeeding Business Day with the same force and effect as if made on
such Interest Payment Date or the maturity date of the Debentures, as the case
may be, and no interest shall accrue for the period from and after such Interest
Payment Date or maturity date. The term "Business Day" shall mean any day other
than a Saturday or Sunday or a day on which banking institutions in New York
City are authorized or obligated by law or executive order to close.
BOOK-ENTRY SYSTEM
Upon issuance, the Debentures will be represented by one or more global
securities (the "Book-Entry Debentures"). Each global security representing the
Book-Entry Debentures will be deposited with, or on behalf of the "Depository,"
as depository, and registered in the name of a nominee of the Depository. The
Book-Entry Debentures will not be exchangeable at the option of the Holder for
certificated Debentures and, except under the circumstances described below,
will not otherwise be issuable in definitive form.
The Depository has advised the Company as follows: The Depository 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 pursuant to the provisions of Section 17A of the Exchange
Act. The Depository was created to hold securities for 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. The Depository'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 the Depository. Access to the Depository'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.
Upon issuance of the Book-Entry Debentures, the Depository will credit,
on its book-entry registration and transfer system, the respective principal
amounts of the Debentures represented by such Book-Entry Debentures to the
accounts of institutions that have accounts with the Depository or its nominee
("participants"). Ownership of beneficial interests in the Book-Entry Debentures
will be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in such Book-Entry Debentures
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depository or its nominee (with respect to
participants' interests) for such Book-Entry Debentures or by participants or
persons that hold through 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 the Book-Entry Debentures.
So long as the Depository, or its nominee, is the registered owner of
the Book-Entry Debentures, the Depository or such nominee, as the case may be,
will be considered the sole owner or holder of the Book-Entry Debentures for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in such Book-Entry Debentures will not be entitled to have the
Debentures represented by such Book-Entry Debentures registered in their names,
will not receive or be entitled to receive physical delivery of Debentures in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Principal and interest payments on Book-Entry Debentures registered in
the name of or held by the Depository or its nominee will be made to the
Depository or its nominee, as the case may be, as the registered owner or holder
of the Book-Entry Debentures. Neither the Company, the Trustee nor any paying
agent for such Book-Entry Debentures will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in Book-Entry Debentures or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that the Depository, upon receipt of any payments
of principal or interest in respect of the Book-Entry Debentures, will credit
immediately the accounts of the related participants with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Book-Entry Debentures as shown on the records of the Depository. The
Company also expects that payments by participants to owners of beneficial
interests in such Book-Entry Debentures held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
Unless and until it is exchanged, in whole or in part, for a Debenture
in definitive form in accordance with the terms of the Debentures, a Book-Entry
Debenture may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository or
another nominee of the Depository or by the Depository or any such nominee to a
successor of the Depository or a nominee of such successor. If the Depository is
at any time unwilling or unable to continue as depository or if at any time the
Depository ceases to be a clearing agency registered under the Exchange Act, and
a successor Depository is not appointed by the Company within 90 days, the
Company will issue Debentures in definitive registered form in exchange for the
Book-Entry Debentures. In addition, the Company may at any time and in its sole
discretion determine not to have any Debentures represented by one or more
Book-Entry Debentures and, in such event, will issue Debentures in definitive
registered form in exchange for all Book-Entry Debentures. Further, if an event
of default, or an event which, with the giving of notice or lapse of time, or
both, would constitute an event of default, under the Indenture occurs and is
continuing with respect to the Debentures, or if the Company so specifies with
respect to the Debentures, the Depository may exchange the Book-Entry Debentures
for Debentures in definitive registered form. In any such instance, an owner of
a beneficial interest in a Book-Entry Debenture will be entitled to physical
delivery in definitive form of Debentures represented by such Book-Entry
Debenture in principal amount equal to such beneficial interest and to have such
Debentures registered in its name.
CONCERNING THE TRUSTEE
The Debentures will be issued under the Indenture, with The First
National Bank of Chicago as trustee. The Indenture has substantially the same
terms as the indenture between the Company and Bankers Trust Company dated as of
May 15, 1991. The First National Bank of Chicago is also a depositary of the
Company, and it has performed other services for the Company and its
subsidiaries in the normal course of its business.
LEGAL OPINION
The validity of the offered debt securities will be passed upon by
Terry L. Overbey, Secretary and Associate General Counsel of the Company.
THE PROCTER & GAMBLE COMPANY
DEBT SECURITIES AND WARRANTS
The Company may from time to time offer Debt Securities consisting of
debentures, notes and/or other unsecured evidences of indebtedness in one or
more series and Warrants to purchase Debt Securities or to buy and sell
government debt securities, foreign currencies, currency units or units of a
currency index or currency basket, units of a stock index or stock basket or a
commodity or a commodity index from which the Company will receive proceeds of
up to an aggregate of $725,000,000 (or the equivalent in foreign currency or
currency units). The Debt Securities and Warrants may be offered independently
or together for sale directly to purchasers or through dealers, underwriters or
agents to be designated. The Debt Securities and Warrants will be offered to the
public on terms determined by market conditions. The Debt Securities and
Warrants may be sold for U.S. dollars, foreign currency or currency units and
the principal and any premium and interest on the Debt Securities may likewise
be payable in U.S. dollars or, at the option of the Company if so specified in
the applicable Prospectus Supplement, in any other foreign currency or currency
units, including composite currencies such as the European Currency Unit.
The specific designation, aggregate principal amount, purchase price,
maturity, rate (or manner of calculation thereof) and time of payment of
interest, if any, any listing on a securities exchange and other specific terms
not set forth herein of the Debt Securities in respect of which this Prospectus
is being delivered, the duration, purchase price, exercise price, detachability
and any other specific terms not set forth herein of any Warrants in respect of
which this Prospectus is being delivered, and the names of any underwriters,
dealers or agents, and the other terms and manner of the sale and distribution
of such Debt Securities and Warrants, are set forth in the accompanying
Prospectus Supplement ("Prospectus Supplement"). See "Description of Debt
Securities", "Description of Warrants" and "Plan of Distribution".
As used from time to time herein, the term "Securities" means the Debt
Securities and the Warrants.
-------------------
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 date of this Prospectus is May 22, 1996.
AVAILABLE INFORMATION
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"). Such reports, proxy
statements and other information 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
at Seven World Trade Center, 13th Floor, New York, New York 10048; and Suite
1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661-2511. Copies of such materials can be obtained by mail from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, reports, proxy statements and other
information concerning the Company may also be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, and
the offices of the Cincinnati Stock Exchange, 400 S. LaSalle Street, 5th Floor,
Chicago, Illinois 60605.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended. This
Prospectus does not contain all of the 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 following documents filed with the Commission (File No. 1-434)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1995 (which incorporates by reference portions of
the Company's definitive Proxy Statement dated September 1, 1995 for
the Company's Annual Meeting of Stockholders held on October 10, 1995
and portions of its 1995 Annual Report to Stockholders for the year
ended June 30, 1995).
2. The Company's Quarterly Reports on Form 10-Q for the
periods ended September 30, 1995, December 31, 1995 and March 31, 1996.
3. All other documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of
the Securities. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of the Registration Statement or
this Prospectus to the extent that a statement contained herein, in a
Prospectus Supplement or in any other document subsequently filed with
the Commission which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the request of such person, a copy of any
or all of the documents which are incorporated by reference herein, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to Linda D.
Rohrer, Assistant Secretary, The Procter & Gamble Company, at One Procter &
Gamble Plaza, Cincinnati, Ohio 45202, telephone: (513) 983-8697.
THE COMPANY
The Procter & Gamble Company (the "Company") was incorporated in Ohio
in 1905, having been built from a business founded in 1837 by William Procter
and James Gamble. Today, the Company manufactures and markets a broad range of
consumer products in many countries throughout the world. Unless the context
otherwise requires, all references to the Company are to The Procter & Gamble
Company and its consolidated subsidiaries.
The Company's operations fall within five business segments: Laundry
and Cleaning, Paper, Beauty Care, Food and Beverage, and Health Care:
The Laundry and Cleaning segment includes laundry, dishcare, hard
surface cleaners and fabric conditioners. Representative brands
include Ariel, Tide, Cascade, Dawn, Mr. Proper, Downy.
The Paper segment includes tissue/towel, feminine protection and
diapers. Representative brands include Bounty, Charmin, Always,
Whisper, Pampers.
The Beauty Care segment includes hair care, deodorants, personal
cleansing, skin care and cosmetics and fragrances. Representative
brands include Pantene, Vidal Sassoon, Secret, Safeguard, Olay, Cover
Girl.
The Food and Beverage segment includes, coffee, peanut butter, juice,
snacks, shortening and oil, baking mixes and commercial services.
Representative brands include Folgers, Jif, Sunny Delight, Pringles,
Crisco, Duncan Hines.
The Health Care segment includes oral care, gastro-intestinal,
respiratory care, analgesics and pharmaceuticals. Representative brands
include Crest, Scope, Metamucil, Vicks, Aleve.
The Laundry category and Diaper category constituted 21% and 13% of
consolidated 1995 fiscal-year sales, respectively.
In the United States, the Company owned and operated manufacturing
facilities at 39 locations in 20 states as of June 30, 1995. In addition, it
owned and operated 90 manufacturing facilities in 42 other countries as of such
date. Laundry and Cleaning products were produced at 37 of these locations;
Paper products at 35; Health Care products at 30; Beauty Care products at 47;
and Food and Beverage products at 16.
The Company's principal executive offices are located at One Procter &
Gamble Plaza, Cincinnati, Ohio 45202, and its telephone number is (513)
983-1100.
USE OF PROCEEDS
Unless otherwise indicated in the accompanying Prospectus Supplement,
the net proceeds from the issuance of the Debt Securities and Warrants offered
hereby will be used for general corporate purposes.
SUMMARY FINANCIAL INFORMATION
The following summary financial information for the years ended June
30, 1995 and 1994 has been derived from the Company's consolidated financial
statements contained in its Annual Report on Form 10-K for the fiscal year ended
June 30, 1995. See "Incorporation of Certain Documents by Reference". The
summary financial information for the years ended June 30, 1991, 1992 and 1993
has been derived from the Company's consolidated financial statements contained
in its Annual Reports to Shareholders for the years 1992 and 1993. Per share
amounts and number of shares have been adjusted for the two-for-one stock split
of the Company's common stock, effective May 15, 1992.
<TABLE>
<CAPTION>
Years Ended June 30,
- -------------------------------------------------------------------------------------------
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
(in millions, except per share data)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net sales................................ $27,026 $29,362 $30,433 $30,296 $33,434
Cost of products sold.................... 16,081 17,324 17,683 17,355 19,623
Earnings before income taxes and
prior years' effect of accounting
changes............................... 2,687 2,885 349 3,346 4,000
Income taxes............................. 914 1,013 80 1,135 1,355
Net earnings/(loss)<F1>.................. 1,773 1,872 (656) 2,211 2,645
Net earnings/(loss) per common
share<F1>............................. $ 2.46 $ 2.62 $ (1.11) $ 3.09 $ 3.71
Net earnings/(loss) per common share
assuming full dilution<F1>............ $ 2.31 $ 2.45 $ (.96) $ 2.91 $ 3.48
Average shares outstanding............... 689.5 677.4 680.4 683.1 686.0
Ratio of earnings to fixed charges<F2>... 6.8 5.7 1.4 6.6 7.7
FINANCIAL POSITION
(AT PERIOD END):
Working capital.......................... $ 1,702 $ 1,724 $ 1,688 $ 1,948 $ 2,194
Total assets............................. 20,468 24,025 24,935 25,535 28,125
Long-term debt........................... 4,111 5,223 5,174 4,980 5,161
Shareholders' equity..................... 7,736 9,071 7,441 8,832 10,589
- --------------------
<FN>
<F1> In 1993, net earnings and per share earnings include an after-tax charge
of $1,746 or $2.57 per share for restructuring and an after-tax charge
of $925 or $1.36 per share for the prior years' effect of accounting
changes.
<F2> Earnings used to compute this ratio are earnings before income taxes and
before fixed charges (excluding interest capitalized during the period)
and after deducting undistributed earnings of equity method investees.
Fixed charges consist of interest, whether expensed or capitalized,
amortization of debt discount and expense, and one-third of all rent
expense (considered representative of the interest factor).
</FN>
</TABLE>
RESULTS OF OPERATIONS: YEAR ENDED JUNE 30, 1995 COMPARED TO THE YEAR ENDED
JUNE 30, 1994
Worldwide net earnings were $2,645 million, a 20% increase over a year
ago, including a $50 million after-tax charge for incremental costs associated
with the January earthquake in Japan. Net earnings for the prior year were
$2,211 million, including a $102 million after-tax charge related to two
interest rate swap contracts. Excluding the unusual items in both periods, net
earnings increased 17%.
Worldwide net sales for the year increased 10% to 33,434 million. This
sales increase reflects year-to-year unit volume growth of 10%, with
acquisitions contributing approximately 2%. More favorable foreign exchange
rates positively impacted net sales by 2%, but the effect was offset by lower
pricing in certain markets.
Gross margin declined from 42.7% in 1994 to 41.3% in 1995 primarily due
to higher green coffee bean costs, net of related pricing. Increased research
and development costs and higher raw material prices, most importantly pulp,
more than offset the incremental benefits of restructuring activities and other
cost reduction programs. The Company's margin trends are also affected by
pricing policies. Since fiscal year 1993, the Company's value pricing initiative
has reduced list prices by approximately $1 billion (excluding coffee).
Marketing, administrative and other expenses were 28.8% of sales, down
from 30.9% in the prior year. This reflects the benefit of continued cost
control efforts, as well as an incremental benefit from restructuring actions.
Other income of $309 million includes a $77 million pre-tax charge
related to the Kobe, Japan earthquake. The prior year amount of $248 million
contains a $157 million pre-tax charge related to two interest rate swap
contracts.
Net earnings margin increased from 7.3% in 1994 to 7.9% in 1995,
including the effect of unusual items in both years, reflecting continued
emphasis on cost control and volume growth.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets
forth certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Offered Debt Securities.
The Offered Debt Securities are to be issued under an Indenture, dated
as of September 28, 1992 (the "Indenture"), between the Company and The First
National Bank of Chicago, as Trustee (the "Trustee"), a copy of which Indenture
is filed as an exhibit to the Registration Statement. The following summaries of
certain provisions of the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all provisions
of the Indenture, including the definitions therein of certain terms. Wherever
particular provisions or defined terms of the Indenture are referred to, such
provisions or defined terms are incorporated herein by reference. Certain
defined terms in the Indenture are capitalized herein.
GENERAL
The Debt Securities will be unsecured obligations of the Company.
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder and provides that Debt Securities may be issued thereunder
from time to time in one or more series.
Reference is made to the Prospectus Supplement relating to the Offered
Debt Securities for the following terms, where applicable, of the Offered Debt
Securities: (1) the title of the Offered Debt Securities; (2) any limit on the
aggregate principal amount of the Offered Debt Securities; (3) the date or dates
on which the Offered Debt Securities will mature; (4) the rate or rates (which
may be fixed or variable) at which the Offered Debt Securities will bear
interest, if any, and the date or dates from which such interest will accrue;
(5) the dates on which such interest, if any, will be payable and the Regular
Record Dates for such Interest Payment Dates; (6) any mandatory or optional
sinking fund or analogous provisions; (7) the price at which, the periods within
which, and the terms and conditions upon which the Offered Debt Securities may,
pursuant to any optional or mandatory redemption provisions, be redeemed at the
option of the Company; (8) the terms and conditions upon which the Offered Debt
Securities may be repayable prior to final maturity at the option of the holder
thereof (which option may be conditional); (9) the portion of the principal
amount of the Offered Debt Securities, if other than the principal amount
thereof, payable upon acceleration of maturity thereof; (10) the right of the
Company to defease the Offered Debt Securities or certain restrictive covenants
and certain Events of Default under the Indenture; (11) if other than in United
States dollars, the currency or currencies, including composite currencies, of
payment of principal of and premium, if any, and interest on the Offered Debt
Securities (and federal income tax consequences and other special considerations
applicable to any such Offered Debt Securities denominated in a currency or
currencies other than United States dollars); (12) any index used to determine
the amount of payments of principal of and premium, if any, and interest, if
any, on the Offered Debt Securities; (13) if the Offered Debt Securities will be
issuable only in the form of a Global Security as described under "Book-Entry
Debt Securities", the Depository or its nominee with respect to the Offered Debt
Securities and the circumstances under which the Global Security may be
registered for transfer or exchange in the name of a Person other than the
Depository or its nominee; and (14) any other terms of the Offered Debt
Securities. (Section 301)
Unless otherwise indicated in the Prospectus Supplement relating to
Offered Debt Securities, principal of and premium, if any, and interest, if any,
on the Debt Securities will be payable, and the Debt Securities will be
exchangeable and transfers thereof will be registrable, at the office of the
Trustee at 14 Wall Street, 8th Floor, New York, New York 10005, provided that,
at the option of the Company, payment of interest may be made by: (1) wire
transfer on the date of payment in immediately available federal funds or next
day funds to an account specified by written notice to the Trustee from any
Holder of Debt Securities; (2) any similar manner that such Holder may designate
in writing to the Trustee; or (3) by check mailed to the address of the Person
entitled thereto as it appears in the Security Register. (Sections 301, 305 and
1002) Any payment of principal and premium, if any, and interest, if any,
required to be made on an Interest Payment Date, Redemption Date or at Maturity
which is not a Business Day need not be made on such day, but may be made on the
next succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Redemption Date or at Maturity, as the case may be, and
no interest shall accrue for the period from and after such Interest Payment
Date, Redemption Date or Maturity. (Section 113)
Unless otherwise indicated in the Prospectus Supplement relating to
Offered Debt Securities, the Debt Securities will be issued only in fully
registered form, without coupons, in denominations of $1,000 or any integral
multiple thereof. (Section 302) No service charge will be made for any 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 payable in connection
therewith. (Section 305)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount from their
stated principal amount. In addition, under Treasury Regulations it is possible
that Debt Securities which are offered and sold at their stated principal amount
would, under certain circumstances, be treated as issued at an original issue
discount for federal income tax purposes, and special rules may apply to Debt
Securities and Warrants which are considered to be issued as "investment units".
Federal income tax consequences and other special considerations applicable to
any such Original Issue Discount Securities (or other Debt Securities treated as
issued at an original issue discount) and to "investment units" will be
described in the Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof upon the occurrence of an Event of Default
and the continuation thereof. (Section 101)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in the form of one or
more Global Securities that will be deposited with a Depository or its nominee
identified in the Prospectus Supplement relating to the Offered Debt Securities.
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 Outstanding 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 definitive registered form, a Global Security may
not be registered for transfer or exchange except as a whole by the Depository
for such Global Security to a nominee of such Depository and except in the
circumstances described in the Prospectus Supplement relating to the Offered
Debt Securities. (Sections 204 and 305)
RESTRICTIVE COVENANTS
RESTRICTIONS ON SECURED DEBT
If the Company or any Domestic Subsidiary shall incur, assume or
guarantee any Debt secured by a Mortgage on any Principal Domestic Manufacturing
Property or on any shares of stock or debt of any Domestic Subsidiary, the
Company will secure, or cause such Domestic Subsidiary to secure, the Debt
Securities then outstanding equally and ratably with (or prior to) such Debt,
unless after giving effect thereto the aggregate amount of all such Debt so
secured, together with all Attributable Debt in respect of sale and leaseback
transactions involving Principal Domestic Manufacturing Properties, would not
exceed 5% of the Consolidated Net Tangible Assets of the Company and its
consolidated subsidiaries. The restriction will not apply to, and there shall be
excluded in computing secured Debt for the purpose of such restriction, Debt
secured by (a) Mortgages on property of, or on any shares of stock or debt of,
any corporation existing at the time such corporation becomes a Domestic
Subsidiary, (b) Mortgages in favor of the Company or a Domestic Subsidiary, (c)
Mortgages in favor of U.S. governmental bodies to secure progress or advance
payments, (d) Mortgages on property, shares of stock or debt existing at the
time of acquisition thereof (including acquisition through merger or
consolidation), purchase money Mortgages and construction cost Mortgages and (e)
any extension, renewal or refunding of any Mortgage referred to in the foregoing
clauses (a) through (d), inclusive. (Section 1004) The Indenture does not
restrict the incurrence of unsecured debt by the Company or its subsidiaries.
RESTRICTIONS ON SALES AND LEASEBACKS
Neither the Company nor any Domestic Subsidiary may enter into any sale
and leaseback transaction involving any Principal Domestic Manufacturing
Property, the completion of construction and commencement of full operation of
which has occurred more than 120 days prior thereto, unless (a) the Company or
such Domestic Subsidiary could incur a lien on such property under the
restrictions described above under "Restrictions on Secured Debt" in an amount
equal to the Attributable Debt with respect to the sale and leaseback
transaction without equally and ratably securing the Debt Securities then
outstanding or (b) the Company, within 120 days, applies to the retirement of
its Funded Debt an amount not less than the greater of (i) the net proceeds of
the sale of the Principal Domestic Manufacturing Property leased pursuant to
such arrangement or (ii) the fair value of the Principal Domestic Manufacturing
Property so leased (subject to credits for certain voluntary retirements of
Funded Debt). This restriction will not apply to any sale and leaseback
transaction (a) between the Company and a Domestic Subsidiary or between
Domestic Subsidiaries or (b) involving the taking back of a lease for a period
of less than three years. (Section 1005)
CERTAIN DEFINITIONS
The term "Attributable Debt" means the total net amount of rent
(discounted at 10% per annum compounded annually) required to be paid during the
remaining term of any lease. (Section 101)
The term "Consolidated Net Tangible Assets" means the aggregate amount
of assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities and (b) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent balance sheet of the Company
and its consolidated subsidiaries and computed in accordance with generally
accepted accounting principles. (Section 101)
The term "Domestic Subsidiary" means a subsidiary of the Company except
a subsidiary which neither transacts any substantial portion of its business nor
regularly maintains any substantial portion of its fixed assets within the
United States or which is engaged primarily in financing the operations of the
Company and its subsidiaries outside the United States. (Section 101)
The term "Funded Debt" means Debt having a maturity of, or by its terms
extendible or renewable for, a period of more than 12 months after the date of
determination of the amount thereof.
The term "Principal Domestic Manufacturing Property" means any facility
(together with the land on which it is erected and fixtures comprising a part
thereof) used primarily for manufacturing or processing, located in the United
States, owned or leased by the Company or a subsidiary of the Company and having
a gross book value in excess of 3/4 of 1% of Consolidated Net Tangible Assets,
other than any such facility or portion thereof (i) which is a pollution control
or other facility financed by obligations issued by a State or local
governmental unit pursuant to Section 103(b)(4)(E), 103(b)(4)(F) or 103(b)(6) of
the Internal Revenue Code of 1954, or any successor provision thereof, or (ii)
which, in the opinion of the Board of Directors of the Company, is not of
material importance to the total business conducted by the Company and its
subsidiaries as an entirety. (Section 101)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Debt Securities of any series: (a) failure to pay principal of or premium, if
any, on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure to deposit any sinking fund payment, when due, in respect of any
Debt Security of that series; (d) failure to perform any other covenant 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),
continued for 90 days after written notice as provided in the Indenture; (e)
certain events in bankruptcy, insolvency or reorganization; and (f) any other
Event of Default provided with respect to Debt Securities of that series.
(Section 501)
If an Event of Default with respect to Outstanding Debt Securities of
any series shall occur and be continuing, either the Trustee or the Holders of
at least 25% in principal amount of the Outstanding Debt Securities of that
series 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 the Debt
Securities of that series to be due and payable immediately. 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 acceleration has been
obtained, the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series may, under certain circumstances, rescind and annul
such acceleration. (Section 502) For information as to waiver of defaults, see
"Modification and Waiver".
Reference is made to the Prospectus Supplement relating to each series
of Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to acceleration of the Maturity of a portion of
the principal amount of such Original Issue Discount Securities upon the
occurrence of an Event of Default and the continuation thereof.
The Indenture provides that the Trustee will be under no obligation,
subject to the duty of the Trustee during default to act with the required
standard of care, 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 indemnity. (Section 603) Subject to such
provisions for indemnification of the Trustee, the Holders of a majority in
principal amount of the Outstanding 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.
(Section 512)
The Company will furnish to the Trustee annually a certificate as to
compliance by the Company with all conditions and covenants under the Indenture.
(Section 1007)
DEFEASANCE
The Prospectus Supplement will state if any defeasance provision will
apply to the Offered Debt Securities.
DEFEASANCE AND DISCHARGE
The Indenture provides that, if applicable, the Company will be
discharged from any and all obligations in respect of the Debt Securities of any
series (except for certain obligations to register the transfer or exchange of
Debt Securities of such series, to replace stolen, lost or mutilated Debt
Securities of such series, to maintain paying agencies and to hold monies for
payment in trust) upon the deposit with the Trustee, in trust, of money and/or
U.S. Government Obligations (as defined) which through the payment of interest
and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of and premium, if any, and
each installment of interest on the Debt Securities of such series on the Stated
Maturity of such payments in accordance with the terms of the Indenture and the
Debt Securities of such series. Such a trust may only be established if, among
other things, (i) the Company has received from, or there has been published by,
the Internal Revenue Service a ruling to the effect that Holders of the Debt
Securities of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to federal income tax on the same amount and in the same manner
and at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred, and (ii) the Company has delivered to the
Trustee an Opinion of Counsel (who may be an employee of or counsel for the
Company) to the effect that the Debt Securities of such series, if then listed
on the New York Stock Exchange, Inc., will not be delisted as a result of such
deposit, defeasance and discharge. (Section 403)
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT
The Indenture provides that, if applicable, the Company may omit to
comply with certain restrictive covenants in Sections 1004 (Limitation on Liens)
and 1005 (Limitation on Sales and Leasebacks), and Section 501(4) (described in
clause (d) under "Events of Default") with respect to Sections 1004 and 1005
shall not be deemed to be an Event of Default under the Indenture and the Debt
Securities of any series, upon the deposit with the Trustee, in trust, of money
and/or U.S. Government Obligations (as defined) which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of and premium, if
any, and each installment of interest on the Debt Securities of such series on
the Stated Maturity of such payments in accordance with the terms of the
Indenture and the Debt Securities of such series. The obligations of the Company
under the Indenture and the Debt Securities of such series other than with
respect to the covenants referred to above and the Events of Default other than
the Event of Default referred to above shall remain in full force and effect.
Such a trust may only be established if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel (who may be an employee of or
counsel for the Company) to the effect that (i) the Holders of the Debt
Securities of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance of certain
covenants and Events of Default and will be subject to federal income tax on the
same amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred, and (ii) the Debt
Securities of such series, if then listed on the New York Stock Exchange, Inc.,
will not be delisted as a result of such deposit and defeasance. (Section 1006)
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT
In the event the Company exercises its option to omit compliance with
certain covenants of the Indenture with respect to the Debt Securities of any
series as described above and the Debt Securities of such series are declared
due and payable because of the occurrence of any Event of Default other than the
Event of Default described in clause (d) under "Events of Default", the amount
of money and U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Debt Securities of such series at the time
of their Stated Maturity but may not be sufficient 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 shall remain liable for such
payments.
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 662/3% in principal
amount of the Outstanding Debt Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (a) change the Stated Maturity of the principal of,
or any installment of principal of or interest on, any Debt Security, (b) reduce
the principal amount of, or the premium, if any, or interest, if any, on, any
Debt Security, (c) reduce the amount of principal of an Original Issue Discount
Security payable upon acceleration of the Maturity thereof, (d) change the place
or currency of payment of principal of, or premium, if any, or interest, if any,
on, any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, or (f)
reduce the percentage in principal amount of Outstanding Debt Securities of any
series, the consent of the Holders of which is required for modification or
amendment of the Indenture or for waiver of compliance with certain provisions
of the Indenture or for waiver of certain defaults. (Section 902)
The Holders of 662/3% in principal amount of the Outstanding 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 restrictive provisions of the Indenture. (Section 1008) The
Holders of a majority in principal amount of the Outstanding 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 cannot be modified or amended without the consent of the Holder of
each Outstanding Debt Security of that series affected. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of any Holders of Outstanding Debt
Securities, may consolidate or merge with or into, or transfer or lease its
assets as an entirety to, any Person, provided that (i) the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or which acquires or leases the assets of the Company substantially as an
entirety is organized and existing under the laws of any United States
jurisdiction and assumes the Company's obligations on the Debt Securities and
under the Indenture, (ii) after giving effect to such transaction no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing (provided that a
transaction will only be deemed to be in violation of this condition (ii) as to
any series of Debt Securities as to which such Event of Default or such event
shall have occurred and be continuing), and (iii) certain other conditions are
met. (Article Eight)
REGARDING THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture.
The First National Bank of Chicago is also a depositary of the Company and has
performed other services for the Company and its subsidiaries in the normal
course of its business.
DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth
certain general terms and provisions of the Warrants to which any Prospectus
Supplement may relate. The particular terms of the Warrants offered by any
Prospectus Supplement (the "Offered Warrants") and the extent, if any, to which
such general provisions may apply to the Warrants so offered will be described
in the Prospectus Supplement relating to such Offered Warrants.
The Company may issue Warrants for the purchase of Debt Securities,
Warrants to buy or sell debt securities of or guaranteed by the United States
("Government Debt Securities"), Warrants to buy or sell foreign currencies,
currency units or units of a currency index or currency basket, Warrants to buy
or sell units of a stock index or stock basket and Warrants to buy and sell a
commodity or a commodity index. Warrants may be issued independently or together
with any Debt Securities offered by any Prospectus Supplement and may be
attached to or separate from such Debt Securities. The Warrants will be settled
either through physical delivery or through payment of a cash settlement value
as set forth herein and in any applicable Prospectus Supplement. The Offered
Warrants will be issued under a Warrant Agreement to be entered into between the
Company and a bank or trust company, as Warrant Agent, all as set forth in the
Prospectus Supplement relating to the particular issue of Warrants. The Warrant
Agent will act solely as an agent of the Company in connection with the Warrant
Certificates and will not assume any obligation or relationship of agency or
trust for or with any holders of Warrant Certificates or beneficial owners of
Warrants. The following summaries of certain provisions of the forms of Warrant
Agreement do not purport to be complete and are subject to, and are qualified in
their entirety by reference to the provisions of the forms of Warrant Agreement
(including the forms of Warrant Certificates), copies of which are filed as an
exhibit to the Registration Statement.
GENERAL
The Prospectus Supplement will describe the following terms of the
Offered Warrants (to the extent such terms are applicable to such Warrants): (i)
the offering price; (ii) the currency, currency unit, currency index or currency
basket based on or relating to currencies (including ECU) for which Warrants may
be purchased; (iii) the date on which the right to exercise the Warrants shall
commence and the date on which such right shall expire; (iv) whether the Warrant
Certificates will be issuable in definitive registered form or global form or
both; (v) federal income tax consequences; (vi) whether the Warrant is for Debt
Securities, Government Debt Securities, currencies, currency units, currency
indices or currency baskets, stock indices, stock baskets, commodities,
commodity indices or such other index or reference as therein described; and
(vii) any other terms of the Warrants, including any terms which may be required
or advisable under United States laws or regulations.
If the Offered Warrants are to purchase Debt Securities, the Prospectus
Supplement will also describe (a) the designation, aggregate principal amount,
currency, currency unit or currency basket of denomination and other terms of
the Debt Securities purchasable upon exercise of the Offered Warrants; (b) the
designation and terms of the Debt Securities with which the Offered Warrants are
issued and the number of Offered Warrants issued with each such Debt Security;
(c) the date on and after which the Offered Warrants and the related Debt
Securities will be separately transferable; and (d) the principal amount of Debt
Securities purchasable upon exercise of one Offered Warrant and the price at
which and currency, currency unit or currency basket in which such principal
amount of Debt Securities may be purchased upon such exercise.
If the Offered Warrants are to buy or sell Government Debt Securities
or a foreign currency, currency unit, currency index or currency basket, such
Offered Warrants will be listed on a national securities exchange and the
Prospectus Supplement will describe the amount and designation of the Government
Debt Securities or currency, currency unit, currency index or currency basket,
as the case may be, subject to each Offered Warrant, whether such Offered
Warrants provide for cash settlement or delivery of the Government Debt
Securities or foreign currency, currency unit, units of the currency index or
currency basket upon exercise, and the national securities exchange on which the
Offered Warrants will be listed.
If the Offered Warrants are Offered Warrants on a stock index or a
stock basket, such Offered Warrants will provide for payment of an amount in
cash determined by reference to increases or decreases in such stock index or
stock basket and will be listed on a national securities exchange, and the
Prospectus Supplement will describe the terms of the Offered Warrants, the stock
index or stock basket covered by the Offered Warrants and the market to which
such stock index or stock basket relates, and the national securities exchange
on which the Offered Warrants will be listed.
If the Offered Warrants are Offered Warrants on a commodity or
commodity index, such Offered Warrants will provide for cash settlement or
delivery of the particular commodity or commodities and such Offered Warrants
will be listed on a national securities exchange. The Prospectus Supplement will
describe the terms of the Offered Warrants, the commodity or commodity index
covered by the Offered Warrants and the market, if any, to which such commodity
or commodity index relates and the national securities exchange on which the
Warrants will be listed.
Warrant Certificates may be exchanged for new Warrant Certificates of
different denominations, may (if in registered form) be presented for
registration of transfer, and may be exercised at the corporate trust office of
the Warrant Agent or any other office indicated in the Prospectus Supplement.
Warrants to buy or sell Government Debt Securities or a foreign currency,
currency unit, currency index or currency basket, and Warrants on stock indices
or stock baskets or on commodities or commodity indices, may be issued in the
form of a single Global Warrant Certificate, registered in the name of the
nominee of the depository of the Warrants, or may initially be issued in the
form of definitive certificates that may be exchanged, on a fixed date, or on a
date or dates selected by the Company, for interests in a Global Warrant
Certificate, as set forth in the applicable Prospectus Supplement. Prior to the
exercise of their Warrants, holders of Warrants to purchase Debt Securities will
not have any of the rights of holders of the Debt Securities purchasable upon
such exercise, including the right to receive payments of principal of, premium,
if any, or interest, if any, on the Debt Securities purchasable upon such
exercise or to enforce covenants in the Indenture.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount
of Debt Securities or buy or sell such amount of Government Debt Securities or
of a currency, currency unit, currency index or currency basket, stock index or
stock basket, commodity or commodities at such exercise price, or receive such
settlement value in respect of such amount of Government Debt Securities or of a
currency, currency unit, currency index or currency basket, stock index or stock
basket, commodity or commodity index, as shall in each case be set forth in or
calculable from, the Prospectus Supplement relating to the Warrants or as
otherwise set forth in the Prospectus Supplement. Warrants may be exercised at
any time up to 3:00 P.M. New York time on the date set forth in the Prospectus
Supplement relating to such Warrants or as may be otherwise set forth in the
Prospectus Supplement. After such time on that date (or such later date to which
such date may be extended by the Company), unexercised Warrants will become
void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Warrants may be exercised
by delivery to the Warrant Agent of the Warrant Certificate evidencing such
Warrants properly completed and duly executed and of payment as provided in the
Prospectus Supplement of the amount required to purchase the Debt Securities, or
(except in the case of Warrants providing for cash settlement) payment for or
delivery of the Government Debt Securities or currency, currency unit, currency
index, currency basket, stock index, stock basket, commodity or commodities
index as the case may be, purchased or sold upon such exercise. Warrants will be
deemed to have been exercised upon receipt of such Warrant Certificate and any
such payment, if applicable, at the corporate trust office of the Warrant Agent
or any other office indicated in the Prospectus Supplement and the Company will,
as soon as practicable thereafter, issue and deliver the Debt Securities
purchasable upon such exercise, or buy or sell such Government Debt Securities
or currency, currency unit, currency index or currency basket, stock index or
stock basket, commodity or commodities or pay the settlement value in respect of
such Warrants. If fewer than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of the Warrants.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities and Warrants to or through
underwriters, and also may sell Debt Securities and Warrants directly to other
purchasers or through agents. Such underwriters may also act as agents.
The distribution of the Debt Securities and Warrants, if any, may be
effected from time to time in one or more transactions at a fixed price or
prices, which may be changed, or at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices.
In connection with the sale of Debt Securities and Warrants, if any,
underwriters may receive compensation from the Company or from purchasers of
Debt Securities and Warrants, if any, for whom they may act as agents, in the
form of discounts, concessions or commissions. Underwriters may sell Debt
Securities and Warrants, if any, to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
Debt Securities and Warrants, if any, 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 and Warrants, if any, by them may be deemed to be
underwriting discounts and commissions, under the Securities Act of 1933, as
amended (the "Act"). Any such underwriter or agent will be identified, and any
such compensation received from the Company will be described, in the Prospectus
Supplement.
Under agreements which may be entered into by the Company, underwriters
and agents who participate in the distribution of Debt Securities and Warrants,
if any, may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Act.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Debt Securities and Warrants,
if any, from the Company pursuant to contracts providing for payment and
delivery on a future date. Institutions with which such contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others, but in
all cases such institutions must be approved by the Company. The obligations of
any purchaser under any such contract will be subject to the condition that the
purchase of the Offered Debt Securities and Offered Warrants, if any, shall not
at the time of delivery be prohibited under the laws of the jurisdiction to
which such purchaser is subject. The underwriters and such other agents will not
have any responsibility in respect of the validity or performance of such
contracts.
LEGAL OPINIONS
Unless otherwise indicated in the Prospectus Supplement relating to
Offered Debt Securities and Offered Warrants, if any, the validity of Offered
Debt Securities and Offered Warrants, if any, will be passed upon for the
Company by Chris B. Walther, Esq., Counsel, The Procter & Gamble Company, One
Procter & Gamble Plaza, Cincinnati, Ohio 45202, and for the underwriters or
agents, as the case may be, by Fried, Frank, Harris, Shriver & Jacobson (a
partnership including professional corporations), One New York Plaza, New York,
New York 10004. Mr. Walther may rely as to matters of New York law upon the
opinion of Fried, Frank, Harris, Shriver & Jacobson, and Fried, Frank, Harris,
Shriver & Jacobson may rely as to matters of Ohio law upon the opinion of Mr.
Walther. Fried, Frank, Harris, Shriver & Jacobson from time to time perform
legal services for the Company.
EXPERTS
The consolidated financial statements and financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon such reports given upon the authority of
that firm as experts in auditing and accounting.
- ------------------------------------ ---------------------------------
No person has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus Supplement
or the Prospectus, and, if given or
made, such information or representations
must not be relied upon as having been
authorized. This Prospectus Supplement
and the Prospectus do not 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 an offer to
sell or the solicitation of an offer
to buy such securities in any
circumstances in which such offer or
solicitation is unlawful.
Neither the delivery of this Prospectus $100,000,000
Supplement or the Prospectus nor any
sale made hereunder or thereunder THE
shall, under any circumstances, create PROCTER & GAMBLE
any implication that there has been no COMPANY
change in the affairs of theCompany
since the date hereof or that the 8.75% DEBENTURES
information contained herein or DUE JUNE 1, 2022
therein is correct as of any time
subsequent to the date of such
information.
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TABLE OF CONTENTS
Prospectus Supplement
Page
----
Incorporation of Certain
Documents by Reference.............S-2
Consolidated Ratio of
Earnings to Fixed Charges..........S-2
Description of Warrants..............S-2
Description of Debentures............S-3
Prospectus
Available Information................2
Incorporation of Certain
Documents by Reference.............2
The Company..........................3
Use of Proceeds......................4
Summary Financial Information........4
Description of Debt Securities.......5
Description of Warrants..............12
Plan of Distribution.................15
Legal Opinions.......................15
Experts..............................16
