<PAGE> 1
Filed pursuant to Rule 424(b)2
Registration Nos. 33-50547 and
33-55953
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 24, 1995)
$200,000,000
Avco Financial Services, Inc.
6.35% SENIOR NOTES DUE SEPTEMBER 15, 2000
----------------------
Interest payable March 15 and September 15
----------------------
The Notes are not redeemable prior to maturity.
----------------------
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 100% AND ACCRUED INTEREST, IF ANY
----------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.................... 100.000% .450% 99.550%
Total....................... $200,000,000 $900,000 $199,100,000
</TABLE>
------------
(1) Plus accrued interest, if any, from September 21, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting expenses payable by the Company estimated at $289,130.
----------------------
The Notes are being offered subject to prior sale, when, as and if accepted
by the Underwriters and subject to approval of certain legal matters by LeBoeuf,
Lamb, Greene & MacRae, L.L.P., counsel for the Underwriters. It is expected that
delivery of the Notes will be made on or about September 21, 1995 at the office
of Morgan Stanley & Co. Incorporated, New York, N. Y., against payment therefor
in New York funds.
----------------------
MORGAN STANLEY & CO.
Incorporated
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
September 14, 1995
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
SUMMARY OF FINANCIAL INFORMATION
The following summary of certain financial information of the Company and
its consolidated subsidiaries has been derived principally from information
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and its Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1995 (which are incorporated by reference herein) and is
qualified in its entirety by the detailed information and financial statements
set forth therein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------------------- ---------------------
1990 1991 1992 1993 1994 1994 1995
----------- ----------- ----------- ----------- ----------- --------- ---------
(THOUSANDS OF DOLLARS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES AND EARNINGS
Revenues.......................... $1,251,600 $1,321,823 $1,340,834 $1,324,064 $1,388,234 $664,401 $804,375
========== ========== ========== ========== ========== ========= =========
Income Before Income Taxes........ $189,052 $196,886 $203,913 $225,784 259,110 125,856 139,229
Income taxes...................... 71,177 72,286 75,887 83,755 96,781 47,296 52,376
----------- ----------- ----------- ----------- ----------- --------- ---------
Income before cumulative effect of
changes in accounting
principles...................... 117,875 124,600 128,026 142,029 162,329 78,560 86,853
Cumulative effect of changes in
accounting principles(a)........ (24,328)
----------- ----------- ----------- ----------- ----------- --------- ---------
Net Income(b)............ $117,875 $124,600 $103,698 $142,029 $162,329 $78,560 $86,853
========== ========== ========== ========== ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1994 1995
------------ -----------
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<S> <C> <C>
FINANCIAL CONDITION
Receivables outstanding............................................................... $6,336,368 $6,892,937
Investments........................................................................... 704,244 782,833
Consolidated assets................................................................... 7,038,291 7,699,747
Debt (excludes savings deposits)
Commercial paper and banks........................................................ 2,430,291 2,664,828
Notes............................................................................. 3,168,178 3,515,817
Stockholder's equity.................................................................. 893,744 957,605
</TABLE>
S-2
<PAGE> 3
NOTES TO SUMMARY OF FINANCIAL INFORMATION
<TABLE>
<S> <C>
(a) Effective at the beginning of 1992, the Company adopted Statements of Financial
Accounting Standards numbers 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions", and 109, "Accounting for Income Taxes".
(b) The ratios of earnings to fixed charges for the five years ended December 31, 1994 and
the three months ended March 31, 1995 are set forth in the Prospectus under the heading
"The Company -- Ratio of Earnings to Fixed Charges". Such ratio for the six months ended
June 30, 1995 was 1.6.
</TABLE>
S-3
<PAGE> 4
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements the description of the general terms and provisions of Debt
Securities set forth in the Prospectus, to which description reference is hereby
made.
GENERAL
The Notes will be issued under an indenture dated as of May 15, 1984, as
supplemented by a first supplemental indenture dated as of March 1, 1991 (the
"Indenture"), between the Company and Chemical Bank, as Trustee, will be limited
to $200,000,000 aggregate principal amount and will mature on September 15,
2000. The Notes will bear interest at the rate per annum shown on the cover page
of this Prospectus Supplement from September 21, 1995 or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semiannually on March 15 and September 15 of each year, commencing on March 15,
1996, to the persons in whose names the Notes are registered at the close of
business on the last day of February or August, as the case may be, next
preceding such Interest Payment Date. The Notes are to be issued only in
registered form without coupons in denominations of $1,000 and any multiple of
$1,000.
REDEMPTION
The Notes may not be redeemed prior to Maturity.
CONCERNING THE TRUSTEE
The Trustee has extended a line of credit (the borrowings under which
constitute Senior Debt) to the Company. The Trustee acts as trustee with respect
to three series of Debt Securities previously issued under the Indenture and
acts as successor trustee with respect to one series of Debt Securities
previously issued under an indenture dated as of August 1, 1982, as
supplemented. The Company and certain of its affiliates maintain bank accounts,
borrow money and have other customary banking relationships with the Trustee in
the ordinary course of business.
S-4
<PAGE> 5
UNDERWRITERS
Under the terms and subject to the conditions in an Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the Underwriters named
below, for whom Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner
& Smith Incorporated and Salomon Brothers Inc are serving as Representatives,
have severally agreed to purchase, and the Company has agreed to sell to them,
the respective principal amount of the Notes set forth opposite the names of
such Underwriters below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
NAME NOTES
------------------------------------------------------- ------------
<S> <C>
Morgan Stanley & Co. Incorporated...................... $ 57,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................. 56,500,000
Salomon Brothers Inc................................... 56,500,000
BA Securities, Inc. ................................... 10,000,000
Chase Securities, Inc. ................................ 10,000,000
Citicorp Securities, Inc. ............................. 10,000,000
------------
Total................................... $200,000,000
===========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to take and pay for all of the Notes
if any are taken.
The Underwriters propose to offer the Notes directly to the public at the
public offering price set forth on the cover page of this Prospectus Supplement
and to certain dealers at such price less a concession of .300% of the principal
amount of the Notes. The Underwriters may allow and such dealers may reallow to
certain other dealers a concession not in excess of .150% of the principal
amount of the Notes. After the initial public offering, the offering price and
other selling terms may be changed by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
The Company does not intend to apply for the listing of the Notes on a
national securities exchange, but has been advised by the Representatives that
one or more Underwriters currently intend to make a market in the Notes, as
permitted by applicable laws and regulations. No assurance can be given,
however, that the Underwriters will make such a market or as to the liquidity of
any trading market in the Notes.
Affiliates of each of BA Securities, Inc., Chase Securities, Inc. and
Citicorp Securities, Inc. extend credit to, and perform other banking services
for, the Company and its affiliates in the normal course of their respective
businesses.
S-5
<PAGE> 6
AVCO FINANCIAL SERVICES, INC.
DEBT SECURITIES
WARRANTS TO PURCHASE DEBT SECURITIES
------------------
The Company from time to time may issue in one or more series its unsecured
debt securities ("Debt Securities") and warrants ("Warrants") to purchase Debt
Securities (the Debt Securities and the Warrants being herein collectively
called the "Securities") for proceeds up to $1,747,205,000, or the equivalent
thereof if any of the Securities are denominated in a foreign currency or a
foreign currency unit. The Debt Securities of each series will be offered on
terms determined at the time of sale. The Debt Securities and Warrants may be
sold for U.S. dollars, foreign currencies or foreign currency units, and the
principal of and any interest on the Debt Securities may be payable in U.S.
dollars, foreign currencies or foreign currency units. The specific designation,
aggregate principal amount, the currency or currency unit for which the
Securities may be purchased, the currency or currency unit in which the
principal and any interest is payable, the rate (or method of calculation) and
time of payment of any interest, authorized denominations, maturity, offering
price, any redemption terms, any exchange or conversion terms or other specific
terms of the series of Debt Securities in respect of which this Prospectus is
being delivered are set forth in the accompanying Prospectus Supplement
("Prospectus Supplement"). With regard to the Warrants, if any, in respect of
which this Prospectus is being delivered, the Prospectus Supplement sets forth a
description of the Debt Securities for which each Warrant is exercisable and the
offering price, if any, exercise price, duration, detachability and other terms
of the Warrants.
The Securities may be sold through underwriters or dealers or may be sold
by the Company directly or through agents designated from time to time. The
names of any underwriters or agents involved in the sale of the Securities in
respect of which this Prospectus is being delivered and their compensation are
set forth in the Prospectus Supplement.
------------------
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 24, 1995
<PAGE> 7
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
---------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports and other information can be inspected and copied at the offices of the
Commission at 450 Fifth Street N.W., Washington, D.C. 20549; 500 West Madison
Street, Chicago, Illinois 60661-2511; and 7 World Trade Center, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. This Prospectus does not contain all information set forth in
the Registration Statements and Exhibits thereto which the Company has filed
with the Commission under the Securities Act of 1933 and to which reference is
hereby made.
The Company intends to publish annual reports with financial information
that has been audited and reported upon, with an opinion expressed, by
independent auditors. These reports will not be distributed to holders of the
Securities but will be available to them upon request.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1994, its Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
and its Current Report on Form 8-K dated May 1, 1995, heretofore filed with the
Commission pursuant to the Securities Exchange Act of 1934, are incorporated
herein by reference. All documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date
hereof and prior to the termination of the offering of the Securities offered
hereby shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of filing such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein or in
the accompanying Prospectus Supplement modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST BY SUCH PERSON, A COPY OF
ANY OR ALL OF THE DOCUMENTS DESCRIBED ABOVE, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS. REQUESTS SHOULD BE ADDRESSED TO: AVCO FINANCIAL SERVICES, INC., 600
ANTON BOULEVARD, P.O. BOX 5011, COSTA MESA, CALIFORNIA 92628-5011, ATTENTION:
SECRETARY (714-445-7860).
2
<PAGE> 8
THE COMPANY
Avco Financial Services, Inc. (the "Company"), organized under the laws of
Delaware on July 17, 1964, is the successor to the finance business of Seaboard
Finance Company, originally established in 1927, and the finance business of
Delta Acceptance Corporation Limited, originally established in 1954. All the
Company's outstanding capital stock is owned by Textron Inc., a Delaware
corporation. Unless the context otherwise requires, the term "Company" herein
refers to Avco Financial Services, Inc. and its consolidated subsidiaries.
The Company is principally engaged in consumer finance and insurance
activities. The Company's finance operations mainly involve loans made by the
Avco Financial Services Group consisting of consumer loans, which are unsecured
or secured by personal property and are in relatively small amounts and for
relatively short periods; real estate loans, which are secured by real property
and are in larger amounts and for considerably longer periods; and retail
installment contracts, principally covering personal property. As of December
31, 1994 the Company operated 1,198 finance offices located in all states of the
United States (except Arkansas, Kansas, Maine, Michigan, Mississippi, Oklahoma,
Texas and Vermont), the Commonwealth of Puerto Rico, the Virgin Islands, all
Canadian provinces and the Yukon Territory, six Australian states and the
Australian Capital Territory, Hong Kong, New Zealand, Spain and the United
Kingdom. The Company's insurance business consists primarily of the sale of
credit life, credit disability and casualty insurance offered by various
subsidiaries (Avco Insurance Services Group), a significant part of which is
directly related to its finance activities.
The Company's principal executive offices are located at 600 Anton
Boulevard, P.O. Box 5011, Costa Mesa, California 92628-5011 (tel. 714-553-1200
or, after July 1, 1995, 714-435-1200).
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Company for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------- ------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ------------
<S> <C> <C> <C> <C> <C>
1.5 1.5 1.5 1.7 1.7 1.6
</TABLE>
The ratios of earnings to fixed charges represent the number of times fixed
charges (interest and debt expense [without adjustments for discounts or
premiums from the repurchase of debt securities] and one-third of all rent and
related costs, considered to represent an appropriate interest factor, charged
to income) are covered by earnings from operations before income taxes,
extraordinary item, cumulative effect of changes in accounting principles and
fixed charges.
APPLICATION OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, the net proceeds from the sale of the Securities will be added
to the general funds of the Company and will be applied initially to the
reduction of short-term commercial paper borrowings incurred in the ordinary
course of the financing activities of the Company. Additional financing which
may be required from time to time will be effected through such means as the
Company deems appropriate at the time. The amount of further financing, as well
as the purposes for which the proceeds thereof will be used, cannot now be
determined.
3
<PAGE> 9
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute senior debt of the Company and will be
issued under one or more separate indentures described below (each an
"Indenture"), in each case between the Company and a banking institution
organized under the laws of the United States of America or of any State thereof
(each a "Trustee"). The following summary of certain provisions of the
Indentures does not purport to be complete and is qualified in its entirety by
reference to the applicable Indenture, a copy of which is filed as an exhibit to
the Registration Statement. All article and section references appearing herein
are to articles and sections of the applicable Indenture, and all capitalized
terms have the meanings specified in the applicable Indenture.
GENERAL
The Debt Securities will be unsecured obligations of the Company. None of
the Indentures limits the amount of Debt Securities which may be issued
thereunder and each Indenture provides that Debt Securities may be issued
thereunder up to the aggregate principal amount which may be authorized from
time to time by the Company. (Article Three) The Indentures do not contain any
covenant or other provision that is specifically intended to afford any Holder
special protection in the event of a highly leveraged transaction. Reference is
made to the Prospectus Supplement which accompanies this Prospectus for the
following terms and other information with respect to the Debt Securities being
offered thereby: (i) the title of the Debt Securities; (ii) the designation,
aggregate principal amount and authorized denominations of such Debt Securities;
(iii) the percentage of their principal amount at which such Debt Securities
will be issued; (iv) the currency, currencies or currency units for which the
Debt Securities may be purchased and the currency, currencies or currency units
in which the principal of and any interest on such Debt Securities may be
payable; (v) the date on which such Debt Securities will mature; (vi) the rate
per annum at which such Debt Securities will bear interest, if any, or the
method of determination of such rate; (vii) the dates on which such interest, if
any, will be payable and the record dates for such payment dates; (viii) the
Trustee under the Indenture pursuant to which the Debt Securities are to be
issued; (ix) any redemption terms; and (x) any exchange or conversion terms or
other specific terms.
If any of the Securities are sold for foreign currencies or foreign
currency units or if the principal of or any interest on any series of Debt
Securities is payable in foreign currencies or foreign currency units, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such issue of Securities and such currencies or currency units
will be set forth in the Prospectus Supplement relating thereto.
Unless otherwise specified in the Prospectus Supplement which accompanies
this Prospectus, principal, premium, if any, and interest, if any, are to be
payable at the Corporate Trust Office of the Trustee or its successors in The
City of New York, or at the office or agency of the Company maintained for such
purposes in the Borough of Manhattan, The City of New York, provided that
payment of interest, if any, may be made at the option of the Company by check
mailed to the persons in whose names the Debt Securities are registered at the
close of business on the day specified in the Prospectus Supplement accompanying
this Prospectus. (sec. 3.12)
The Debt Securities will be issued only in fully registered form without
coupons. (sec. 3.02) Such Debt Securities will be exchangeable for other Debt
Securities of the same series, registered in the same name, for a like aggregate
principal amount in authorized denominations and will be transferable at any
time or from time to time at the Corporate Trust Office of the Trustee or at any
other office or agency of the Company maintained for that purpose. No charge
will be made to the Holder for any such exchange or transfer except for any tax
or governmental charge incidental thereto. (sec. 3.05) If so specified in the
Prospectus Supplement which accompanies this Prospectus, the Company may provide
for the issuance of uncertificated Debt Securities in addition to or in place of
certificated Debt Securities and for the issuance of one or more Global
Securities denominated in an amount equal to all or a portion of the aggregate
principal amount of the series of Debt Securities.
Debt Securities of a single series may be issued at various times with
different maturity dates, may bear interest at different rates and may otherwise
vary.
4
<PAGE> 10
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable to any such series will be
described in the Prospectus Supplement relating thereto.
None of the Company's outstanding debt is, and the Debt Securities will not
be, guaranteed by Textron Inc.
CERTAIN RESTRICTIVE PROVISIONS
None of the Indentures limits the amount of indebtedness which may be
incurred by the Company or its Subsidiaries but each Indenture contains a
covenant that neither the Company nor any of its Domestic Finance Subsidiaries
or Domestic Insurance Subsidiaries will suffer to exist any lien upon its assets
or acquire assets subject to any lien, except (i) liens for taxes and
governmental charges not yet due or being contested in good faith; (ii)
incidental liens other than in connection with the borrowing of money or
obtaining of credit; (iii) liens securing obligations of a Domestic Finance
Subsidiary or Domestic Insurance Subsidiary to the Company or another Domestic
Finance Subsidiary or Domestic Insurance Subsidiary; (iv) certain liens on
acquired property; and (v) conditional sales or title retention agreements and
other security devices affecting certain acquired property. (sec. 12.08) In
addition, each Indenture provides that neither the Company nor any Subsidiary
will make any loan to, or enter into any other transaction with, an Affiliate on
terms and conditions less favorable to the Company or such Subsidiary than the
terms and conditions which would apply in a similar transaction with an
unaffiliated party, provided that this covenant will not apply to transactions
involving the Company and its Subsidiaries exclusively. (sec. 12.09) The Holders
of 66 2/3% in principal amount of the Debt Securities at the time Outstanding of
each series which is affected thereby, may waive from time to time compliance by
the Company with the foregoing restrictive covenants. (sec. 12.11)
MODIFICATION OF THE INDENTURES
Modifications and amendments of any Indenture may be made by the Company
and the applicable Trustee with the consent of the Holders of 66 2/3% in
principal amount of each series of the Debt Securities at the time Outstanding
under such Indenture which is affected thereby, provided that no such
modification or amendment may, without the consent of the Holder of each Debt
Security affected thereby: (i) modify the terms of payment of principal,
premium, if any, or interest; (ii) reduce the above stated percentage of Holders
of Debt Securities necessary to modify or amend such Indenture or waive
compliance by the Company with any restrictive covenant; or (iii) subordinate
the indebtedness evidenced by the Debt Securities to any indebtedness of the
Company. (sec. 11.02)
EVENTS OF DEFAULT, NOTICE AND WAIVER
Except as may otherwise be set forth in the Prospectus Supplement, each
Indenture provides that the following are Events of Default thereunder with
respect to any series of Debt Securities issued thereunder; default in the
payment of the principal of (or premium, if any, on) any Debt Security of such
series at its Maturity; default in making a sinking fund payment, if any, when
and as the same shall be due and payable by the terms of the Debt Securities of
such series; default for 30 days in the payment of any installment of interest
on any Debt Security of such series; default for 60 days after written notice in
the performance of any other covenant in respect of the Debt Securities of such
series contained in such Indenture; certain events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator or trustee of the
Company or its property; an event of default with respect to any other series of
Debt Securities outstanding under such Indenture or as defined in any other
indenture or instrument evidencing or under which the Company has outstanding
any indebtedness for borrowed money, as a result of which indebtedness of the
Company shall have been accelerated and such acceleration shall not have been
annulled within 10 days after written notice thereof; and any other Event of
Default provided in the applicable resolution of the Board of Directors or
supplemental indenture under which such series of Debt Securities is issued.
(sec. 7.01) An Event of Default with respect to a particular series of Debt
Securities does not necessarily constitute an Event of Default with respect to
any other series of Debt Securities issued under the same or another Indenture.
The
5
<PAGE> 11
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except in the payment of principal,
premium or interest) if it considers such withholding in the interests of such
Holders. (sec. 8.02)
If an Event of Default with respect to any series of Debt Securities shall
have occurred and be continuing, the Trustee or the Holders of 25% in aggregate
principal amount of the Debt Securities of such series may declare the
principal, or in the case of discounted Debt Securities, such portion thereof as
may be described in the Prospectus Supplement accompanying this Prospectus, of
all the Debt Securities of such series to be due and payable immediately. (sec.
7.02)
Each Indenture contains a provision entitling the Trustee to be indemnified
by the Holders of Debt Securities issued thereunder before proceeding to
exercise any right or power under such Indenture at the request of any Holders.
(sec. 8.03) Each Indenture provides that the Holders of a majority in principal
amount of the Outstanding Debt Securities of any series issued thereunder may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee, with respect to the Debt Securities of such series. (sec. 7.12) The
right of the Holder to institute a proceeding with respect to the applicable
Indenture is subject to certain conditions precedent including notice and
indemnity to the applicable Trustee, but each Holder has an absolute right to
receipt of principal, premium, if any, and interest at the respective Stated
Maturities (or, in the case of redemption, on the Redemption Date) or to
institute suit for the enforcement thereof. (sec.sec. 7.07 and 7.08)
The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
the Debt Securities of such series waive any past defaults except (a) a default
in payment of the principal of (or premium, if any) or interest, if any, or
sinking fund payments, if any, on any Debt Security of such series and (b) a
default in respect of a covenant or provision of the applicable Indenture which
cannot be amended or modified without the consent of the Holder of each
Outstanding Debt Security affected. (sec. 7.13)
Each Indenture requires the Company to furnish to the applicable Trustee
annual statements as to the fulfillment by the Company of its obligations under
such Indenture. (sec. sec. 9.04 and 12.06)
CONCERNING THE TRUSTEES
Business and other relationships (including other trusteeships) between the
Company and its affiliates and each Trustee under any Indenture pursuant to
which any of the Debt Securities to which the Prospectus Supplement accompanying
this Prospectus relates are described in such Prospectus Supplement.
DESCRIPTION OF WARRANTS
The following statements with respect to the Warrants are summaries of, and
subject to, the detailed provisions of one or more separate Warrant Agreements
(each a "Warrant Agreement") between the Company and one or more banking
institutions organized under the laws of the United States of America or any
State thereof, as Warrant Agent (each a "Warrant Agent"), a form of which is
filed as an exhibit to the Registration Statement.
GENERAL
The Warrants, evidenced by Warrant Certificates (the "Warrant
Certificates") may be issued under a Warrant Agreement independently or together
with any Debt Securities offered by any Prospectus Supplement and may be
attached to or separate from such Debt Securities. If Warrants are offered, the
Prospectus Supplement will describe the terms of the Warrants, including the
following: (i) the offering price, if any; (ii) the designation, aggregate
principal amount, and terms of the Debt Securities purchasable upon exercise of
the Warrants; (iii) if applicable, the designation and terms of the Debt
Securities with which the Warrants are issued and the number of Warrants issued
with each such Debt Security; (iv) if applicable, the date on and after which
the Warrants and the related Debt Securities will be separately transferable;
(v) the principal amount of Debt Securities purchasable upon exercise of one
Warrant and the price at which such principal
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amount of Debt Securities may be purchased upon such exercise; (vi) the date on
which the right to exercise the Warrants shall commence and the date on which
such right shall expire; (vii) federal income tax consequences; (viii) whether
the Warrants represented by the Warrant Certificates will be issued in
registered or bearer form; and (ix) any other terms of the Warrants.
Warrant Certificates may be exchanged for new Warrant Certificates of
different denominations and may (if in registered form) be presented for
registration of transfer at the corporate trust office of the Warrant Agent or
any Co-Warrant Agent, which will be listed in the Prospectus Supplement, or at
such other office as may be set forth therein. Warrantholders do not have any of
the rights of holders of Debt Securities (except to the extent that the consent
of Warrantholders may be required for certain modifications of the terms of an
Indenture and the series of Debt Securities issuable upon exercise of the
Warrants) and are not entitled to payments of principal and interest, if any, on
such Debt Securities.
EXERCISE OF WARRANTS
Warrants may be exercised by surrendering the Warrant Certificate at the
corporate trust office of the Warrant Agent or at the corporate trust office of
the Co-Warrant Agent, if any, with the form of election to purchase on the
reverse side of the Warrant Certificate properly completed and executed, and by
payment in full of the exercise price, as set forth in the Prospectus
Supplement. Upon exercise of Warrants, the Warrant Agent will, as soon as
practicable, deliver the Debt Securities in authorized denominations in
accordance with the instructions of the exercising Warrantholder and at the sole
cost and risk of such holder. If less than all of the Warrants evidenced by the
Warrant Certificate are exercised, a new Warrant Certificate will be issued for
the remaining amount of Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities (i) through underwriters or dealers;
(ii) directly to one or more institutional purchasers; or (iii) through agents.
The Prospectus Supplement with respect to the Securities being offered thereby
sets forth the terms of the offering of such Securities, including the name or
names of any underwriters, the purchase price of such Securities and the
proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering
price, any discounts or concessions allowed or reallowed or paid to dealers and
any securities exchanges on which such Securities may be listed. Only
underwriters so named in the Prospectus Supplement are deemed to be underwriters
in connection with the Securities offered thereby.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase such Securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all the Securities of the series offered by the Company's Prospectus Supplement
if any of such Securities are purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Securities may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offering
and sale of the Securities in respect of which this Prospectus is delivered is
named, and any commissions payable by the Company to such agent are set forth,
in the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent is acting on a best efforts basis for the period of
its appointment.
As one of the means of direct issuance of the Debt Securities, the Company
may utilize the services of another entity to conduct an electronic "dutch
auction" of the Debt Securities among potential purchasers who are eligible to
participate in the auction of such Securities, as described in the Prospectus
Supplement.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutional
investors to purchase Securities providing for payment and delivery on a future
date specified in the Prospectus Supplement. There may be limitations on the
minimum amount which
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may be purchased by any such institutional investor or on the portion of the
aggregate principal amount of the particular Securities which may be sold
pursuant to such arrangements. Institutional investors to which such offers may
be made, when authorized, include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and such other institutions as may be approved by the Company. The
obligations of any such purchasers pursuant to such delayed delivery and payment
arrangements will not be subject to any conditions except (i) the purchase by an
institution of the particular Securities shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject, and (ii) if the particular Securities are being sold to
underwriters, the Company shall have sold to such underwriters the total
principal amount of such Securities less the principal amount thereof covered by
such arrangements. Underwriters will not have any responsibility in respect of
the validity of such arrangements or the performance of the Company or such
institutional investors thereunder.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribution with
respect to payments which the agents or underwriters may be required to make in
respect thereof. Agents and underwriters may engage in transactions with, or
perform services for, the Company in the ordinary course of business.
LEGAL AND AUDIT OPINIONS
Certain legal matters in connection with the Securities being offered
hereby will be passed upon for the Company by its Senior Vice President,
Secretary and General Counsel, Herbert F. Smith, Esq., 600 Anton Boulevard, P.O.
Box 5011, Costa Mesa, California 92628-5011, and for any underwriters or agents
by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited liability partnership
including professional corporations, 125 West 55th Street, New York, New York
10019.
The consolidated financial statements and schedules of the Company
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements and schedules are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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