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<S> <C>
As filed with the Securities and Exchange Commission on January 6, 2000
Registration No. 333-92333
===================================================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Amendment No. 1
to
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
AVON PRODUCTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
New York 2844 13-0544597
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Number) Identification Number)
1345 Avenue of the Americas
New York, New York 10105-0196
(212) 282-5000
(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant's Principal Executive Offices)
-----------------------
Ward M. Miller, Jr., Esq.
General Counsel
1345 Avenue of the Americas
New York, New York 10105-0196
(212) 282-5000
(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)
-----------------------
Copy to:
Sarah Beshar, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. |_|
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class Amount to be Offering Price Per Aggregate Registration
of Securities to be Registered Registered Unit (1) Offering Price (1) Fee(2)
- ------------------------------------------------------------------------------------------------------------------------
6.90% Notes due 2004......................... $200,000,000 99.010% $198,020,000 $ 52,277.28
7.15% Notes due 2009......................... $300,000,000 98.199% $294,597,000 $ 77,773.61
- ------------------------------------------------------------------------------------------------------------------------
Total $500,000,000 - $492,617,000 $130,050.89
========================================================================================================================
(1) Determined pursuant to Rule 457(f), solely for the purpose of calculating
the registration fee, on the basis of the average of the bid and asked
price for the securities on December 2, 1999.
(2) This registration fee was previously paid on December 8, 1999.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
===================================================================================================================
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<PAGE>
Prospectus
January 6, 2000
[LOGO]
Avon Products, Inc.
Offer to Exchange
$200,000,000 6.90% Notes due 2004 and
$300,000,000 7.15% Notes due 2009
for
$200,000,000 6.90% New Notes due 2004 and
$300,000,000 7.15% New Notes due 2009
-----------------------
We are offering to exchange up to $200,000,000 of our 6.90% notes due 2004
and up to $300,000,000 of our 7.15% notes due 2009 (the New Notes), which will
be registered under the Securities Act of 1933, as amended, for up to
$200,000,000 of our existing 6.90% notes due 2004 and up to $300,000,000 of our
existing 7.15% notes due 2009 (the Old Notes). We are offering to issue the New
Notes to satisfy our obligations contained in the registration rights agreement
entered into when the Old Notes were sold in transactions permitted by Rule
144A and Regulation S under the Securities Act.
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except that the transfer restrictions, registration
rights and additional interest provisions relating to the Old Notes do not
apply to the New Notes.
The exchange offer and withdrawal rights will expire at 5:00 p.m. New York
City time, on February 8, 2000 unless extended.
-----------------------
To exchange your Old Notes for New Notes:
o You must complete and send the letter of transmittal that accompanies
this prospectus to the exchange agent by 5:00 p.m., New York time, on
February 8, 2000.
o If your Old Notes are held in book-entry form at The Depository Trust
Company, you must instruct DTC, through your signed letter of
transmittal, that you wish to exchange your Old Notes for New Notes.
When the exchange offer closes, your DTC account will be changed to
reflect your exchange of Old Notes for New Notes.
o You should read the section called "The Exchange Offer" for
additional information on how to exchange your Old Notes for New
Notes.
-----------------------
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
<PAGE>
-----------------------
You should rely only on the information contained in this document or that
we have referred you to. We have not authorized anyone to provide you with
information that is different. We are not making an offer of these securities
in any state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of those documents.
----------------------
TABLE OF CONTENTS
Page
----
Where You can Find More Information.........................................3
Special Note Regarding Forward-Looking Information..........................4
Summary.....................................................................5
Selected Financial Data.....................................................8
The Company................................................................10
Recent Developments........................................................11
No Cash Proceeds to the Company............................................12
Consolidated Ratio of Earnings to Fixed Charges............................12
Capitalization.............................................................13
Description of the New Notes...............................................14
The Exchange Offer.........................................................23
Certain United States Income Tax Considerations............................32
Plan of Distribution.......................................................33
Notice to Investors........................................................34
Validity of the New Notes..................................................35
Independent Accountants....................................................35
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Avon is subject to the informational requirements of the Securities
Exchange Act and we file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
Our SEC filings are available over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file with the
SEC at its public reference facilities:
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<S> <C> <C>
Public Reference Room Office New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of the documents at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further
information on the operations of the public reference facilities. Our SEC
filings are also available at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
We incorporate by reference in this prospectus the following documents
filed by us with the SEC:
(i) Our Annual Report on Form 10-K for the fiscal year ended December
31, 1998, filed with the SEC on February 25, 1999;
(ii) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, filed with the SEC on May 14, 1999;
(iii) Our Quarterly Report on Form 10-Q for the quarter ended June 30,
1999, filed with the SEC on August 12, 1999;
(iv) Our Quarterly Report on From 10-Q for the quarter ended September
30, 1999, filed with the SEC on November 15, 1999; and
(v) Our Definitive Proxy Statement, dated March 25, 1999, filed with
the SEC on March 25, 1999.
Any statement made in a document incorporated by reference or deemed
incorporated herein by reference is deemed to be modified or superseded for
purposes of this prospectus if a statement contained in this prospectus or in
any other subsequently filed document which also is incorporated or deemed
incorporated by reference herein modifies or supersedes that statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus. We also incorporate by
reference all documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act after the date of this exchange offer and prior to
the termination of this exchange offer.
Statements made in this prospectus or in any document incorporated by
reference in this prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in
each instance reference is made to the copy of the contract or other document
filed as an exhibit to the documents incorporated by reference, each statement
being qualified in all material respects by that reference.
We will promptly provide without charge to you, upon oral or written
request, a copy of any or all of the documents incorporated by reference in
this prospectus. To obtain timely delivery, you must request the information no
later than February 1, 2000, or five business days before the expiration date,
if the exchange offer is extended. Requests should be directed to Avon, 1345
Avenue of the Americas, New York, New York 10105-0196, Attention: Ward M.
Miller, Jr., Esq., telephone (212) 282-5000.
3
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We have filed with the SEC under the Securities Act and the rules and
regulations thereunder a registration statement on Form S-4 with respect to the
New Notes issuable pursuant to the exchange offer. This prospectus does not
contain all of the information contained in the registration statement, certain
portions of which have been omitted pursuant to the rules and regulations of
the SEC and to which reference is hereby made.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Some of the statements included or incorporated by reference in this
prospectus constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act. These statements involve known and unknown risks, uncertainties and other
factors which may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any
future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
These factors include, among others, the following:
o general economic and business conditions in our markets;
o our ability to implement our business strategy;
o our ability to achieve anticipated cost savings and profitability
targets;
o our ability to attract and retain key executives;
o our access to financing and management of foreign currency risks;
o the impact of substantial currency exchange devaluations in our
principal foreign markets;
o our ability to successfully identify new business opportunities;
o the effect of legal and regulatory proceedings and restrictions
imposed on us or our operations by foreign governments;
o changes in the industry; and
o competition.
As a result of the foregoing and other factors, no assurance can be given
as to the future results and achievements of Avon. Neither Avon nor any other
person assumes responsibility for the accuracy and completeness of these
statements.
4
<PAGE>
SUMMARY
The following summary contains basic information about this exchange
offer. It may not contain all the information that is important to you in
making your investment decision. More detailed information appears elsewhere in
this prospectus and in our consolidated financial statements and accompanying
notes that we incorporate by reference. "The Exchange Offer" and the
"Description of New Notes" sections of this prospectus contain more detailed
information regarding the terms and conditions of the exchange offer and the
New Notes. Certain capitalized terms used in this prospectus summary are
defined elsewhere in this prospectus. Unless the context clearly implies
otherwise, the words "company," "we," "our," "ours," "us" and "Avon" refer to
Avon Products, Inc., a New York corporation.
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THE EXCHANGE OFFER
<S> <C>
New Notes.................................... $200,000,000 in principal amount of our new 6.90% notes
due 2004 and $300,000,000 in principal amount of our
new 7.15% notes due 2009.
The Exchange Offer........................... We are offering to issue the New Notes in exchange for a
like principal amount of outstanding Old Notes that we
issued on November 9, 1999. We are offering to issue the
New Notes to satisfy our obligations contained in the
registration rights agreement we entered into when we
sold the Old Notes in transactions pursuant to Rule 144A,
Rule 501 and Regulation S under the Securities Act. The
Old Notes were subject to transfer restrictions that will not
apply to the New Notes so long as you are acquiring the
New Notes in the ordinary course of your business, you
are not participating in a distribution of the New Notes
and you are not an affiliate of ours.
Maturity Dates............................... November 15, 2004 and November 15, 2009.
Interest Payment Dates....................... May 15 and November 15 of each year, commencing May
15, 2000.
Ranking...................................... The New Notes are unsecured senior obligations of ours
and will rank equally with all of our other senior
unsecured indebtedness.
Optional Redemption.......................... We may redeem some or all of the New Notes at any time
or from time to time at the redemption price described
under the heading "Description of the New Notes--
Optional Redemption" plus accrued interest, if any, to the
date of redemption.
5
<PAGE>
Certain Covenants............................ The indenture governing the New Notes contains
covenants that, among other things, limit our ability to:
o create liens;
o engage in certain sale/leaseback transactions;
o merge or consolidate with another company; or
o transfer substantially all of our assets.
For more details, see the section under the heading
"Description of the New Notes--Covenants" in the prospectus.
Use of Proceeds.............................. We will not receive any proceeds from the issuance of the
New Notes.
Denominations and Issuance of New Notes...... The New Notes will be issued only in registered form
without coupons, in minimum denominations of $1,000
and multiples of $1,000.
Tenders, Expiration Date, Withdrawal......... The exchange offer will expire at 5:00 p.m., New York
City time, on February 8, 2000, unless it is extended. To
tender your Old Notes you must follow the detailed
procedures described under the heading "The Exchange
Offer--Process for Tendering" including special
procedures for certain beneficial owners and broker-
dealers. If you decide to exchange your Old Notes for
New Notes, you must acknowledge that you do not intend
to engage in and have no arrangement with any person to
participate in a distribution of the New Notes. If you
decide to tender your Old Notes pursuant to the exchange
offer, you may withdraw them at any time prior to 5:00
p.m., New York City time, on the expiration date.
Federal Income Tax Consequences.............. Your exchange of Old Notes for New Notes pursuant to
the exchange offer will not result in a gain or loss to you.
Exchange Agent............................... The Chase Manhattan Bank is the exchange agent for the
exchange offer.
Failure to Exchange Your Old Notes........... If you fail to exchange your Old Notes for New Notes in
the exchange offer, your Old Notes will continue to be
subject to transfer restrictions and you will not have any
further rights under the registration rights agreement,
including any right to require us to register your Old
Notes or to pay any additional interest.
Trading Market............................... To the extent that Old Notes are tendered and accepted in
the exchange offer, your ability to sell untendered, and
tendered but unaccepted, Old Notes could be adversely
6
<PAGE>
affected. There may be no trading market for the Old
Notes.
There can be no assurance that an active public market
for the New Notes will develop or as to the liquidity of any
market that may develop for the New Notes, the ability of
holders to sell the New Notes, or the price at which
holders would be able to sell the New Notes. For more
details, see the section under the heading "Notice to
Investors."
</TABLE>
7
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data is derived from our audited
consolidated financial statements, except for the financial data for the nine
months ended September 30 that is derived from our unaudited consolidated
financial statements. You should read the financial data presented below in
conjunction with our consolidated financial statements, accompanying notes and
management's discussion and analysis of our results of operations and financial
condition, which are incorporated by reference into this prospectus.
<TABLE>
<CAPTION>
Nine Months Ended
September 30 Year Ended December 31,
----------------------- ------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------- ------- ------- ------- ------- ------- -------
($ in millions, except ratios and per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Net Sales.................. $ 3,723 $ 3,664 $ 5,213 $ 5,079 $ 4,814 $ 4,492 $ 4,267
Income from continuing
operations before
income taxes, minority
interest and accounting
changes................. 285 (1) 224 (2) 456 (2) 535 510 465 434
Net income................. 161 (1) 122 (2) 270 (2) 339 318 257 196
Balance Sheet data (at
period end):
Total assets............... $ 2,527 $ 2,465 $ 2,434 $ 2,273 $ 2,222 $ 2,053 $ 1,978
Total debt................. 600 496 256 234 202 162 178
Other financing(3)......... 108 56 112 59 - - -
Total stockholders' equity. 61 204 285 285 242 193 186
Other Data:
EBITDA(4).................. 379.3 (1) 305.1 (2) 568 (2) 648.8 614.9 564.6 540.3
Capital expenditures....... 123.3 110.9 189.5 169.4 103.6 72.7 99.9
Ratio of total debt and
other financing to
EBITDA.................. 1.9x(1) 1.8x(2) 0.6x(2) 0.5x 0.3x 0.3x 0.3x
Ratio of EBITDA to
interest expense........ 11.5x(1) 10.0x(2) 13.9x(2) 15.5x 15.4x 13.7x 10.6x
Ratio of earnings to
fixed charges(5)........ 6.3x 5.3x 7.5x 8.5x 8.3x 7.9x 6.3x
Cash dividends per share... $ 0.54 $ 0.51 $ 0.68 $ 0.63 $ 0.58 $ 0.53 $ 0.48
Diluted EPS from
continuing operations... $ 0.61 (1) $ 0.46 (2) $ 1.02 (2) $ $1.27 $ 1.18 $ 1.05 $ 0.93
Cash Flows provided
(used) by Operating
Activities.............. $ 109.7 $ (13.6) $ 324.4 $ 315.5 $ 386.9 $ 279.0 $ 292.3
Cash Flows provided
(used) by Investing
Activities.............. $(133.5) $(104.3) $(182.3) $(175.1) $(106.6) $ (73.3) $ 54.6
Cash Flows provided
(used) by Financing
Activities.............. $ 39.7 $ 69.6 $(183.1) $(163.8) $(236.2) $(272.0) $(345.4)
- -------------------
(1) Includes a one-time charge of $151.2 million pre-tax ($121.9 million
after tax) or $0.46 per diluted share, related to our Business
Process Redesign (BPR) program. Excluding the charge, income from
continuing operations before income taxes, minority interest and
accounting changes, net income, EBITDA, ratio of total debt and other
financing to EBITDA, ratio of EBITDA to interest expense, and diluted
earnings per share were $437 million, $283 million, $531 million,
1.3x, 16.0x and $1.07, respectively, for the nine months ended
September 30, 1999.
8
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(2) Includes one-time charges of $154.4 million pre-tax ($122.8 million
after tax) or $0.46 per diluted share related to our BPR program.
Excluding the charges, income from continuing operations before
income taxes, minority interest and accounting changes, net income,
EBITDA, ratio of total debt and other financing to EBITDA, ratio of
EBITDA to interest expense, and diluted earnings per share were $378
million, $245 million, $460 million, 1.2x, 15.1x and $0.92,
respectively, for the nine months ended September 30, 1998, and $610
million, $393 million, $723 million, 0.5x, 17.6x and $1.48,
respectively, for the year ended December 31, 1998.
(3) "Other financing" is included in other non-current liabilities on our
Consolidated Balance Sheet at September 30, 1999 and 1998 and
December 31, 1998 and 1997.
(4) EBITDA represents income from continuing operations before income
taxes, minority interest, interest expense, depreciation and
amortization. EBITDA is a widely accepted financial indicator of a
company's ability to service and/or incur debt. However, EBITDA
should not be construed as an alternative to operating income (as
determined in accordance with generally accepted accounting
principles) or to cash flows from operating activities (as determined
in accordance with generally accepted accounting principles) and
should not be construed as an indication of our operating performance
or as a measure of our liquidity. EBITDA is not a measurement under
generally accepted accounting principles and may not be comparable
with similarly titled measures of other companies that do not compute
EBITDA in the same manner.
(5) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of earnings before income taxes and minority
interest, plus fixed charges and the amortization of capitalized
interest. "Fixed charges" consist of interest incurred on
indebtedness, amortization of debt discount, fees and expenses plus
one-third of the rental expense from operating leases, which
management believes is a reasonable approximation of the interest
component of rental expense. The ratios of earnings to fixed charges
are calculated as follows:
(Income before income taxes and minority interest) + (fixed charges) + (amortization of capitalized interest)
-------------------------------------------------------------------------------------------------------------
(fixed charges)
For the nine months ended September 30, 1999 and 1998, excluding the
one-time charges discussed above, the ratio of earnings to fixed
charges was 9.0 and 8.3, respectively. For the year ended December
31, 1998, excluding the one-time charges discussed above, the ratio
of earnings to fixed charges was 9.7.
</TABLE>
9
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THE COMPANY
General
We are one of the world's leading manufacturers and marketers of beauty
and related products, which include cosmetics, fragrance and toiletries (CFT);
fashion jewelry and accessories; apparel; and gift and decorative products.
Approximately 2.8 million independent sales Representatives market our products
to consumers globally. We commenced operations in 1886 and were incorporated in
the State of New York on January 27, 1916. Our business is comprised of one
industry segment, direct selling, with worldwide operations.
Global Business Strategy
In 1999, we adopted a new strategic plan to drive revenue growth and
expand our customer base around the world by building on our strengths as a
beauty marketer and a leading home direct seller. The new strategy includes,
but is not limited to, plans to upgrade our beauty image; build a global
portfolio of jewelry and accessories; and develop innovative programs to train,
motivate and retain Representatives as well as enhance their earnings
opportunities. We expect that our Business Process Redesign (BPR) programs will
continue to free resources to fund these strategic growth initiatives and
contribute to earnings growth. Spending for product innovation and advertising
are also key components in building a global beauty image and allocating our
investments towards reaching the end consumer.
Our global strategies include the following key growth initiatives:
International Expansion
Avon is one of the most widely recognized brand names in the world. We are
particularly well positioned to capitalize on growth in new international
markets due to high demand for quality products, underdeveloped retail
infrastructures and relatively attractive earnings opportunity for women. We
presently have operations in 45 countries outside the U.S. and our products are
distributed in 89 more, for coverage in 135 markets, and we continue to expand
into new markets. We have entered 21 new markets since 1990, including Russia
and China and rapidly emerging nations throughout Central Europe, and are
currently evaluating several other markets in Eastern Europe and the Pacific
region.
Direct Selling Contemporization
We continue to revolutionize our direct selling channel and Representative
experience, enabling us to reach women quickly and efficiently by offering
Representatives training, support and earnings opportunities. In addition to
new commission, sales training and communication programs, we are planning to
leverage new technology such as the Internet to improve customer service, offer
electronic ordering and communicate more effectively with Representatives.
Additionally, we annually produce more than 600 million brochures in a dozen
languages, utilizing common imagery and layouts from a single global database
to enhance our global beauty image.
Complementary Access and Image Enhancement
To accelerate growth in established industrial nations such as the U.S.,
Western Europe and Japan, we have developed new channels to reach more
customers and improve access to our products through Avon Beauty Centers and
Express Centers in the U.S., toll-free telephone numbers, direct mail and
"on-line" shopping via the Internet on our web site, Avon.com. We intend to
implement an integrated Internet strategy to focus on improving access and
accelerating growth. These complementary access programs will further increase
Avon's brand awareness and drive our global beauty image.
Strategies to increase the number of "fixed locations" that sell our
products also help reach new customers in the Pacific region. For example, the
Philippines, India and Indonesia use decentralized branches and satellite
stores to serve Representatives and customers. The branches also create
visibility for us with consumers and help build our
10
<PAGE>
beauty image. Additionally, in Malaysia, we have 145 franchised beauty
boutiques, which are staffed by franchise Representatives and located in areas
with high concentrations of Representatives. The boutiques provide more direct
and personal service to Representatives and their customers.
We continue to update the image of our core beauty products and our
portfolio of global beauty brands. In the past four years, CFT products have
all undergone extensive upgrades in packaging, imaging and formulations,
consistent with the global brands strategy. These contemporary products project
a consistent, high quality image in all markets and include brands such as
Anew, Skin-So-Soft, Avon Color, Far Away, Rare Gold, Millennia, Starring, Avon
Skin Care and Women of Earth. Global brands are growing rapidly as a percentage
of our worldwide CFT business and in 1998 and 1997, they accounted for 47% and
39%, respectively, of our core beauty sales. The development of global brands
has also enabled us to deliver a consistent beauty image around the world, as
well as improve margins through pricing and supply chain efficiencies. We are
also marketing a more vibrant beauty image through increased advertising and
research and development spending and image-building programs focused on the
consumer. In early 2000, we intend to launch our first-ever global advertising
campaign, designed to further build our worldwide beauty image.
In 1998, an important image enhancement came with the opening of the Avon
Centre, a spa, salon and retail store located in Trump Tower, New York City.
The Avon Centre emphasizes health and beauty and offers a selection of our
beauty products created exclusively for use at the Avon Centre.
Through these strategic initiatives designed to focus on high-quality,
affordable products, as well as convenience for the customer, we are not only
positioned for continued growth but also strengthening our image.
Distribution
Our products are sold worldwide by approximately 2.8 million
Representatives, approximately 445,000 of whom are in the United States. Almost
all Representatives are women who sell on a part-time basis. Representatives
are independent contractors or independent dealers, and are not agents or
employees of ours. Representatives purchase products directly from us and sell
them directly to their customers.
RECENT DEVELOPMENTS
On December 7, 1999, we announced that we estimate our dollar-denominated
sales growth in 1999 will be approximately 1% over our sales in 1998 and that
we are targeting dollar-denominated sales growth in 2000 to be in the
mid-single digits over our sales in 1999. We also announced that we expect our
earnings per share for the fourth quarter of 1999 to be approximately $0.56 per
share, which would be equal to that for the same period last year, and that we
are targeting earnings per share growth in 2000 to be in the low-to-mid teens
over our earnings per share in 1999.
These forward-looking statements are subject to all of the known and
unknown risks, uncertainties and other factors set forth in the section
entitled "Special Note Regarding Forward-Looking Information."
11
<PAGE>
NO CASH PROCEEDS TO THE COMPANY
This exchange offer is intended to satisfy certain of our obligations
under the registration rights agreement. We will not receive any proceeds from
the issuance of the New Notes and have agreed to pay the expenses of the
exchange offer. In consideration for issuing the New Notes as contemplated in
the registration statement, of which this prospectus is a part, we will
receive, in exchange, Old Notes in like principal amount. The form and terms of
the New Notes are identical in all material respects to the form and terms of
the Old Notes, except as otherwise described herein under "The Exchange Offer
- -- Terms of the Exchange Offer." The Old Notes surrendered in exchange for the
New Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the New Notes will not result in any increase in our outstanding
debt.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to
fixed charges for the years and periods indicated:
<TABLE>
<CAPTION>
Nine Months
Ended
September 30 Year Ended December 31,
------------ ---------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Ratio of Earnings to Fixed Charges................... 6.3(1) 5.3(2) 7.5(2) 8.5 8.3 7.9 6.3
- -------------------
(1) Includes a one-time charge of $151.2 million pre-tax ($121.9 million after
tax) or $0.46 per diluted share, related to our Business Process Redesign
(BPR) program. Excluding the one-time charge, the ratio of earnings to
fixed charges for the nine months ended September 30, 1999 was 9.0.
(2) Includes one-time charges of $154.4 million pre-tax ($122.8 million after
tax) or $0.46 per diluted share, related to our BPR program. Excluding the
one-time charges, the ratio of earnings to fixed charges for the nine
months ended September 30, 1998 was 8.3 and for the year ended December
31, 1998, the ratio was 9.7.
</TABLE>
For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of earnings before income taxes and minority interest, plus
fixed charges and the amortization of capitalized interest. "Fixed charges"
consist of interest incurred on indebtedness, amortization of debt discount,
fees and expenses plus one-third of the rental expense from operating leases,
which management believes is a reasonable approximation of the interest
component of rental expense. The ratios of earnings to fixed charges are
calculated as follows:
<TABLE>
<S> <C>
(Income before income taxes and minority interest) + (fixed charges) + (amortization of capitalized interest)
-------------------------------------------------------------------------------------------------------------
(fixed charges)
</TABLE>
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CAPITALIZATION
The following table shows our capitalization as of September 30, 1999 and
as adjusted to reflect the sale of the Old Notes offered on November 9, 1999.
The table does not reflect our short-term borrowings incurred after September
30, 1999 to finance our seasonal needs and the previously announced share
repurchase program, some of which borrowings were repaid with the proceeds of
the Old Notes, or adjustments to our shareholders' equity to reflect the impact
on treasury stock and total stockholders' equity of shares repurchased after
September 30, 1999. You should read this table in conjunction with our
consolidated financial statements and their accompanying notes, which are
incorporated by reference in the registration statement, of which this
prospectus is a part.
<TABLE>
<CAPTION>
September 30, 1999
--------------------------------------------
Actual Adjustment As Adjusted
--------- ---------- -----------
($ in millions)
<S> <C> <C> <C>
Short-term borrowing................................................. $ 395.7 -- $ 395.7
Long-term debt....................................................... 204.7 (1) -- 204.7 (1)
Notes due 2004................................................. -- 200.0 200.0
Notes due 2009................................................. -- 300.0 300.0
--------- -------- ---------
Total debt........................................................ 600.4 500.0 1,100.4
Common stock......................................................... 88.1 -- 88.1
Additional paid-in capital........................................... 809.3 -- 809.3
Retained earnings.................................................... 738.8 -- 738.8
Accumulated other comprehensive income............................... (346.3) -- (346.3)
Treasury stock, at cost.............................................. (1,228.7) -- (1,228.7)
--------- -------- ---------
Total stockholders' equity........................................ 61.2 (2) -- 61.2 (2)
--------- -------- ---------
Total capitalization......................................... $ 661.6 (2) $500.0 $ 1,161.6 (2)
========= ======== =========
- -------------------
(1) Long-term debt of $204.7 million is comprised of $100.0 million of 6.55%
Notes due 2007, $100.0 million of 6.25% Notes due 2018 (putable/callable
in 2003) and $4.7 million of other long-term debt.
(2) Does not reflect the changes to treasury stock and total stockholders'
equity relating to the shares repurchased after September 30, 1999.
</TABLE>
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DESCRIPTION OF THE NEW NOTES
The following summaries of certain provisions of the indenture do not
purport to be complete and are subject to, and qualified in their entirety by
reference to, all the provisions of the indenture, including the definitions
therein of certain terms. Because the following is only a summary, it does not
contain all information that you may find useful. For further information you
should read the New Notes and the indenture.
General
The Old Notes were, and the New Notes will be, issued under an indenture
dated as of November 9, 1999 (as supplemented from time to time) between us and
The Chase Manhattan Bank, as trustee ("Trustee"). The terms of the New Notes
are identical in all material respects to the terms of the Old Notes, except
that the transfer restrictions, registration rights and additional interest
provisions relating to the Old Notes do not apply to the New Notes.
The Old Notes and the New Notes will be considered collectively to be a
single class for all purposes under the indenture, including, without
limitation, waivers and amendments.
The New Notes are unsecured senior obligations of the Company and will
rank pari passu with all other unsecured and unsubordinated indebtedness of the
Company.
The New Notes are limited to $200,000,000 aggregate principal amount for
the notes due 2004 and $300,000,000 aggregate principal amount for the notes
due 2009. Each series of New Notes will mature on November 15 of its respective
year of maturity.
The New Notes bear interest at the rates per annum shown on the front
cover of this prospectus from November 9, 1999 or from the most recent interest
payment date to which interest has been paid or provided for, payable
semi-annually on May 15 and November 15 of each year, commencing May 15, 2000,
to the person in whose name the New Note (or any predecessor Note) is
registered at the close of business on the preceding May 1 or November 1, as
the case may be.
The New Notes are not redeemable prior to maturity, except as described
below under "--Optional Redemption," and do not have the benefit of a sinking
fund. Principal of and interest on the New Notes will be payable, and the
transfer of New Notes will be registrable, at the office of the Trustee at 450
W. 33rd St., 15th Floor, New York, New York. In addition, payment of interest
may, at the option of the Company, be made by check mailed to the address of
the person entitled thereto as it appears in the Security Register.
The New Notes will be issued only in registered form without coupons in
minimum denominations of $1,000 and integral multiples of $1,000. No service
charge will be made for any registration of transfer or exchange of New Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. Each of the notes
due 2004 and the notes due 2009 will be represented by one or more Global Notes
registered in the name of a nominee of The Depository Trust Company, New York,
New York. Except as set forth under "Book-Entry; Delivery and Form" below, New
Notes will not be issuable in certificated form.
Optional Redemption
The New Notes will be redeemable, as a whole or in part, at our option, at
any time or from time to time, by mailing notice to the registered address of
each holder of New Notes at least 30 days but not more than 60 days prior to
the redemption. The redemption price will be equal to the greater of (1) 100%
of the principal amount of the New Notes to be redeemed or (2) the sum of the
present values of the Remaining Scheduled Payments (as defined below) on those
New Notes discounted, on a semiannual basis (assuming a 360-day year consisting
of twelve 30-day months), at a rate equal to the sum of the applicable Treasury
Rate (as defined below) plus (i) 20 basis points with
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<PAGE>
respect to the notes due 2004 or (ii) 25 basis points with respect to the notes
due 2009, as the case may be. Accrued interest, if any, will be paid to the
date of redemption.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the New Notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of the New Notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee at the direction of the
Company.
"Comparable Treasury Price'" means, with respect to any Redemption Date,
as determined by the Trustee (i) the average of the Reference Treasury Dealer
Quotations (as defined below) for such Redemption Date, after excluding the
highest and lowest of such Reference Treasury Dealer Quotations, or (ii) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such quotations.
"Redemption Date" when used with respect to any New Note to be redeemed,
means the date which is a Business Day fixed for such redemption by the Company
pursuant to the indenture.
"Reference Treasury Dealers" means Salomon Smith Barney Inc., J.P. Morgan
Securities Inc., Banc of America Securities LLC, Chase Securities Inc.,
Deutsche Bank Securities Inc., Morgan Stanley & Co. Incorporated and Warburg
Dillon Read LLC and their respective successors. If any Reference Treasury
Dealer shall cease to be a primary U.S. Government securities dealer, we will
substitute another nationally recognized investment banking firm that is a
primary U.S. Government securities dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer, at 5:00 p.m., New
York City time, on the third business day preceding such Redemption Date.
"Remaining Scheduled Payments" means, with respect to the New Notes to be
redeemed, the remaining scheduled payments of principal of and interest on
those New Notes that would be due after the related Redemption Date but for
that redemption; provided, however, that if such Redemption Date is not an
interest payment date with respect to the New Notes to be redeemed, the amount
of the next succeeding scheduled interest payment on those New Notes will be
reduced by the amount of interest accrued on such New Notes to such Redemption
Date.
"Treasury Rate" means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately preceding that Redemption Date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for that Redemption Date.
On or after the Redemption Date, interest will cease to accrue on the New
Notes or any portion of the New Notes called for redemption (unless we default
in the payment of the redemption price and accrued interest). On or before the
Redemption Date, we will deposit with a paying agent (or the Trustee) money
sufficient to pay the redemption price of and accrued interest on the New Notes
to be redeemed on that date. If less than all of the New Notes are to be
redeemed, the New Notes to be redeemed shall be selected by the Trustee, pro
rata, by lot or by a method the Trustee deems to be fair and appropriate.
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<PAGE>
Covenants
Negative Pledge
The Company has agreed that if the Company or any subsidiary shall issue,
assume, incur or guarantee any indebtedness secured by a lien on any Principal
Property (as defined below) or on any shares of capital stock of any subsidiary
("Secured Debt"), the Company will secure, or cause such subsidiary to secure,
the New Notes equally and ratably with such Secured Debt, unless after giving
effect thereto the aggregate amount of all such Secured Debt, together with all
Attributable Debt (as defined below) of the Company and its subsidiaries in
respect of sale and leaseback transactions to which the restriction referred to
below applies, would not exceed 20% of the Consolidated Net Tangible Assets (as
defined below) of the Company and its consolidated subsidiaries.
Secured Debt does not include indebtedness secured by:
(a) liens on any Principal Property acquired by the Company or a
subsidiary after the date of the indenture to secure or provide for
the payment or financing of all or any part of the purchase price
thereof or construction of fixed improvements thereon (prior to, at
the time of or within 180 days after the latest of the acquisition,
completion of construction or commencement of commercial operation
thereof);
(b) liens on any shares of stock or Principal Property acquired by the
Company or a subsidiary after the date of the indenture existing at
the time of such acquisition;
(c) liens on any shares of stock or Principal Property of a corporation
which is merged into or consolidated with the Company or a
subsidiary or substantially all of the assets of which are acquired
by the Company or a subsidiary;
(d) liens securing indebtedness of a subsidiary owing to the Company or
another subsidiary;
(e) liens existing at the date of the indenture;
(f) liens on any Principal Property being constructed or improved
securing loans to finance such construction or improvements;
(g) liens in favor of governmental bodies of the United States or any
state thereof or any other country or political subdivision thereof
to secure partial, progress or advance payments pursuant to any
contract or statute, or to secure any indebtedness incurred or
guaranteed for the purpose of financing all or any part of the cost
of acquiring, constructing or improving the property subject to such
liens;
(h) liens securing taxes, assessments or governmental charges or levies
not yet delinquent, or already delinquent but the validity of which
is being contested in good faith;
(i) liens arising by reason of deposits necessary to qualify the Company
or any subsidiary to conduct business, maintain self-insurance, or
obtain the benefit of, or comply with, any law; or
(j) extensions, renewals or replacement of liens referred to in the
foregoing clauses provided that the indebtedness secured is not
increased or the lien extended to any additional assets.
Restriction on Sale and Leaseback Transactions
The Company has also agreed that neither the Company nor any subsidiary
will enter into, assume, guarantee, or otherwise become liable with respect to
any sale and leaseback transaction involving any Principal Property, unless
immediately after giving effect thereto the sum, without duplication, of:
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<PAGE>
(i) the aggregate principal amount of all Secured Debt; and
(ii) the aggregate amount of all Attributable Debt in respect of sale and
leaseback transactions to which this restriction applies
would not exceed 20% of the Consolidated Net Tangible Assets of the Company and
its consolidated subsidiaries.
This restriction will not apply to the extent that, during the period
commencing 60 days prior to and ending 120 days after a sale and leaseback
transaction, the Company or a subsidiary applies an amount equal to the
Attributable Debt with respect to such sale and leaseback transaction:
(i) to the acquisition, directly or indirectly and in whole or in part,
of Principal Properties, or
(ii) to the retirement of long-term indebtedness (other than mandatory
prepayment or retirement) of the Company or any subsidiary.
This restriction will also not apply to any sale and leaseback
transaction:
(i) between the Company and a subsidiary or between subsidiaries, or
(ii) involving the taking back of a lease for a period of three years or
less.
"Attributable Debt" means, as of the time of determination, the present
value (discounted at the rate per annum equal to the rate of interest implicit
in the lease involved in such sale and leaseback transaction, as determined in
good faith by the Company) of the obligation of the lessee under a sale and
leaseback transaction for rental payments (excluding, however, any amounts
required to be paid by such lessee, whether or not designated as rent or
additional rent, on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges or any amounts required to be paid
by such lessee thereunder contingent upon the amount of sales or similar
contingent awards) during the remaining term of such lease (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended). In the case of any lease which is terminable by the
lessee upon the payment of a penalty, such rental payments shall also include
the amount of such penalty, but no rental payments shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated.
"Consolidated Net Tangible Assets" means the total assets shown on the
most recent audited annual consolidated balance sheet of the Company and its
consolidated subsidiaries, after deducting the amount of all current
liabilities and intangible assets.
"Principal Property" means any manufacturing plant, testing or research
and development facility, distribution facility, processing plant or warehouse
(including, without limitation, land, fixtures and equipment), owned or leased
by the Company or any subsidiary (including any of the foregoing acquired or
leased after the date of the indenture) and located within the United States of
America, its territories and possessions, unless the Board of Directors of the
Company determines in good faith that such plant or facility is not of material
importance to the total business conducted by the Company and its consolidated
subsidiaries.
The indenture does not otherwise restrict the incurrence of debt by the
Company or its subsidiaries.
Consolidation, Merger and Sale of Assets
The Company has also agreed that it will not consolidate with or merge
into, or convey, transfer or lease its properties and assets substantially as
an entity to, any Person (a "successor Person"), and may not permit any Person
to merge into, or convey, transfer or lease its properties and assets
substantially as an entirety to, the Company, unless:
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<PAGE>
(i) the successor Person (if not the Company) is a corporation,
partnership or trust organized and validly existing under the laws of any
domestic jurisdiction and assumes the Company's obligations on the New Notes
and under the indenture;
(ii) immediately after giving effect to the transaction, and treating any
indebtedness which becomes an obligation of the Company as a result of the
transaction as having been incurred by it at the time of the 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 occurred and be continuing; and
(iii) certain other conditions are met.
Events of Default
Each of the following will constitute an Event of Default under the
indenture:
(a) failure to pay principal of any New Note at its maturity;
(b) failure to pay any interest on any New Note when due, continued for 30
days;
(c) failure to perform any covenant of the Company in the indenture,
continued for 60 days after written notice of such failure is given as provided
in the indenture;
(d) failure by the Company to pay when due (subject to any applicable
grace period) the principal of, or acceleration of, any indebtedness for money
borrowed by the Company having an aggregate principal amount outstanding of at
least $50,000,000, if, in the case of any such failure, such indebtedness has
not been discharged or, in the case of any such acceleration, such indebtedness
has not been discharged or such acceleration has not been rescinded or
annulled, in each case within 30 days after written notice has been given by
the Trustee, or the holders of at least 25% in principal amount of the New
Notes, as provided in the indenture; and
(e) certain events in bankruptcy, insolvency or reorganization.
If an Event of Default (other than an Event of Default described in clause
(e) above) shall occur and be continuing, either the Trustee or the holders of
at least 25% in aggregate principal amount of the outstanding New Notes and Old
Notes, if any, by notice as provided in the indenture may declare the principal
amount of the New Notes to be due and payable immediately. If an Event of
Default described in clause (e) above shall occur, the principal amount of all
the outstanding New Notes and Old Notes, if any, will automatically, and
without any action by the Trustee or any holder, become immediately due and
payable. After any such acceleration, but before a judgment or decree for
payment of the money due, the holders of a majority in aggregate principal
amount of the New Notes and Old Notes, if any, may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the non-payment of accelerated principal, have been cured or waived
as provided in the indenture. For information as to waiver of defaults, see
"--Modification and Waiver."
Subject to the provisions of the indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless such
holders shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, the holders of a majority in
aggregate principal amount of the New Notes and Old Notes, if any, 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 New Notes and Old Notes, if any.
No holder of a New Note will have any right to institute any proceeding
with respect to the indenture, or for the appointment of a receiver or a
Trustee, or for any other remedy thereunder, unless:
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<PAGE>
(i) such holder has previously given to the Trustee written notice of a
continuing Event of Default with respect to the New Notes;
(ii) the holders of at least 25% in aggregate principal amount of the New
Notes and Old Notes, if any, have made written request, and such holder or
holders have offered reasonable indemnity, to the Trustee to institute such
proceeding as Trustee; and
(iii) the Trustee has failed to institute such proceeding, and has not
received from the holders of a majority in aggregate principal amount of the
outstanding New Notes and Old Notes, if any, a direction inconsistent with such
request, within 60 days after such notice, request and offer. However, such
limitations do not apply to a suit instituted by a holder of a New Note for the
enforcement of payment of the principal of or interest on such New Note on or
after the applicable due date specified in such New Note.
The Company will be required to furnish to the Trustee annually a
statement by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions and conditions of the indenture and, if so, specifying all such
known defaults.
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 at least a majority in
aggregate principal amount of New Notes and Old Notes, if any, affected by such
modification or amendment.
No such modification or amendment may, without the consent of the holder
of each outstanding New Note affected thereby,
(a) change the stated maturity of the principal of, or any
installment of interest on, any New Note;
(b) reduce the principal amount of or interest on, any New Note;
(c) change the place or currency of payment of principal of or
interest on, any New Note;
(d) impair the right to institute suit for the enforcement of any
payment on any New Note;
(e) reduce the percentage in principal amount of outstanding New
Notes, the consent of whose holders is required for modification or
amendment of the indenture;
(f) reduce the percentage in principal amount of outstanding New
Notes necessary for waiver of compliance with certain provisions of the
indenture or for waiver of certain defaults; or
(g) modify such provisions with respect to modification and waiver.
The holders of at least a majority in principal amount of the outstanding
New Notes and Old Notes, if any, may waive compliance by the Company with
certain restrictive provisions of the indenture. The holders of a majority in
principal amount of the outstanding New Notes and Old Notes, if any, may waive
any past default under the indenture, except a default in the payment of
principal or interest and certain covenants and provisions of the indenture
which cannot be amended without the consent of the holder of each New Note.
Defeasance and Discharge; Covenant Defeasance
The Company may elect, at its option at any time, to have the indenture
provisions relating to defeasance and discharge of indebtedness, or relating to
defeasance of certain restrictive covenants in the indenture, applied to the
outstanding New Notes.
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Defeasance and Discharge
The indenture provides that upon the Company's exercise of its option to
have the provisions relating to defeasance and discharge applied to the New
Notes, the Company will be discharged from all its obligations with respect to
the New Notes (except for certain obligations to replace stolen, lost or
mutilated New Notes, to maintain paying agencies and to hold moneys for payment
in trust) upon the deposit in trust for the benefit of the holders of the New
Notes of money or U.S. Government Obligations, or both, which, through the
payment of principal and interest in respect thereof in accordance with their
terms, will provide money in an amount sufficient to pay the principal of and
interest on the New Notes at maturity in accordance with the terms of the
indenture and the New Notes. Such defeasance or discharge may occur only if,
among other things, the Company has delivered to the Trustee an opinion of
counsel to the effect that the Company has received from, or there has been
published by, the United States Internal Revenue Service a ruling, or there has
been a change in tax law, in either case to the effect that holders of the New
Notes will not recognize 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, in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge were not to
occur.
Defeasance of Certain Covenants
The indenture provides that, upon the Company's exercise of its option to
have the provisions relating to defeasance of certain restrictive covenants
applied to the New Notes, the Company may omit to comply with certain
restrictive covenants, including those described under " -- Covenants--Negative
Pledge," "--Covenants --Restriction on Sale and Leaseback Transactions" and
"--Covenants--Consolidation, Merger and Sale of Assets," and the occurrence of
certain Events of Default, which are described above in clause (c) (with
respect to such restrictive covenants) and clause (d) under "--Events of
Default," will be deemed not to be or result in an Event of Default, in each
case with respect to the New Notes.
The Company, in order to exercise such option, will be required, among
other things:
(1) to deposit, in trust for the benefit of the holders of the New
Notes, money or U.S. Government Obligations, or both, which, through
the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount
sufficient to pay the principal of and interest on the New Notes at
maturity in accordance with the terms of the indenture and the New
Notes, and
(2) to deliver to the Trustee an opinion of counsel to the effect
that holders of the New Notes will not recognize gain or loss for
federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal
income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit and defeasance were
not to occur.
In the event the Company exercises this option and the New Notes are
declared due and payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations so deposited in trust would be
sufficient to pay amounts due on the New Notes at maturity but may not be
sufficient to pay amounts due on the New Notes upon any acceleration resulting
from such Event of Default. In such case, the Company would remain liable for
such payments.
Regarding the Trustee
The indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set
forth in the indenture. During the existence of an Event of Default, the
Trustee will exercise such rights and powers vested in it under the indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs.
The indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee, should it
become a creditor of the Company, to obtain payment of claims in certain cases
or
20
<PAGE>
to realize on certain property received by it in respect of any such claim as
security or otherwise. The Trustee is permitted to engage in other transactions
with the Company or any affiliate of the Company; provided, however, that if it
acquires any conflicting interest (as defined in the indenture or in the Trust
Indenture Act), it must eliminate such conflict or resign.
The Trustee under the indenture is also the Administrative Agent and a
lender under the Company's $600,000,000 Revolving Credit and Competitive
Advance Facility Agreement dated as of August 8, 1996, the Trustee with respect
to the Company's pension assets and the Issuing and Paying Agent with respect
to the Company's commercial paper program.
Book-Entry; Delivery and Form
The New Notes will be issued in fully registered form.
The New Notes will be represented by one or more fully registered global
notes and will be deposited on behalf of DTC and registered in the name of Cede
& Co., as DTC's nominee.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for persons who have accounts with DTC ("participants") and to
facilitate the clearance and settlement of securities transactions, such as
transfers and pledges, among participants in deposited securities through
electronic book-entry charges to accounts of its participants, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. Indirect access to DTC's
system is also available to other entities such as banks, brokers, dealers, and
trust companies (the "indirect participants") that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Certain of such participants (or other representatives), together with other
entities, own DTC. The rules applicable to DTC and its participants are on file
with the SEC.
Purchases of New Notes under the DTC system must be made by or through
participants, which will receive a credit for the New Notes on DTC's records.
The ownership interest of each beneficial owner is in turn to be recorded on
the participants' and indirect participants' records. Beneficial owners will
not receive written confirmation from DTC of their purchase, but beneficial
owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
participant or indirect participant through which the beneficial owner entered
into the transaction. Transfers of ownership interests in the New Notes are to
be accomplished by entries made on the books of participants acting on behalf
of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in New Notes, except in the event that
use of the book-entry system for the New Notes is discontinued.
The deposit of New Notes with a custodian for DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the New Notes; DTC's records
reflect only the identity of the participants to whose accounts such New Notes
are credited, which may or may not be the beneficial owners. The participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in any Global Security.
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants and by participants and indirect
participants to beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
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Principal and interest payments on the New Notes will be made to DTC by
wire transfer of immediately available funds. DTC's practice is to credit
participants' accounts on the payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the payable date. Payments by participants to beneficial
owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibilities of such
participant and not of DTC or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of the Company,
disbursement of such payments to participants shall be the responsibility of
DTC, and disbursement of such payments to the beneficial owners shall be the
responsibility of participants and indirect participants. Neither the Company
nor the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
DTC may discontinue providing its services as securities depositary with
respect to the New Notes at any time by giving reasonable notice to the
Company. In the event that DTC notifies the Company that it is unwilling or
unable to continue as depositary for any Global Security or if at any time DTC
ceases to be a clearing agency registered as such under the Exchange Act when
DTC is required to be so registered to act as such depositary and no successor
depositary shall have been appointed within 90 days of such notification or of
the Company becoming aware of DTC's ceasing to be registered, as the case may
be, certificates for the relevant New Notes will be printed and delivered in
exchange for interests in such Global Security. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
relevant New Notes registered in such names as DTC shall direct. It is expected
that such instructions will be based upon directions received by DTC from its
participants with respect to ownership of beneficial interests in such Global
Security.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
certificates representing the New Notes will be printed and delivered.
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THE EXCHANGE OFFER
Purpose of the Exchange Offer
The Old Notes were sold by us on November 9, 1999 to the initial
purchasers pursuant to a purchase agreement, dated November 4, 1999, between us
and the initial purchasers. The initial purchasers subsequently sold the Old
Notes to "qualified institutional buyers," as defined in Rule 144A under the
Securities Act in reliance on Rule 144A, to a limited number of institutional
"accredited investors," as defined in Rule 501 under the Securities Act, and
outside the United States in accordance with Regulation S under the Securities
Act. As a condition to the initial sale of the Old Notes, Avon and the initial
purchasers entered into the registration rights agreement. Pursuant to the
registration rights agreement, we agreed that we would:
o use our reasonable best efforts to file with the SEC within 150 days
after the closing date, which is the date we delivered the Old Notes
to the initial purchasers, a registration statement under the
Securities Act with respect to the New Notes; and
o cause such registration statement to become effective under the
Securities Act within 180 days after the closing date.
We agreed to issue and exchange New Notes for all Old Notes validly
tendered and not withdrawn before the expiration of the exchange offer. A copy
of the registration rights agreement has been filed as an exhibit to the
registration statement of which this prospectus is a part. The registration
statement is intended to satisfy certain of our obligations under the
registration rights agreement and the purchase agreement. In the event that due
to a change in current interpretations by the SEC, we are not permitted to
effect such exchange offer, it is contemplated that we will instead file a
shelf registration statement covering resales by the holders of the Old Notes
and will use our reasonable best efforts to cause such shelf registration
statement to become effective and to keep such shelf registration statement
effective for a maximum of two years from the closing date.
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all Old Notes validly
tendered and not withdrawn prior to the expiration date.
We will issue $1,000 principal amount of New Notes in exchange for each
respective $1,000 principal amount of outstanding Old Notes validly tendered
and not withdrawn pursuant to the exchange offer. Old Notes may be tendered in
the principal amount of $100,000 and integral multiples of $1,000 in excess
thereof, provided that if fewer than all of the Old Notes of a holder are
tendered for exchange, the untendered principal amount of the holder's
remaining Old Notes must be $100,000 or any integral multiple of $1,000 in
excess thereof.
The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that:
o the exchange will be registered under the Securities Act and,
therefore, the New Notes will not bear legends restricting the
transfer thereof;
o holders of the New Notes will not be entitled to any of the
registration rights of holders of Old Notes under the registration
rights agreement, which rights will terminate upon the consummation
of the exchange offer; and
o the New Notes will be issued in minimum denominations of $1,000 and
integral multiples of $1,000 above that amount, while the Old Notes
were issued in minimum denominations of $100,000 and integral
multiples of $1,000 above that amount.
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The New Notes will evidence the same indebtedness as the Old Notes (which they
replace) and will be issued under, and be entitled to the benefits of, the
indenture, which also authorized the issuance of the Old Notes, such that the
New Notes and the Old Notes will be treated as a single class of securities
under the indenture.
As of the date of this prospectus, $200,000,000 of notes due 2004 and
$300,000,000 of notes due 2009 are outstanding, all of which are registered in
the name of Cede & Co., as nominee for DTC. Solely for reasons of
administration, we have fixed the close of business on January 4, 2000 as the
record date for the exchange offer for purposes of determining the persons to
whom this prospectus and the letter of transmittal will be mailed initially.
There will be no fixed record date for determining holders of the Old Notes
entitled to participate in the exchange offer.
Holders of the Old Notes do not have any appraisal or dissenters' rights
under the Business Corporation Law of the State of New York or the indenture in
connection with the exchange offer. We intend to conduct the exchange offer in
accordance with the provisions of the registration rights agreement and the
applicable requirements of the Securities Act and the rules and regulations of
the SEC thereunder.
We shall be deemed to have accepted validly tendered Old Notes when, and
if, we have given oral or written notice thereof to The Chase Manhattan Bank,
the exchange agent. The exchange agent will act as agent for the tendering
holders of Old Notes for the purpose of receiving the New Notes from the
Company.
Holders who tender Old Notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the exchange offer. We will pay all charges and expenses, other
than certain applicable taxes described below, in connection with the exchange
offer. See "The Exchange Offer--Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "expiration date" shall mean 5:00 p.m., New York City time, on
February 8, 2000, unless we, in our sole discretion, extend the exchange offer,
in which case the term "expiration date" shall mean the latest date and time to
which the exchange offer is extended.
If we determine to extend the exchange offer, we will, prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date:
o notify the exchange agent of any extension by oral or written notice;
and
o issue a press release or other public announcement which shall
include disclosure of the approximate number of Old Notes deposited
to date.
We reserve the right, in our sole discretion:
o to delay accepting any Old Notes;
o to extend the exchange offer; or
o if, in the opinion of our counsel, the consummation of the exchange
offer would violate any applicable law, rule or regulation or any
applicable interpretation of the staff of the Commission, to
terminate or amend the exchange offer by giving oral or written
notice of such delay, extension, termination or amendment to the
exchange agent. Any such delay in acceptance, extension, termination
or amendment will be followed as promptly as practicable by a press
release or other public announcement thereof.
If the exchange offer is amended in a manner determined by us to
constitute a material change, we will promptly disclose such amendment by means
of a prospectus supplement that will be distributed to the registered
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holders of the Old Notes, and we will extend the exchange offer for a period of
five to ten business days, depending upon the significance of the amendment and
the manner of disclosure to the holders, if the exchange offer would otherwise
expire during such five to ten business day period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment or termination of the exchange
offer, we shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
Interest on the New Notes
The New Notes will accrue interest at the rate of 6.90% per annum for the
notes due 2004 and 7.15% per annum for the notes due 2009 from the most recent
date to which interest has been paid on the Old Notes or, if no interest has
been paid, from November 9, 1999, payable semi-annually in arrears on May 15
and November 15 of each year beginning on May 15, 2000.
Resale of the New Notes
With respect to the New Notes, based upon interpretations by the staff of
the SEC set forth in certain no-action letters issued to third parties, we
believe that a holder who exchanges Old Notes for New Notes in the ordinary
course of business, who is not participating, does not intend to participate,
and has no arrangement or understanding with any person to participate in a
distribution of the New Notes, and who is not an "affiliate" of ours within the
meaning of Rule 405 of the Securities Act, will be allowed to resell New Notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the New Notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act.
If any holder acquires New Notes in the exchange offer for the purpose of
distributing or participating in the distribution of the New Notes, such
holder:
o cannot rely on the position of the staff of the SEC enumerated in
such no-action letters issued to third parties; and
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
transaction, unless an exemption from registration is otherwise
available.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes acquired by such broker-dealer as a result of market-making or
other trading activities must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The letter of transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of any New
Notes received in exchange for Old Notes acquired by such broker-dealer as a
result of market-making or other trading activities. We will make this
prospectus, as it may be amended or supplemented from time to time, available
to any such broker-dealer that requests copies of such prospectus in the letter
of transmittal for use in connection with any such resale for a period of up to
90 days after the expiration date. See "Plan of Distribution."
Procedures for Tendering
To tender in the exchange offer, a holder of Old Notes must either:
o complete, sign and date the letter of transmittal or facsimile
thereof, have the signatures thereon guaranteed if required by the
letter of transmittal, and mail or otherwise deliver such letter of
transmittal or such facsimile to the exchange agent; or
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o if such Old Notes are tendered pursuant to the procedures for
book-entry transfer set forth below, a holder tendering Old Notes may
transmit an agent's message (as defined below) to the exchange agent
in lieu of the letter of transmittal,
in either case for receipt on or prior to the expiration date.
In addition, either:
o certificates for such Old Notes must be received by the exchange
agent along with the letter of transmittal;
o a timely confirmation of a book-entry transfer (a "book-entry
confirmation") of such Old Notes into the exchange agent's account at
DTC pursuant to the procedure for book-entry transfer described
below, along with the letter of transmittal or an agent's message, as
the case may be, must be received by the exchange agent prior to the
expiration date; or
o the holder must comply with the guaranteed delivery procedures
described.
The term "agent's message" means a message, transmitted to the exchange
agent's account at DTC and received by the exchange agent and forming a part of
the book-entry confirmation, which states that such account has received an
express acknowledgment from the tendering participant that such participant has
received and agrees to be bound by the letter of transmittal and that the
Company may enforce the letter of transmittal against such participant. To be
tendered effectively, the letter of transmittal and other required documents,
or an agent's message in lieu thereof, must be received by the exchange agent
at the address set forth below under "--Exchange Agent" prior to 5:00 p.m., New
York City time, on the expiration date.
The tender by a holder that is not withdrawn prior to the expiration date
will constitute an agreement between such holder and us in accordance with the
terms and subject to the conditions set forth herein and in the letter of
transmittal.
The method of delivery of Old Notes, the letter of transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holder. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service, properly insured. In all cases, sufficient
time should be allowed to assure delivery to the exchange agent before the
expiration date. Do not send the letter of transmittal or any Old Notes to us.
Holders may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transactions for such holders.
Any beneficial owner(s) of the Old Notes whose Old Notes are held through
a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such intermediary promptly and instruct such
intermediary to tender on such beneficial owner's behalf. If such beneficial
owner wishes to tender on its own behalf, such owner must, prior to completing
and executing the letter of transmittal and delivering such owner's Old Notes:
o make appropriate arrangements to register ownership of the Old Notes
in such owner's name; or
o obtain a properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal described
below (see "--Withdrawal of Tenders"), as the case may be, must be guaranteed
by an eligible institution unless the Old Notes tendered pursuant thereto are
tendered:
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o by a registered holder who has not completed the box titled "Special
Delivery Instruction" on the letter of transmittal; or
o for the account of an eligible institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be made by an eligible institution, which is a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an "eligible guarantor institution"
(within the meaning of Rule 17Ad-15 under the Exchange Act) which is a member
of one of the recognized signature guarantee programs identified in the letter
of transmittal.
If the letter of transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder exactly as such registered holder's name appears on such Old
Notes.
In connection with any tender of Old Notes in definitive certified form,
if the letter of transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by us, evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal.
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's Automated Tender Offer
Program to tender Old Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
us in our sole discretion, which determination will be final and binding.
We reserve the absolute right:
o to reject any and all Old Notes not properly tendered and any Old
Notes our acceptance of which would, in the opinion of our counsel,
be unlawful; and
o to waive any defects, irregularities or conditions of tender as to
particular Old Notes.
Our interpretation of the terms and conditions of the exchange offer
(including the instructions in the letter of transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as we shall
determine. Although we intend to notify holders of defects or irregularities in
connection with tenders of Old Notes, neither we, the exchange agent nor any
other person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
While we have no present plan to acquire any Old Notes that are not
tendered in the exchange offer or to file a registration statement to permit
resales of any Old Notes that are not tendered pursuant to the exchange offer,
we reserve the right in our sole discretion to purchase or make offers for any
Old Notes that remain outstanding subsequent to the expiration date and, to the
extent permitted by applicable law, purchase Old Notes in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the exchange offer.
By tendering Old Notes pursuant to the exchange offer, each holder of Old
Notes will represent to us that, among other things:,
o the New Notes to be acquired by such holder of Old Notes in
connection with the exchange offer are being acquired by such holder
in the ordinary course of business of such holder;
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o such holder is not participating, does not intend to participate, and
has no arrangement or understanding with any person to participate in
the distribution (within the meaning of the Securities Act) of the
New Notes;
o such holder acknowledges and agrees that any person who is
participating in the exchange offer for the purpose of distributing
the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a
secondary resale of the New Notes acquired by such person and cannot
rely on the position of the staff of the Commission set forth in
certain no-action letters;
o such holder understands that a secondary resale transaction,
described above, and any resales of New Notes obtained by such holder
in exchange for Old Notes acquired by such holder directly from us
should be covered by an effective registration statement containing
the selling security holder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the Commission; and
o such holder is not an "affiliate", as defined in Rule 405 under the
Securities Act, of ours.
If the holder is a broker-dealer that will receive New Notes for such
holder's own account in exchange for Old Notes that were acquired as a result
of market-making activities or other trading activities, such holder will be
required to acknowledge in the letter of transmittal that such holder will
deliver a prospectus in connection with any resale of such New Notes; however,
by so acknowledging and by delivering a prospectus, such holder will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
Return of Old Notes
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the exchange agent of:
o Old Notes or a timely book-entry confirmation of such Old Notes into
the exchange agent's account at DTC; and
o a properly completed and duly executed letter of transmittal and all
other required documents, or an agent's message in lieu thereof.
If any tendered Old Notes are not accepted for any reason set forth in
the terms and conditions of the exchange offer or if Old Notes are withdrawn or
are submitted for a greater principal amount than the holders desire to
exchange, such unaccepted, withdrawn or otherwise non-exchanged Old Notes will
be returned without expense to the tendering holder thereof (or, in the case of
Old Notes tendered by book-entry transfer into the exchange agent's account at
DTC pursuant to the book-entry transfer procedures described below, such Old
Notes will be credited to an account maintained with DTC) as promptly as
practicable.
Book-Entry Transfer
The exchange agent will make a request to establish an account with
respect to the Old Notes at DTC for purposes of the exchange offer within two
business days after the date of this prospectus, and any financial institution
that is a participant in DTC's systems may make book-entry delivery of Old
Notes by causing DTC to transfer such Old Notes into the exchange agent's
account at DTC in accordance with DTC's procedures for transfer. However,
although delivery of Old Notes may be effected through book-entry transfer at
DTC, the letter of transmittal or facsimile thereof, with any required
signature guarantees and any other required documents, or an agent's message in
lieu of a letter of transmittal, must, in any case, be transmitted to and
received by the exchange agent at the address set forth below under "--Exchange
Agent" on or prior to the expiration date or pursuant to the guaranteed
delivery procedures described below.
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Guaranteed Delivery Procedures
If a holder of the Old Notes desires to tender such Old Notes and the Old
Notes are not immediately available or the holder cannot deliver its Old Notes
(or complete the procedures for book-entry transfer), the letter of transmittal
or any other required documents to the exchange agent prior to the expiration
date, a holder may effect a tender if:
o the tender is made through an eligible institution;
o prior to the expiration date, the exchange agent receives from such
eligible institution (by facsimile transmission, mail or hand
delivery) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by us setting forth the
name and address of the holder, the certificate number(s) of such Old
Notes (if applicable) and the principal amount of Old Notes tendered,
stating that the tender is being made thereby and guaranteeing that,
within three New York Stock Exchange trading days after the
expiration date:
(i) the letter of transmittal (or a facsimile thereof), or an
agent's message in lieu thereof,
(ii) the certificate(s) representing the Old Notes in proper form
for transfer or a book-entry confirmation, as the case may
be, and
(iii) any other documents required by the letter of transmittal,
will be deposited by the eligible institution with the exchange
agent; and
o such properly executed letter of transmittal (or facsimile thereof),
or an agent's message in lieu thereof, as well as the certificate(s)
representing all tendered Old Notes in proper form for transfer or a
book-entry confirmation, as the case may be, and all other documents
required by the letter of transmittal, are received by the exchange
agent within three New York Stock Exchange trading days after the
expiration date.
Upon request to the exchange agent, a form of Notice of Guaranteed
Delivery will be sent to holders who wish to tender their Old Notes according
to the guaranteed delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of Old Notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth herein prior to the expiration date. Any such
notice of withdrawal must:
o specify the name of the person having deposited the Old Notes to be
withdrawn;
o identify the Old Notes to be withdrawn (including the certificate
number or numbers, if applicable, and principal amount of such Old
Notes); and
o be signed by the holder in the same manner as the original signature
on the letter of transmittal by which such Old Notes were tendered
(including any required signature guarantees).
If Old Notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of DTC. All questions as to the validity,
form and eligibility (including
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time of receipt) of such notices will be determined by us, in our sole
discretion, which determination shall be final and binding on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the exchange offer, and no New Notes will be issued
with respect thereto, unless the Old Notes so withdrawn are validly re-
tendered. Properly withdrawn Old Notes may be re-tendered by following one of
the procedures described above under "--Procedures for Tendering" at any time
prior to the expiration date.
Termination of Certain Rights
All registration rights under the registration rights agreement accorded
to holders of the Old Notes (and all rights to receive additional interest in
the event of a Registration Default as defined therein) will terminate upon
consummation of the exchange offer. However, for a period of up to 90 days
after the registration statement is declared effective, we will keep the
registration statement effective and provide copies of the latest version of
the prospectus to any broker-dealer that requests copies of such prospectus in
the letter of transmittal for use in connection with any resale by such
broker-dealer of New Notes received for its own account pursuant to the
exchange offer in exchange for Old Notes acquired for its own account as a
result of market-making or other trading activities.
Exchange Agent
The Chase Manhattan Bank has been appointed as exchange agent for the
exchange offer. Questions and requests for assistance, requests for additional
copies of this prospectus or the letter of transmittal and requests for a copy
of the Notice of Guaranteed Delivery should be directed to the exchange agent
addressed as follows:
By Mail or Hand/Overnight Delivery: By Facsimile:
The Chase Manhattan Bank (212) 638-7380/81
55 Water Street
Room 234, North Building Confirm by Telephone:
New York, NY 10041
Attn.: Carlos Esteves (212) 638-0828
The Chase Manhattan Bank also serves as Trustee under the indenture.
Fees and Expenses
The expenses of soliciting tenders will be borne by us. The principal
solicitation is being made by mail; however, additional solicitation may be
made by telegraph, facsimile transmission, telephone or in person by our
officers and regular employees or those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
The expenses to be incurred in connection with the exchange offer,
including registration fees, fees and expenses of the exchange agent and the
Trustee, accounting and legal fees, and printing costs, will be paid by us.
We will pay all transfer taxes, if any, applicable to the exchange of Old
Notes pursuant to the exchange offer. If, however, a transfer tax is imposed
for any reason other than the exchange of the Old Notes pursuant to the
exchange offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will
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be payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the letter of transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
Consequence of Failure to Exchange
Participation in the exchange offer is voluntary. Holders of the Old Notes
are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
Old Notes that are not exchanged for the New Notes pursuant to the
exchange offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) under the Securities Act. Accordingly, such Old Notes may not be
offered, sold, pledged or otherwise transferred except:
o to a person whom the seller reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for
its own account or for the account of a qualified institutional buyer
in a transaction meeting the requirements of Rule 144A;
o in an offshore transaction complying with Rule 903 or Rule 904 of
Regulation S under the Securities Act;
o pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available)
o pursuant to an effective registration statement under the Securities
Act; or
o pursuant to another available exemption from the registration
requirements of the Securities Act, and, in each case, in accordance
with all other applicable securities laws.
Accounting Treatment
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The expenses of the exchange offer will be amortized over
the term of the New Notes.
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CERTAIN UNITED STATES INCOME TAX CONSIDERATIONS
The exchange of Old Notes for New Notes should not be treated as a taxable
transaction for U.S. Federal income tax purposes because the New Notes will not
be considered to differ materially in kind or in extent from the Old Notes.
Rather, the New Notes you receive should be treated as a continuation of your
investment in the Old Notes. As a result, there should be no material U.S.
Federal income tax consequences to you resulting from the exchange of Old Notes
for New Notes.
You should consult your own tax advisors concerning the tax consequences
arising under state, local, or foreign laws of the exchange of Old Notes for
New Notes.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes acquired by the broker-dealer as a result of market-making or
other trading activities must acknowledge that it will deliver a prospectus in
connection with any resale of those New Notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a participating
broker-dealer in connection with resales of New Notes received in exchange for
such Old Notes. For a period of up to 90 days after the expiration date, we
will make this prospectus, as amended or supplemented, available to any such
broker-dealer that requests copies of this prospectus in the letter of
transmittal for use in connection with any such resale.
We will not receive any proceeds from any sale of New Notes by
broker-dealers or any other persons. New Notes received by participating
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the over-the-counter market,
in negotiated transactions or through the writing of options on the New Notes,
or a combination of these methods of resale, at market prices prevailing at the
time of resale or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such participating
broker-dealer that resells the New Notes that were received by it for its own
account pursuant to the exchange offer. Any broker or dealer that participates
in a distribution of New Notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of New Notes
and any commissions or concessions received by these persons may be deemed to
be underwriting compensation under the Securities Act. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
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NOTICE TO INVESTORS
Based on interpretations of the staff of the SEC set forth in no-action
letters issued to third parties, we believe that New Notes issued pursuant to
the exchange offer in exchange for Old Notes may be offered for resale, resold,
and otherwise transferred by a holder (other than broker-dealers, as set forth
below, and any holder that is an "affiliate" of the Company within the meaning
of Rule 405 under the Securities Act) without further registration under the
Securities Act and without delivery to prospective purchasers of a prospectus
pursuant to the provisions of the Securities Act, provided that the holder is
acquiring the New Notes in the ordinary course of its business, is not
participating and has no arrangement or understanding with any person to
participate in the distribution of the New Notes. Eligible holders wishing to
accept the exchange offer must represent to us in the letter of transmittal
that these conditions have been met. See "The Exchange Offer--Procedures for
Tendering."
Each broker-dealer who holds Old Notes acquired for its own account as a
result of market-making or other trading activities and who receives New Notes
for its own account pursuant to the exchange offer must acknowledge that it
will deliver a prospectus in connection with any resale of New Notes. The
letter of transmittal states that by acknowledging and delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with the resales of New Notes received for the broker-dealer's own account in
exchange for Old Notes where Old Notes were acquired by the broker-dealer as a
result of market-making activities or other trading activities. For a period of
up to 90 days after the expiration date, we will make this prospectus available
to those broker-dealers (if they so request in the letter of transmittal) for
use in connection with those resales. See "Plan of Distribution."
The Old Notes and the New Notes constitute new issues of securities with
no established public trading market. We do not intend to apply for listing of
the New Notes on any securities exchange or for inclusion of the New Notes in
any automated quotation system. There can be no assurance that an active public
market for the New Notes will develop or as to the liquidity of any market that
may develop for the New Notes, the ability of holders to sell the New Notes, or
the price at which holders would be able to sell the New Notes. We have been
advised by the initial purchasers that they intend to make a market in the New
Notes; however, these entities are under no obligation to do so and any market
making activities with respect to the New Notes may be discontinued at any
time. Future trading prices of the New Notes will depend on many factors,
including among other things, prevailing interest rates our operating results
and the market for similar securities.
Any Old Notes not tendered or accepted in the exchange offer will remain
outstanding. To the extent that Old Notes are tendered and accepted in the
exchange offer, your ability to sell untendered, and tendered but unaccepted,
Old Notes could be adversely affected. Following consummation of the exchange
offer, the holders of Old Notes will continue to be subject to the existing
restrictions on transfer thereof and we will have no further obligation to
those holders, under the registration rights agreement, to provide for the
registration under the Securities Act of the Old Notes. There may be no trading
market for the Old Notes.
We will not receive any proceeds from, and have agreed to bear the
expenses of, the exchange offer. No underwriter is being used in connection
with the exchange offer.
The exchange offer is not being made to, nor will we accept surrenders for
exchange from, holders of Old Notes in any jurisdiction in which the exchange
offer or the acceptance thereof would not be in compliance with the securities
or blue sky laws of those jurisdictions.
34
<PAGE>
VALIDITY OF THE NEW NOTES
The validity of the New Notes will be passed upon for the Company by Davis
Polk & Wardwell, New York, New York.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements incorporated in this registration
statement by reference to the Annual Report on Form 10-K for the year ended
December 31, 1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
35
<PAGE>
===============================================================================
Avon Products, Inc.
[LOGO]
$200,000,000 6.90% New Notes due 2004
$300,000,000 7.15% New Notes due 2009
-----------------------
Prospectus
-----------------------
January 6, 2000
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XII of the By-Laws of Avon Products, Inc. provides as follows:
Section 1. Indemnification--Third Party and Derivative Actions. (a) The
corporation shall indemnify any person made, or threatened to be made, a party
to an action or proceeding, whether civil or criminal (other than one by or in
the right of the corporation to procure a judgment in its favor), including an
action by or in the right of any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, which any director, officer or employee of the
corporation served in any capacity at the request of the corporation, by reason
of the fact that he is or was a director or officer of the corporation, or is
or was serving such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, including excise taxes, amounts paid in settlement and expenses,
including attorney's fees, incurred in connection with any such action or
proceeding, or any appeal therein, provided that no indemnification may be made
to or on behalf of such person if a judgment or other final adjudication
adverse to such person establishes that (i) his acts were committed in bad
faith or were the result of his active or deliberate dishonesty and were
material to such action or proceeding or (ii) he personally gained in fact a
financial profit or other advantage to which he was not legally entitled.
(b) The corporation shall indemnify any person made, or threatened to be
made, a party to an action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of any other corporation of any type or
kind, domestic or foreign, or of any partnership, joint venture, trust,
employee benefit plan or other enterprise, against amounts paid in settlement
and expenses, including attorneys' fees, incurred in connection with such
action, or any appeal therein, provided that no indemnification may be made to
or on behalf of such person if (i) his acts were committed in bad faith or were
the result of his active and deliberate dishonesty and were material to such
action or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
(c) The termination of any civil or criminal action or proceeding by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such person has
not met the standard of conduct set forth in this Section 1.
Section 2. Payment of Indemnification; Repayment. (a) A person who has
been successful, on the merits or otherwise, in the defense of a civil or
criminal action or proceeding of the character described in Section 1 of this
Article shall be entitled to indemnification as authorized in such Section.
(b) Any indemnification under Section 1 of this Article, unless ordered by
a court, shall be made by the corporation in such manner as provided by law.
(c) Expenses incurred by a person referred to in Section 1 of this Article
in defending a civil or criminal action or proceeding shall be paid by the
corporation in advance of the final disposition of such action or proceeding
upon receipt of an undertaking by or on behalf of such person to repay such
amount in case he is ultimately found, in accordance with this Article, not to
be entitled to indemnification or, where indemnity is granted, to the extent
the expenses so paid exceed the indemnification to which he is entitled.
(d) Any indemnification of a person under Section 1 of this Article, or
advancement of expenses under Section 2(c) of this Article, shall be made
promptly, and in any event within 60 days, upon the written request of such
person.
II-1
<PAGE>
Section 3. Enforcement; Defenses. The right to indemnification or
advancement of expenses granted by this Article shall be enforceable by the
person in question in any court of competent jurisdiction if the corporation
denies such request, in whole or in part, or if no disposition thereof is made
within 60 days. Such person's expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the
advancement of expenses under Section 2(c) of this Article where the required
undertaking has been received by the corporation) that the claimant has not met
the standard of conduct set forth in Section 1 of this Article, but the burden
of proving such defense shall be on the corporation. Neither the failure of the
corporation to have made a determination that indemnification of the claimant
is proper, nor the fact that there has been an actual determination by the
corporation that indemnification of the claimant is not proper, shall be a
defense to the action or create a presumption that the claimant is not entitled
to indemnification.
Section 4. Survival; Savings Clause; Preservation of Other Rights. (a) The
foregoing indemnification provisions shall be deemed to be a contract between
the corporation and each person who serves in such capacity at any time while
these provisions as well as the relevant provisions of the New York Business
Corporation Law are in effect and any repeal or modification thereof shall not
affect any right or obligation then existing with respect to any state of facts
then or previously existing or any action or proceeding previously or
thereafter brought or threatened based in whole or in part upon any such state
of facts. Such a contract right may not be modified retroactively without the
consent of such person.
(b) If this Article or any portion hereof shall be invalidated on any
ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each such person against judgments, fines, amounts paid
in settlement and expenses, including attorneys' fees, incurred in connection
with any actual or threatened action by or in the right of the corporation, or
any appeal therein, to the full extent permitted by any applicable portion of
this Article that shall not have been invalidated and to the full extent
permitted by applicable law.
(c) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of shareholders or directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer or employee of the corporation and shall inure to the benefit
of the heirs, executors and administrators of such a person. The corporation is
hereby authorized to provide further indemnification if it deems it advisable
by resolution of shareholders or directors, by amendment of these by-laws or by
agreement.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)
1.1* Purchase Agreement, dated November 4, 1999, between
Avon Products, Inc. and Salomon Smith Barney Inc.,
J.P. Morgan Securities Inc., Banc of America
Securities LLC, Chase Securities Inc., Deutsche Bank
Securities Inc., Morgan Stanley & Co. Incorporated and
Warburg Dillon Read LLC, as initial purchasers.
4.1* Form of New Note due 2004 (included in Exhibit 4.2).
4.1* Form of New Note due 2009 (included in Exhibit 4.2).
4.2* Indenture, dated as of November 9, 1999, between Avon
Products, Inc., as Issuer, and The Chase Manhattan
Bank, as Trustee.
4.3** First Supplemental Indenture, dated as of
January 5, 2000, between Avon Products, Inc., as
Issuer, and The Chase Manhattan Bank, as Trustee.
II-2
<PAGE>
4.4* Registration Rights Agreement, dated as of November 9,
1999, between Avon Products, Inc. and Salomon Smith
Barney Inc., J.P. Morgan Securities Inc., Banc of
America Securities LLC, Chase Securities Inc.,
Deutsche Bank Securities Inc., Morgan Stanley & Co.
Incorporated and Warburg Dillon Read LLC.
5.1** Opinion of Davis Polk & Wardwell regarding the validity
of the New Notes.
23.1** Consent of Davis Polk & Wardwell (included in Exhibit
5.1).
23.2* Consent of PricewaterhouseCoopers LLP.
24.1* Power of Attorney.
25.1* Statement of Eligibility under the Trust Indenture Act
of 1939 on Form T-1 of The Chase Manhattan Bank, as
Trustee.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Exchange Agent Agreement.
- -------------------
* Previously filed.
** Filed with this Amendment No. 1.
(b) Not Applicable.
(c) Not Applicable.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referred to in Item 20, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this amendment to the registration statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on this 5th day of January, 2000.
AVON PRODUCTS, INC.
By: /s/ Ward M. Miller, Jr.
--------------------------------
Ward M. Miller, Jr.
Senior Vice President,
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
--------- ----- ----
* Non Executive Chairman of the January 5, 2000
- ---------------------------------- Board and Director
Stanley C. Gault
* President and Chief Executive Officer January 5, 2000
- ---------------------------------- (principal executive officer)
Andrea Jung
* Executive Vice President and January 5, 2000
- ---------------------------------- Chief Financial Officer
Robert J. Corti (principal financial officer)
*
- ---------------------------------- Vice President and Controller January 5, 2000
Janice Marolda (principal accounting officer)
*
- ---------------------------------- Director January 5, 2000
Brenda C. Barnes
*
- ---------------------------------- Director January 5, 2000
Richard S. Barton
- ---------------------------------- Director
Jose Ferreira, Jr.
II-4
<PAGE>
Signature Title Date
--------- ----- ----
* Director January 5, 2000
- ---------------------------------
Edward T. Fogarty
* Director January 5, 2000
- ---------------------------------
Fred Hassan
* Director January 5, 2000
- ---------------------------------
Susan J. Kropf
* Director January 5, 2000
- ---------------------------------
Ann S. Moore
* Director January 5, 2000
- ---------------------------------
Paula Stern
* Director January 5, 2000
- ---------------------------------
Lawrence A. Weinbach
* By: /s/ Ward M. Miller, Jr. January 5, 2000
--------------------------------------
Ward M. Miller, Jr.
Senior Vice President,
General Counsel and Secretary
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1.1* Purchase Agreement, dated November 4, 1999, between Avon Products,
Inc. and Salomon Smith Barney Inc., J.P. Morgan Securities Inc.,
Banc of America Securities LLC, Chase Securities Inc., Deutsche
Bank Securities Inc., Morgan Stanley & Co. Incorporated and Warburg
Dillon Read LLC, as initial purchasers.
4.1* Form of New Note due 2004 (included in Exhibit 4.2).
4.1* Form of New Note due 2009 (included in Exhibit 4.2).
4.2* Indenture, dated as of November 9, 1999, between Avon Products,
Inc., as Issuer, and The Chase Manhattan Bank, as Trustee.
4.3** First Supplemental Indenture, dated as of January 5, 2000,
between Avon Products, Inc., as Issuer, and The Chase Manhattan
Bank, as Trustee.
4.4* Registration Rights Agreement, dated as of November 9, 1999,
between Avon Products, Inc. and Salomon Smith Barney Inc., J.P.
Morgan Securities Inc., Banc of America Securities LLC, Chase
Securities Inc., Deutsche Bank Securities Inc., Morgan Stanley &
Co. Incorporated and Warburg Dillon Read LLC.
5.1** Opinion of Davis Polk & Wardwell regarding the validity of the New
Notes.
23.1** Consent of Davis Polk & Wardwell (included in Exhibit 5.1).
23.2* Consent of PricewaterhouseCoopers LLP.
24.1* Power of Attorney.
25.1* Statement of Eligibility under the Trust Indenture Act of 1939 on
Form T-1 of The Chase Manhattan Bank, as Trustee.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
99.3* Form of Exchange Agent Agreement.
- -------------------
* Previously filed.
** Filed with this Amendment No. 1.
E-1
Exhibit 4.3
================================================================================
AVON PRODUCTS, INC.
as Issuer
and
THE CHASE MANHATTAN BANK
as Trustee
-----------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of January 5, 2000
To Indenture of Avon Products, Inc.
Dated as of November 9, 1999
-----------------
$200,000,000 6.90% Notes due 2004
$300,000,000 7.15% Notes due 2009
================================================================================
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of January 5, 2000, between
AVON PRODUCTS, INC., a New York corporation, as Issuer (the "Company"), and THE
CHASE MANHATTAN BANK, a New York banking corporation, as Trustee (the
"Trustee"), under the Indenture referred to hereinafter.
W I T N E S S E T H:
WHEREAS, the Company and the Trustee executed and delivered an Indenture
dated as of November 9, 1999 (the "Indenture"), providing for the issuance of
$200,000,000 principal amount of 6.90% Notes due 2004 and $300,000,000 principal
amount of 7.15% Notes due 2009 of the Company (collectively, the "Securities");
WHEREAS, except as otherwise defined herein, any capitalized term used but
not defined herein shall have the meaning set forth in the Indenture;
WHEREAS, pursuant to Section 9.01 of the Indenture, the Company and the
Trustee have agreed to enter into this First Supplemental Indenture to amend the
provisions of Sections 2.03, 2.05, 3.02 and 3.05 of the Indenture;
WHEREAS, the parties hereto are entering into this First Supplemental
Indenture, in connection with the filing with the Commission of a Registration
Statement on Form S-4 in respect of the Securities, for the purpose of amending
the Indenture to allow Exchange Securities to be issued thereunder in minimum
denominations of $1,000 and integral multiples thereof;
WHEREAS, the execution and delivery of this First Supplemental Indenture
has been authorized by a Board Resolution and all acts, conditions and
requirements necessary to make this First Supplemental Indenture a valid and
binding agreement in accordance with its terms and for the purposes herein set
forth have been done and taken, and the execution and delivery of this First
Supplemental Indenture have otherwise been in all respects duly authorized;
NOW THEREFORE, in consideration of the above premises, each party hereto
agrees, for the benefit of the other party and for the equal and proportionate
benefit of the Holders of the Securities, as follows:
1
<PAGE>
ARTICLE 1
AMENDMENTS
SECTION 1.01. The first sentence of the thirteenth paragraph of the "Form
of Reverse of Security" appearing in Section 2.03 of the Indenture is hereby
amended to add to the end of such sentence, before the period, the following:
"; provided, that Exchange Securities may be issued in
denominations of $1,000 and any integral multiple thereof."
SECTION 1.02. The proviso to the first sentence of Section 2.05 is hereby
deleted in its entirety and replaced by the following:
"; provided, however, that the term "Restricted Security" shall
not include any Exchange Securities or any Securities as to which
restrictions have been terminated in accordance with Section
3.05."
SECTION 1.03. Section 3.02 of the Indenture is hereby amended to add to the
end of such section, before the period, the following:
"; provided, that Exchange Securities may be issued in
denominations of $1,000 and any integral multiple thereof."
SECTION 1.04. The last sentence of the sixth paragraph of Section 3.05(a)
of the Indenture is hereby deleted in its entirety and replaced by the
following:
"Exchange Securities and other Securities which are not
Restricted Securities, as well as Securities which are issued
upon registration of transfer of, or in exchange for, Securities
which are not Restricted Securities, shall not bear such legend."
ARTICLE 2
MISCELLANEOUS PROVISIONS
SECTION 2.01. Except as specifically amended and supplemented by this First
Supplemental Indenture, the Indenture shall remain in full force and effect.
SECTION 2.02. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS FIRST
SUPPLEMENTAL INDENTURE.
2
<PAGE>
SECTION 2.03. The Trustee accepts the modification of the Indenture as
hereby effected but only upon the terms and conditions set forth in the
Indenture as amended and supplemented by this First Supplemental Indenture.
SECTION 2.04. The parties may sign any number of counterparts of this First
Supplemental Indenture. Each such counterpart shall be an original, but all of
them together represent the same agreement.
SECTION 2.05. Except as otherwise provided in the Indenture, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this First Supplemental Indenture or for or in
respect of the recitals contained herein.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the date first written above.
AVON PRODUCTS, INC.,
as Issuer
By: /s/ Dennis Ling
-----------------------------
Name: Dennis Ling
Title: Group Vice President,
Finance and Treasurer
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Kathleen Perry
------------------------
Name: Kathleen Perry
Title: Vice President
4
Exhibit 5.1
January 5, 2000
Avon Products, Inc.
1345 Avenue of the Americas
New York, NY 10105-0196
Ladies and Gentlemen:
We have acted as special counsel to Avon Products, Inc., a New York
corporation (the "Company"), in connection with the Company's offer (the
"Exchange Offer") to exchange its 6.90% notes due 2004 and 7.15% notes due 2007
(together, the "New Notes") for any and all of its outstanding 6.90% notes due
2004 and 7.15% notes due 2009 (together, the "Old Notes") pursuant to (i) the
Indenture, dated as of November 9, 1999, between the Company and The Chase
Manhattan Bank, as trustee (the "Trustee"), as supplemented by the First
Supplemental Indenture, dated as of January 5, 2000, between the Company and
the Trustee (collectively, the "Indenture"), and (ii) the Registration Rights
Agreement, dated as of November 9, 1999 (the "Registration Rights Agreement"),
by and among the Company and Salomon Smith Barney Inc., J.P. Morgan Securities
Inc., Banc of America Securities LLC, Chase Securities Inc., Deutsche Bank
Securities Inc., Morgan Stanley & Co. Incorporated and Warburg Dillon Read LLC.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments as we have deemed necessary or advisable for
the purposes of rendering this opinion.
Upon the basis of such examination, we advise you that, in our opinion,
the New Notes have been duly authorized by the Company and when the Securities
and Exchange Commission declares the Company's Registration Statement on Form
S-4 (File No. 333-92333) effective and the New Notes have been duly executed,
authenticated, issued and delivered in accordance with the terms of the
Registration Rights Agreement and the Indenture, the New Notes will constitute
valid and legally binding obligations of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States.
In connection with the foregoing, we have assumed that at the time of the
issuance and delivery of the New Notes there will not have occurred any change
in law affecting the validity, legally binding character or enforceability of
the New Notes and that the issuance and delivery of the New Notes, all of the
terms of the New Notes and the performance by the Company of its obligations
thereunder will comply with applicable law and with each requirement or
restriction imposed by any court or governmental body having jurisdiction over
the Company and will not result in a default under or a breach of any agreement
or instrument then binding upon the Company.
In rendering the foregoing opinion, we have relied as to certain matters
on information obtained from public officials, officers of the Company and
other sources believed by us to be responsible, and we have assumed (i) that
the Indenture has been duly authorized, executed and delivered by the Trustee,
(ii) that the New Notes will conform to the specimens thereof examined by us,
(iii) that the Trustee's certificates of authentication of the New Notes will
be manually signed by one of the Trustee's authorized officers and (iv) that
the signatures on all documents examined by us are genuine, assumptions which
we have not independently verified.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Validity
of the New Notes" in the prospectus which is part of such Registration
Statement. In giving such consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
DAVIS POLK & WARDWELL
2
