<PAGE> 1
This filing is made pursuant
to Rule 424(b)(1) under the
Securities Act of 1933 in
connection with Registration
No. 33-62165
PROSPECTUS SUPPLEMENT Issued March 4, 1996 (Subject to Completion)
(To Prospectus dated February 28, 1996)
1,305,000 PEPS(sm)
Premium Equity Participating Securities
The Times Mirror Company
% PEPS DUE MARCH 15, 2001
------------------------
Issue Price and Amount Payable at Maturity Based on the per
Share Price of Common Stock of
Netscape Communications Corporation
------------------------
The issue price (the "Issue Price") of each of the % Premium Equity
Participating Securities Due March 15, 2001 (the "PEPS") of The Times Mirror
Company (the "Company") being offered hereby will be $ (the last reported
bid price of the common stock, par value $0.0001 per share (the "Netscape Common
Stock"), of Netscape Communications Corporation ("Netscape") on March , 1996,
as reported on the Nasdaq National Market ("Nasdaq")). The PEPS will mature on
March 15, 2001 (subject to extension upon the occurrence of Non-Trading Days (as
defined herein), but in no event later than March 21, 2001). See "Description of
Securities -- General" and "-- Extension for Non-Trading Days" in this
Prospectus Supplement.
The amount of cash payable at maturity with respect to each PEPS will equal
the average Market Price (as defined herein) of one share of the Netscape Common
Stock for the 10 Trading Days (as defined herein) ending on the second Business
Day (as defined herein) prior to maturity, subject to adjustment as a result of
certain dilution events involving Netscape. See "Description of
Securities -- General" and "-- Dilution Adjustments" in this Prospectus
Supplement. Interest on each PEPS will be payable quarterly in arrears on each
March 15, June 15, September 15 and December 15 until maturity or redemption, as
the case may be, beginning June 15, 1996, and on the Maturity Date (as defined
herein) and the Redemption Date (as defined herein), at the rate of % of the
Issue Price per annum (or $ per annum). See "Description of
Securities -- Interest" in this Prospectus Supplement.
At any time after December 15, 2000, the Company will be entitled to redeem
all, or from time to time any part, of the outstanding PEPS for cash in an
amount per PEPS equal to the product of the Redemption Ratio (as defined herein)
and the average Market Price of one share of the Netscape Common Stock for the
10 Trading Days (the "Market Value") ending on the second Business Day prior to
the Redemption Date plus cash in an amount equal to all unpaid interest, whether
or not accrued, that would have been payable on the PEPS through the Maturity
Date. The Redemption Ratio will be calculated as of the Redemption Notice Date
(as defined herein) and will equal (a) if the Market Value of the Netscape
Common Stock is less than the Issue Price, 1.000, (b) if such Market Value is
equal to or greater than the Issue Price but less than or equal to $ (the
"Threshold Appreciation Price"), a fraction the numerator of which is the Issue
Price and the denominator of which is such Market Value and (c) if such Market
Value is greater than the Threshold Appreciation Price, 0. . In certain events
relating to the delisting of the Netscape Common Stock, the PEPS are subject to
mandatory redemption. See "Description of Securities -- General," "-- Optional
Redemption," "-- Redemption Procedures" and "-- Mandatory Redemption; Delisting
of the Netscape Common Stock" in this Prospectus Supplement.
The Netscape Common Stock is traded on Nasdaq under the symbol "NSCP." On
March 1, 1996, the last reported sale price of the Netscape Common Stock was
$53 5/8.
------------------------
SEE "RISK FACTORS" ON PAGES S-4 THROUGH S-6 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
Netscape is neither affiliated with the Company nor involved in this offering of
the PEPS.
See "Risk Factors -- Lack of Affiliation Between the Company and Netscape."
------------------------
The PEPS have been approved for listing on the NYSE, subject to official notice
of issuance.
The NYSE symbol for the PEPS is "TME." Prior to this offering,
there has been no public market for the PEPS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PRICE $ A PEPS
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------------------------------------------------------------------------
<S> <C> <C> <C>
Per PEPS................. $ $ $
Total(4)............... $ $ $
</TABLE>
- ------------
(1) Plus accrued interest from March , 1996, if any.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company estimated at $ .
(4) The Company has granted to the Underwriters an option, exercisable within
30 days of the date of this Prospectus Supplement, to purchase up to an
aggregate of 195,000 additional PEPS at the price to public less
underwriting discounts and commissions, for the purpose of covering
over-allotments, if any. If the Underwriters exercise such option in
full, the total price to public, underwriting discounts and commissions
and proceeds to Company will be $ , $ , and $ ,
respectively. See "Underwriters."
The PEPS are offered, subject to prior sale, when, as and if accepted by the
Underwriters named herein and subject to the approval of certain legal matters
with respect to the offering by Davis Polk & Wardwell and Latham & Watkins,
co-counsel for the Underwriters. It is expected that delivery of the PEPS will
be made on or about March , 1996, at the office of Morgan Stanley & Co.
Incorporated, New York, N.Y., against payment therefor in immediately available
funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
March , 1996
INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS SUBJECT
TO COMPLETION OR AMENDMENT. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
PROSPECTUS SUPPLEMENT
Netscape Communications Corporation.... S-3
Risk Factors........................... S-4
Price Range and Dividend History of the
Netscape Common Stock................ S-6
Use of Proceeds........................ S-6
Hedging................................ S-7
The Company............................ S-7
Recent Developments.................... S-7
Ratios and Pro Forma Ratios............ S-12
Capitalization and Pro Forma
Capitalization....................... S-13
Description of Securities.............. S-14
Certain United States Federal Income
Tax Considerations................... S-20
Underwriters........................... S-23
<CAPTION>
PAGE
------
<S> <C>
PROSPECTUS
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 3
Use of Proceeds........................ 3
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Fixed Charges
and Preferred Stock Dividends........ 3
Description of Debt Securities......... 3
Description of Capital Stock........... 8
Description of Warrants................ 18
Plan of Distribution................... 19
Certain Legal Matters.................. 19
Experts................................ 19
</TABLE>
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PEPS OFFERED
HEREBY AND THE NETSCAPE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THE PROSPECTUS OR IN THIS PROSPECTUS SUPPLEMENT
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THE
DELIVERY OF THE PROSPECTUS OR THIS PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
THEREUNDER OR HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF OR THEREOF. THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
"PEPS" is a service mark of Morgan Stanley Group Inc.
------------------------
The following is included for compliance with Florida blue sky laws:
Jeppesen & Co., GmbH, a wholly owned subsidiary of the Company organized under
the laws of Germany, sells airway manuals and revision services to the Cuban
government-owned airline, Cubana deAviacion, on an ongoing basis. In 1995, such
sales resulted in revenues of approximately $224,000. In 1989, Jeppesen
Sanderson, Inc., a wholly owned subsidiary of the Company ("Jeppesen"), obtained
a formal ruling from the United States Department of Commerce Bureau of Export
Administration that Jeppesen's flight charts and navigational data tapes are
eligible for export to any country in the world without restriction or prior
clearance pursuant to a general license. The general license operates to exempt
the Company's activities through its affiliates from prohibitions of the Cuban
Democracy Act of 1992 with respect to such flight charts and navigational data.
The information provided in this paragraph is accurate as of the date of this
Prospectus Supplement. As of the date of this Prospectus Supplement the Company
has not made the filings with the Florida Department of Banking and Finance
required by Florida Statutes Section 517.075(3). The Company currently intends
to make any filings required by such section in the near future, and when any
such filings are made, current information concerning the dealings of the
Company's affiliates with the government of Cuba and other persons or affiliates
located in Cuba may be obtained from the Florida Department of Banking and
Finance, at 1313 N. Tampa, Tampa, Florida 33602, phone (813) 272-2565. The
foregoing filings are required by the Florida blue sky laws.
S-2
<PAGE> 3
NETSCAPE COMMUNICATIONS CORPORATION
According to publicly available documents, Netscape Communications
Corporation ("Netscape"), a corporation organized under the laws of the state of
Delaware, develops, markets and supports open client, server and integrated
applications software that enables information exchange and commerce over the
Internet and private Internet Protocol networks. Netscape filed a Registration
Statement on Form S-1 (file no. 33-93862), effective August 8, 1995, with the
Securities and Exchange Commission (the "Commission") in connection with the
initial public offering of the Netscape Common Stock. Netscape is subject to the
information requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and required to file reports and other information with the
Commission. Copies of such registration statement, reports and other information
may be inspected and copied at certain offices of the Commission specified under
"Available Information" in the accompanying Prospectus in the context of the
Company's information filed with the Commission and at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C., 20006.
THIS PROSPECTUS SUPPLEMENT RELATES ONLY TO THE PEPS OFFERED HEREBY AND DOES
NOT RELATE TO THE NETSCAPE COMMON STOCK OR OTHER SECURITIES OF NETSCAPE. ALL
DISCLOSURES CONTAINED IN THIS PROSPECTUS SUPPLEMENT REGARDING NETSCAPE ARE
DERIVED FROM THE PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING
PARAGRAPH. THE COMPANY HAS NOT PARTICIPATED IN THE PREPARATION OF SUCH DOCUMENTS
NOR MADE ANY DUE DILIGENCE INQUIRY WITH RESPECT TO THE INFORMATION PROVIDED
THEREIN, NOR HAS ANY OF THE UNDERWRITERS MADE ANY DUE DILIGENCE INQUIRY WITH
RESPECT TO THE INFORMATION PROVIDED THEREIN IN CONNECTION WITH THE OFFERING OF
THE PEPS HEREBY. NEITHER THE COMPANY NOR ANY OF THE UNDERWRITERS MAKES ANY
REPRESENTATION THAT SUCH PUBLICLY AVAILABLE DOCUMENTS OR ANY OTHER PUBLICLY
AVAILABLE INFORMATION REGARDING NETSCAPE ARE ACCURATE OR COMPLETE. FURTHERMORE,
THERE CAN BE NO ASSURANCE THAT ALL EVENTS OCCURRING PRIOR TO THE DATE HEREOF
(INCLUDING EVENTS THAT WOULD AFFECT THE ACCURACY OR COMPLETENESS OF THE PUBLICLY
AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPH) THAT WOULD AFFECT THE
TRADING PRICE OF THE NETSCAPE COMMON STOCK (AND THEREFORE THE ISSUE PRICE OF THE
PEPS) HAVE BEEN PUBLICLY DISCLOSED. SUBSEQUENT DISCLOSURE OF ANY SUCH EVENTS OR
THE DISCLOSURE OF OR FAILURE TO DISCLOSE MATERIAL FUTURE EVENTS CONCERNING
NETSCAPE COULD AFFECT THE AMOUNT PAYABLE AT MATURITY OR UPON REDEMPTION WITH
RESPECT TO THE PEPS AND THEREFORE THE TRADING PRICES OF THE PEPS.
NEITHER THE COMPANY NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION TO
ANY PURCHASER OF PEPS AS TO THE PERFORMANCE OF NETSCAPE, THE NETSCAPE COMMON
STOCK OR OTHER SECURITIES OF NETSCAPE.
S-3
<PAGE> 4
RISK FACTORS
Prospective holders of the PEPS should carefully consider, in addition to
the other information set forth in this Prospectus Supplement, the following:
COMPARISON TO OTHER DEBT SECURITIES
The terms of the PEPS differ from those of other debt securities in that
the amount payable at maturity or redemption is not fixed, but is based on the
price of the Netscape Common Stock. There can be no assurance that the amount
payable at maturity or redemption will be equal to or greater than the Issue
Price. If the Market Value of the Netscape Common Stock at maturity or
redemption is less than the Issue Price, the amount payable at maturity or
redemption will also be less than the Issue Price, in which case an investment
in the PEPS may result in a loss. In addition, if the Market Value of the
Netscape Common Stock at redemption is greater than the Issue Price, the amount
payable at redemption will be less than the Market Value, and holders of the
PEPS will not realize all or, in certain cases, any of the appreciation in the
Market Value of the Netscape Common Stock.
EFFECT OF SALES OF THE NETSCAPE COMMON STOCK ON THE MARKET FOR THE PEPS
The Company currently holds 1,777,780 shares of the Netscape Common Stock.
It is the Company's present intention to hold until prior to the Maturity Date
or the Redemption Date a number of shares of the Netscape Common Stock (after
certain dilution adjustments) equal to the number of the PEPS outstanding, and
to sell such shares during the 10 Trading Days ending on the second Business Day
prior to the Maturity Date or Redemption Date, as the case may be, to pay the
amount due upon maturity or redemption of the PEPS. Although no assurance can be
given that such sales of the Netscape Common Stock will not adversely affect the
market for the Netscape Common Stock or the amount due at maturity or upon
redemption of the PEPS, the Company has no reason to believe that these sales
will have such an effect. The Company, however, is not obligated to hold the
Netscape Common Stock for any period or to sell the Netscape Common Stock prior
to the Maturity Date or the Redemption Date, and the Netscape Common Stock is
not subject to any lien, negative pledge or other restriction on disposition or
encumbrance in favor of the holders of the PEPS. See "Hedging" in this
Prospectus Supplement.
LACK OF AFFILIATION BETWEEN THE COMPANY AND NETSCAPE
The Company is not affiliated with Netscape (other than as a stockholder of
the Netscape Common Stock) and as of the date of this Prospectus Supplement the
Company does not have any material non-public information concerning Netscape.
Although the Company has no knowledge that any of the corporate events described
below under "-- Dilution of the Netscape Common Stock" are currently being
contemplated by Netscape, such corporate events are beyond the Company's ability
to control and are difficult to predict. Although the Company has no reason to
believe the information concerning Netscape included or referred to herein is
not reliable, neither the Company nor any of the Underwriters warrants that
there have not occurred events, not yet publicly disclosed by Netscape, that
would affect either the accuracy or completeness of the information concerning
Netscape included or referred to herein. See "Netscape Communications
Corporation" in this Prospectus Supplement. Netscape is not involved in the
offering of the PEPS and has no obligations with respect to the PEPS, including
any obligation to take the interests of the Company (other than as a stockholder
of the Netscape Common Stock) or of holders of the PEPS into consideration for
any reason or under any circumstance. Netscape will not receive any of the
proceeds of the offering of the PEPS made hereby and is not responsible for, and
has not participated in, the determination of the timing of, prices for or
quantities of the PEPS offered hereby or the determination or calculation of the
amount to be paid to holders of the PEPS at maturity or upon redemption.
Netscape is not involved with the administration, marketing or trading of the
PEPS nor in the preparation of this Prospectus Supplement and has no obligations
with respect to the amount to be paid to holders of the PEPS at maturity or upon
redemption. Holders of the PEPS will not be entitled to any rights, including
voting rights or any cash dividends (although amounts payable in respect of the
PEPS will be subject to certain adjustments in the case of Extraordinary Cash
Dividends (as defined below)) with respect to the Netscape Common Stock.
S-4
<PAGE> 5
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
It is not possible to predict how the PEPS will trade in the secondary
market or whether such market will be liquid or illiquid. The PEPS have been
approved for listing on the NYSE, subject to official notice of issuance.
However, there can be no assurance that the PEPS will not later be delisted or
that trading in the PEPS on the NYSE will not be suspended. In the event of a
delisting or suspension of trading on the NYSE, the Company will use its best
efforts to list the PEPS on another national securities exchange. The PEPS will
not be redeemable or exchangeable as a result of any such delisting or
suspension of trading. If the PEPS are not listed or traded on any United States
national securities exchange or through the facilities of a United States
national securities system, or if trading of the PEPS is suspended, pricing
information for the PEPS may be more difficult to obtain, and the liquidity and
market prices of the PEPS may be adversely affected.
RELATIONSHIP OF THE PEPS AND THE NETSCAPE COMMON STOCK
The market price of the PEPS at any time is expected to be affected
primarily by changes in the price of the Netscape Common Stock. As indicated in
"Price Range and Dividend History of the Netscape Common Stock" in this
Prospectus Supplement, the price of the Netscape Common Stock has been volatile
since its initial public offering on August 9, 1995 and may exhibit more or less
volatility during the term of the PEPS. It is impossible to predict whether the
price of the Netscape Common Stock will rise or fall. Trading prices of the
Netscape Common Stock will be influenced by, among other things, Netscape's
financial condition, results of operations and prospects, factors over which the
Company has no control. The historical market prices of the Netscape Common
Stock should not be taken as an indication of the Netscape Common Stock's future
performance during the term of the PEPS.
EFFECT OF THE PEPS ON THE MARKET FOR THE NETSCAPE COMMON STOCK
Any market that develops for the PEPS may influence the market for the
Netscape Common Stock. For example, the price of shares of the Netscape Common
Stock could become more volatile and could be depressed by the sale of the PEPS,
by investors' anticipation of the potential distribution into the market of
substantial additional amounts of the Netscape Common Stock by the Company or
otherwise, by possible sales of the Netscape Common Stock by investors who view
the PEPS as a more attractive means of equity participation in Netscape and by
hedging or arbitrage trading activity that may develop involving the PEPS and
shares of the Netscape Common Stock.
DILUTION OF THE NETSCAPE COMMON STOCK
The amount payable at maturity or redemption with respect to the PEPS is
subject to adjustment for certain events arising from stock splits and
combinations, stock dividends, Extraordinary Cash Dividends and certain other
events or actions of Netscape that affect Netscape's capital structure. See
"Description of Securities -- Dilution Adjustments" in this Prospectus
Supplement. The amount payable at maturity or redemption of the PEPS is not
adjusted for certain other events, such as offerings of the Netscape Common
Stock for cash, or business acquisitions by Netscape with the Netscape Common
Stock that may adversely affect the price of the Netscape Common Stock and may
adversely affect the trading price of and market value of the PEPS. There can be
no assurance that Netscape will not make offerings of the Netscape Common Stock
or other equity securities or such business acquisitions in the future.
DELISTING OF THE NETSCAPE COMMON STOCK
The PEPS will be subject to mandatory redemption on the Business Day
immediately preceding the first day (the "Delisting Date") on which the Netscape
Common Stock (or equity securities comprising more than 25% of the fair market
value (as determined in good faith by the Board of Directors of the Company on
the date any such equity security is distributed and on the date any such equity
security is delisted) of the Reference Property Relating to One PEPS (as defined
below)) is not listed on any United States national securities exchange or
United States national securities system subject to last sale reporting or is
permanently suspended from trading (within the meaning of the Exchange Act and
the rules and regulations thereunder)
S-5
<PAGE> 6
on each such securities exchange and securities system on which it is then
listed. See "Description of Securities -- Mandatory Redemption; Delisting of the
Netscape Common Stock" in this Prospectus Supplement. If a Delisting Date
occurs, investors would realize a net total return on the PEPS which may be
materially lower than anticipated. Moreover, it is possible that if a Delisting
Date were to occur, it might occur at a time when the price of the Netscape
Common Stock or equity security of any Netscape Successor, as the case may be,
is materially lower than the Issue Price. In such case, the amount payable upon
mandatory redemption of the PEPS would be less, resulting in a loss on an
investment in the PEPS. No assurance may be given that a Delisting Date will not
occur.
OTHER CONSIDERATIONS
It is suggested that prospective investors who consider purchasing the PEPS
should reach an investment decision only after carefully considering with their
advisors the suitability of an investment in the PEPS in light of their
particular circumstances. Investors should also consider the tax consequences of
investing in the PEPS. See "Certain United States Federal Income Tax
Considerations" in this Prospectus Supplement.
PRICE RANGE AND DIVIDEND HISTORY OF THE NETSCAPE COMMON STOCK
The Netscape Common Stock is listed and began trading on Nasdaq on August
9, 1995 under the symbol "NSCP." The following table sets forth the high and low
last reported sale prices per share of the Netscape Common Stock on Nasdaq for
the periods indicated. The last reported sale price per share of the Netscape
Common Stock on March 1, 1996 was $53 5/8. The last reported sale prices per
share of the Netscape Common Stock listed below are furnished as a matter of
information only and have been derived from publicly disseminated information
that the Company has no reason to believe is inaccurate. Neither the Company nor
any of the Underwriters makes any representation as to the accuracy of such
information. The historical prices of the Netscape Common Stock should not be
taken as an indication of future performance, and no assurance can be given that
the price of the Netscape Common Stock will not decrease so that the beneficial
owners of the PEPS will receive at maturity or upon redemption an amount of cash
based on the price of the Netscape Common Stock that is less than the Issue
Price of the PEPS. Nor can assurance be given that the price of the Netscape
Common Stock will increase above the Threshold Appreciation Price so that at
maturity or upon redemption the beneficial owners of the PEPS will receive an
amount in excess of the Issue Price of the PEPS. Fluctuations in or levels of
the sales prices that have occurred in the past are not necessarily indicative
of fluctuations in or levels of the sales prices of the Netscape Common Stock
that may occur over the term of the PEPS.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
August 9, 1995-August 31, 1995.......................... $37 1/2 $22 7/8
September 1995.......................................... 34 1/2 23
October 1995............................................ 45 7/8 28
November 1995........................................... 71 1/8 43 1/4
December 1995........................................... 87 58 7/8
January 1996............................................ 86 58 3/4
February 1996........................................... 80 47 1/4
</TABLE>
The last reported sale prices for the Netscape Common Stock set forth above
have been adjusted for a 2-for-1 stock split, issued as a stock dividend with
respect to the Netscape Common Stock, that occurred on February 6, 1996. No cash
dividends or other stock dividends have been declared or paid with respect to
the Netscape Common Stock as of the date of this Prospectus Supplement.
USE OF PROCEEDS
The estimated net proceeds from the offering are $ million ($
million if the Underwriters exercise their over-allotment option in full) and
will be used by the Company for general corporate purposes.
S-6
<PAGE> 7
HEDGING
The Company's obligations under the PEPS are hedged by the Company's
investment in 1,777,780 shares of the Netscape Common Stock, which it acquired
on February 6, 1996, after a 2-for-1 stock split of 888,890 shares of the
Netscape Common Stock acquired on August 8, 1995 upon a 2-for-1 conversion of
its 444,445 shares of Series C Preferred Stock of Netscape. The Series C
Preferred Stock was purchased by the Company pursuant to a Stock Purchase
Agreement, dated April 5, 1995, by and among Netscape and certain investors,
including the Company, listed on Schedule A thereto. It is the Company's present
intention to hold until prior to the Maturity Date or the Redemption Date a
number of shares of the Netscape Common Stock (after certain dilution
adjustments) equal to the number of PEPS outstanding, and to sell such shares
during the 10 Trading Days ending on the second Business Day prior to the
Maturity Date or the Redemption Date, as the case may be, to pay the amount due
upon maturity or redemption of the PEPS. The Company is not, however, obligated
to hold the Netscape Common Stock for any period or to sell the Netscape Common
Stock prior to the Maturity Date or the Redemption Date and the Netscape Common
Stock is not subject to any lien, negative pledge or other restriction on
disposition or encumbrance in favor of the holders of the PEPS. The Company will
consider all relevant economic and market factors in determining whether to hold
the Netscape Common Stock until maturity or redemption of the PEPS, as the case
may be, or to sell all or any portion of the shares of the Netscape Common Stock
prior to the 10 Trading Days ending on the second Business Day prior to either
such date. Although no assurance can be given that such sales of Netscape Common
Stock will not adversely affect the market for the Netscape Common Stock or the
amount due at maturity or upon redemption of the PEPS, the Company has no reason
to believe that these sales will have such an effect.
THE COMPANY
The Company is engaged principally in the newspaper publishing,
professional information and consumer media businesses. The Company publishes
the Los Angeles Times, Newsday, The Baltimore Sun, The Hartford Courant, The
Morning Call, The (Stamford) Advocate, the Greenwich Time and several smaller
newspapers. Through its subsidiaries, the Company also provides professional
information to the legal, aviation, health science and consumer health markets,
publishes college textbooks, other categories of books and magazines and also
provides training information and services. The Company was incorporated in the
State of Delaware in June 1994 for the purpose of owning and operating these
businesses after a reorganization of the Company's predecessor was completed in
February 1995. The Company's predecessor was incorporated in 1884 in the State
of California and was reincorporated in the State of Delaware in 1986.
RECENT DEVELOPMENTS
The Company's 1995 results were significantly affected by the impact of a
$1.63 billion after-tax gain in the first quarter on the disposition of its
cable television business, as well as its comprehensive restructuring program in
the second half of the year. After-tax charges related to this restructuring
program were $554.0 million of which $504.4 million related to continuing
operations and $49.6 million related to discontinued operations. In addition,
the Company repurchased 7.0 million shares of its common stock and 8.8 million
shares of its Series B Conversion Preferred Stock (PERCS) for a total cost of
$446.5 million. On February 1, 1996, the Company announced its earnings and
other results of operations for the year ended December 31, 1995. The substance
of such announcement is set forth below:
RESULTS OF OPERATIONS
For 1995, net income for the Company was $1.23 billion, or $10.02 per
common share. For 1994, net income was $173.1 million, or $1.35 per share. For
1995, the Company's revenues rose 2.8 percent to $3.45 billion from $3.36
billion in the prior year. Fourth quarter 1995 revenues were up 1.1 percent to
$966.7 million from $956.4 million in the fourth quarter of 1994.
Due to the $504.4 million after-tax impact of the 1995 restructuring
program on continuing operations, and other special items, the Company reported
a loss from continuing operations of $339.0 million, or $3.74
S-7
<PAGE> 8
per share, for 1995 compared with 1994 income from continuing operations of
$132.2 million, or $1.03 per share. Due to these same items, for the fourth
quarter of 1995, the Company reported a loss from continuing operations of
$141.6 million, or $1.62 per share, compared with income from continuing
operations in the 1994 fourth quarter of $51.7 million, or 40 cents per share.
Income from continuing operations was $139.6 million, or 84 cents per
share, in 1995 before the impact of asset dispositions, the Company's
restructuring program charges and other special items, and $57.1 million, or 42
cents per share, in the 1995 fourth quarter. On a comparable basis, 1994 income
from continuing operations was $121.6 million, or 95 cents per share, for the
year, and $51.7 million, or 40 cents per share, for the 1994 fourth quarter.
In addition to the gain on the cable transaction and the Company's
restructuring program, 1995 net income was reduced by changes in accounting
principles affecting first quarter results. Also, the repurchase of shares of
Series B Conversion Preferred Stock at a premium over their liquidation value
reduced 1995 earnings applicable to common shareholders by $43.1 million, or 38
cents per share, for the year and $21.8 million, or 20 cents per share, in the
fourth quarter.
Year-to-year comparisons of earnings per share, excluding special items,
were affected by new preferred stock dividend requirements in 1995, which
reduced earnings applicable to common shareholders by $44.0 million, or 39 cents
per share, for the year, and $12.1 million, or 11 cents per share, for the
fourth quarter.
RESTRUCTURING PROGRAM
The Company's 1995 restructuring program and other actions will result in
the reduction of approximately 3,000 positions and is expected to produce
approximately $135 million in annualized operating expense savings. In the
fourth quarter of 1995, operating expense reductions of approximately $20
million were achieved, primarily in the newspaper segment, and approximately
$120 million of operating expense savings are expected to be realized in 1996.
In addition, businesses and projects projected to lose $50 million in 1996 have
been discontinued and other one-time expense savings have been realized.
Approximately $427 million in cash is expected to be spent for restructuring
program actions, of which approximately $169 million was spent in 1995 and the
balance will be spent in 1996 and beyond. As a result of the program-related
cost reductions and the discontinuations, the Company expects to recoup these
expenditures in less than three years.
The major elements of the Company's restructuring program include:
- Closure of New York Newsday, Baltimore's Evening Sun, and certain
sections of the Los Angeles Times.
- Staff reductions throughout the Company.
- Discontinuations of the Company's consumer multimedia business, cable
television programming business, and its electronic shopping joint
ventures with Pacific Telesis and NYNEX.
- Renegotiation of union agreements at Newsday and The Baltimore Sun.
- Consolidation in the same building of the New York offices of Newsday,
Matthew Bender, Times Mirror Magazines and the east coast corporate
staff, with substantial reduction in cost per square foot and a net
reduction of leased office space from approximately 559,000 square feet
to approximately 270,000 square feet.
- Writedowns of goodwill and other intangibles at The Baltimore Sun, Times
Mirror Magazines and several professional information businesses.
- Discontinuation of marginal product lines, channels of distribution and
manufacturing facilities.
- Discontinuation of the development of a company-wide digital network of
product, marketing and administrative databases.
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<PAGE> 9
Restructuring, impairment and one-time charges for 1995 of $634.1 million
included $153.8 million in severance and other employee-related costs, $126.4
million in real estate-related charges, $117.2 million of asset writeoffs, $60.9
million in impairment charges, $163.9 million in one-time charges primarily for
renegotiation of union agreements and writedowns of idle assets and $11.9
million of other charges. In addition, nonrecurring operating expenses of $90.0
million were incurred in connection with the restructuring program.
Investment-related writedowns and charges of $43.9 million further reduced
income from continuing operations. For continuing operations, the after-tax
impact of these restructuring program-related charges for 1995 was approximately
$504.4 million, or $4.43 per share. In addition, the Company discontinued its
cable television programming and consumer multimedia businesses and other
activities, resulting in a $49.6 million, or 44 cents per share, after-tax
charge for discontinuance and other costs. As a result, the total after-tax
impact of the restructuring program charges was $554.0 million, or $4.87 per
share, in 1995.
Fourth quarter restructuring program charges were $251.4 million, which
included $36.2 million in severance and other employee-related costs, $57.0
million in real estate-related charges, $26.6 million of asset writeoffs, $24.8
million in impairment charges, $94.9 million in one-time charges for writedowns
of idle assets and other costs and $11.9 million of other charges. In addition,
nonrecurring operating expenses of $67.3 million were incurred in connection
with the restructuring program. Other restructuring program-related charges
included in the fourth quarter loss aggregated to $7.7 million.
STOCK REPURCHASE PROGRAM
In its 1995 stock repurchase program, the Company acquired 7.0 million
shares of its common stock and 8.8 million shares of its Series B Conversion
Preferred Stock (PERCS) for an aggregate of $446.5 million. The Company recently
announced its intention to acquire an additional 12.0 million shares of its
common stock over the next three years.
SEGMENT RESULTS
NEWSPAPER PUBLISHING
For the fourth quarter of 1995, Newspaper Publishing operating profit,
excluding restructuring program charges, rose to $80.0 million, a 9.9 percent
increase from the $72.8 million in the fourth quarter of 1994, despite a decline
in revenues and a 37 percent increase in newsprint costs. Fourth quarter
revenues decreased 2.2 percent to $568.5 million, due to the closure of New York
Newsday. For the segment, operating profit margins, excluding restructuring
program charges, rose to 14.1 percent compared to 12.5 percent in the 1994
fourth quarter, as lower costs and productivity improvements more than offset
the increase in newsprint prices. Excluding newsprint, all other costs declined
around 10 percent in the 1995 fourth quarter from last year's fourth quarter.
For the full year 1995, the segment's operating profit, excluding
restructuring program charges, increased 6.1 percent to $206.7 million, the
highest level since 1989. The higher operating profit and profit margins were
achieved as reductions in operating costs more than offset slightly lower
revenues and a nearly 30% increase in newsprint expense. Revenues were $2.06
billion, about the same as the prior year.
Advertising revenues were $1.56 billion in 1995, essentially the same as
1994. The Los Angeles Times continues to experience a difficult advertising
environment, due primarily to retail store consolidations, while Newsday's
advertising revenues were reduced by the closure of its New York Edition. All of
the other Eastern newspapers showed advertising revenue improvement.
PROFESSIONAL INFORMATION
For the 1995 fourth quarter, the Professional Information segment reported
operating profit, excluding restructuring program charges, of $56.6 million
compared with $60.2 million in the prior year. Revenues in the 1995 fourth
quarter increased to $321.3 million from $296.0 million in 1994. For the full
year 1995, operating profit, excluding restructuring program charges, declined
to $136.0 million from $174.0 million in 1994, while revenues increased to $1.09
billion from $1.01 billion in the prior year.
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<PAGE> 10
Revenues rose in 1995 at all groups within the segment, except at Matthew
Bender. Bender's significant declines in revenue and operating profit were the
largest factors in the segment's operating profit decline. Despite higher
revenues, college textbook publishing and the Company's health information group
also reported declines in operating profit due to higher costs related to
acquisitions, increased marketing and greater international expansion as well as
the start-up of a new medical on-line service. The training companies reported
reduced operating profit, excluding restructuring program charges, for the year,
reflecting weaknesses in certain markets and higher marketing, acquisition and
other costs. The Company's flight information publisher, Jeppesen Sanderson,
reported substantial revenue growth and a significant increase in operating
profit.
CONSUMER MEDIA
For the 1995 fourth quarter, the Consumer Media segment reported an
operating loss of $1.0 million, excluding restructuring program charges, and
revenues of $77.3 million, a decline of 2.5 percent from the prior year. For the
full year 1995, revenues rose 4.4 percent to $300.7 million from $288.1 million
in 1994. Increased year-end promotional and marketing expenses at Times Mirror
Magazines and overall higher paper and postage costs contributed to the 1995
operating loss. The operating loss for 1995, excluding restructuring program
changes, was $1.0 million compared with operating profit of $3.3 million in
1994.
This section of the Prospectus Supplement contains certain forward-looking
statements that are subject to risk and uncertainty. There can be no assurance
that these future results will be achieved. Potential investors are cautioned
that a number of factors, including those identified below, could adversely
affect the Company's ability to obtain these results: (a) an increase in paper,
printing and distribution costs over the levels anticipated; (b) increased
consolidation among major retailers or other events depressing the level of
display advertising; (c) an economic downturn in the Company's principal
newspaper markets or other occurrences leading to decreased circulation and
diminished revenues from both display and classified advertising; (d)
competitive pressures arising from increased consolidation in the legal
information industry and the college textbook publishing industry; (e) an
increase in expenses related to new initiatives and product improvement efforts
in the Company's legal information, flight information and health information
operating units; (f) unfavorable foreign currency fluctuations; and (g) a
general economic downturn resulting in decreased professional or corporate
spending on discretionary items such as information or training and in decreased
consumer spending on discretionary items such as magazines or newspapers.
S-10
<PAGE> 11
CONSOLIDATED RESULTS OF OPERATIONS
The following table summarizes the Company's financial results (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
FOURTH QUARTER ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
------------------------- -------------------------
1994(A) 1995 1994(A) 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES.................................. $3,355,761 $3,448,287 $ 956,409 $ 966,742
Operating expenses........................ 3,053,253 3,269,589(b) 842,671 921,670(c)
Restructuring, impairment and one-time
charges................................. -- 634,077 -- 251,403
---------- ---------- ---------- ----------
Operating profit (loss)................... 302,508 (455,379) 113,738 (206,331)
Interest expense.......................... (69,322) (29,467) (17,565) (7,727)
Interest income........................... 2,517 27,237 1,026 4,888
Other, net................................ 22,196 2,596 (472) (7,614)
---------- ---------- ---------- ----------
Income (loss) from continuing operations
before income tax provision (benefit)... 257,899 (455,013) 96,727 (216,784)
Income tax provision (benefit)............ 125,676 (116,030) 45,077 (75,152)
---------- ---------- ---------- ----------
Income (loss) from continuing
operations.............................. 132,223 (338,983) 51,650 (141,632)
Discontinued operations:
Net income (loss) from operations....... 53,126 (55,836) 13,305 --
Net gain on disposal(d)................. -- 1,634,294 -- --
Extraordinary loss on early retirement of
debt, net of taxes...................... (12,232) -- (12,232) --
Cumulative effect of changes in accounting
principles, net of taxes................ -- (12,724) -- --
---------- ---------- ---------- ----------
NET INCOME (LOSS)......................... $ 173,117 $1,226,751 $ 52,723 $ (141,632)
========== ========== ========== ==========
Preferred dividend requirements........... $ -- $ 44,003 $ -- $ 12,052
========== ========== ========== ==========
Cash paid over liquidation value for
Series B preferred stock
redemptions(e).......................... $ -- $ 43,085 $ -- $ 21,818
========== ========== ========== ==========
EARNINGS (LOSS) APPLICABLE TO COMMON
SHAREHOLDERS............................ $ 173,117 $1,139,663 $ 52,723 $ (175,502)
========== ========== ========== ==========
EARNINGS (LOSS) PER COMMON SHARE
Continuing operations................... $ 1.03 $ (3.74) $ .40 $ (1.62)
Discontinued operations:
Net income (loss) from operations.... .41 (.49) .10 --
Net gain on disposal................. -- 14.36 -- --
Extraordinary loss...................... (.09) -- (.09) --
Cumulative effect of changes in
accounting principles................ -- (.11) -- --
---------- ---------- ---------- ----------
EARNINGS (LOSS) PER COMMON SHARE.......... $ 1.35 $ 10.02 $ .41 $ (1.62)
========== ========== ========== ==========
Weighted average common and common
equivalent shares....................... 128,800 113,800(f) 128,800 108,200(g)
========== ========== ========== ==========
</TABLE>
- ---------------
(a) 1994 amounts have been restated to reflect operations discontinued in 1995.
(b) Includes $90.0 million of nonrecurring costs in 1995.
(c) Includes $67.3 million of nonrecurring costs in 1995.
(d) Gain from disposal of cable television operations in the first quarter of
1995.
(e) This amount, along with preferred dividend requirements, reduces earnings
applicable to common shareholders for purposes of determining earnings per
share.
(f) Common stock equivalents of 1.7 million shares are not included in 1995
because the dilution is less than 3%.
(g) Common stock equivalents of 2.4 million shares are not included in this
amount because they are antidilutive.
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<PAGE> 12
RATIOS AND PRO FORMA RATIOS
The following table sets forth the consolidated ratio of earnings to fixed
charges and the ratio of earnings to fixed charges and preferred stock dividends
for the Company for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------ PRO FORMA
1991 1992 1993 1994 1995 1995
--- --- --- --- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges..... 1.3x (a) 2.0x 3.8x (a) (a)
Ratio of earnings to fixed charges and
preferred stock dividends............ N/A N/A N/A N/A (b) (b)
</TABLE>
- ---------------
(a) Earnings for 1992, 1995 and 1995 pro forma were lower than the amount needed
to cover fixed charges by approximately $7 million, $451 million and $453
million, respectively. Earnings in 1992 and 1995 were impacted by
approximately $200 million and $768 million, respectively, in restructuring
program charges.
(b) Earnings for 1995 and 1995 pro forma were lower than the amount needed to
cover fixed charges and preferred stock dividends by approximately $526
million and $528 million, respectively. Earnings in 1995 were impacted by
approximately $768 million in restructuring program charges.
The ratio of earnings to fixed charges was computed by dividing earnings
(income from continuing operations before income taxes, adjusted for fixed
charges (net of capitalized interest), equity income or loss from unconsolidated
affiliates and amortization of capitalized interest) by fixed charges for the
periods indicated. Fixed charges include interest incurred on long-term and
other debt, capitalized interest, the interest factor deemed to be included in
rental expense, and certain amortization.
The ratio of earnings to fixed charges and preferred stock dividends was
computed as described above, except that fixed charges were combined with the
preferred stock dividends for the period indicated. The preferred stocks were
issued in 1995 and began accruing dividends on March 1, 1995.
The pro forma ratio of earnings to fixed charges and the pro forma ratio of
earnings to fixed charges and preferred dividends was computed by dividing pro
forma earnings (earnings as described above adjusted by pro forma fixed charges)
by pro forma fixed charges, and pro forma fixed charges and preferred dividends,
respectively, for the period. Pro forma fixed charges include interest on the
PEPS, assuming a 3.25% interest rate on an assumed January 1, 1995 issuance of
1,305,000 PEPS for $67.9 million. This is based on the assumption that each PEPS
had a value of $52.00 on January 1, 1995.
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<PAGE> 13
CAPITALIZATION AND PRO FORMA CAPITALIZATION
The following table sets forth the capitalization and the pro forma
capitalization of the Company at December 31, 1995 after giving effect to the
transaction described in this Prospectus Supplement. This table should be read
in conjunction with the Company's historical consolidated financial statements
and related notes thereto incorporated by reference in the accompanying
Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------
HISTORICAL PRO FORMA
---------- ----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C>
Debt, including short-term debt..................................... $ 248,187 $ 316,047(a)
Shareholders' equity
Preferred stock:
Preferred Stock, $1.00 par value, 7,100,000 shares authorized,
no shares issued..............................................
Series A Preferred Stock, $1.00 par value, 900,000 shares
authorized, 824,000 shares issued and outstanding, stated at
liquidation value............................................. 411,784 411,784
Series B Preferred Stock, $1.00 par value, 25,000,000 shares
authorized, 7,789,000 shares issued and outstanding, stated at
liquidation value, convertible into Series A common stock..... 164,595 164,595
Common stock:
Series A, $1.00 par value, 500,000,000 shares authorized,
77,765,000 shares issued and outstanding...................... 77,765 77,765
Series B, $1.00 par value, 100,000,000 shares authorized, no
shares outstanding............................................
Series C, $1.00 par value, 300,000,000 shares authorized,
27,933,000 shares issued and outstanding...................... 27,933 27,933
Additional paid-in capital........................................ 180,466 180,466
Retained earnings................................................. 875,981 875,981
Net unrealized gain on securities................................. 55,912 55,912
---------- ----------
Total shareholders' equity.......................................... 1,794,436 1,794,436
---------- ----------
Total capitalization................................................ $2,042,623 $2,110,483
========== ==========
</TABLE>
- ---------------
(a) Assumes that each PEPS has a value of $52.00 at the issuance date and that
1,305,000 PEPS were issued on December 31, 1995 for a total of $67.9
million.
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<PAGE> 14
DESCRIPTION OF SECURITIES
The following description of the terms of the PEPS offered hereby (referred
to in the Prospectus as the "Offered Debt Securities") supplements the
description of the general terms and provisions of the Offered Debt Securities
set forth in the Prospectus, to which description reference is hereby made. The
following summary of the PEPS does not purport to be complete and is subject to,
and qualified in its entirety by, reference to the Indenture referred to in the
accompanying Prospectus.
GENERAL
The aggregate number of PEPS to be issued will be 1,305,000, or 1,500,000
if the over-allotment option granted by the Company to the Underwriters is
exercised in full. See "Underwriters" in this Prospectus Supplement. The PEPS
will be unsecured and unsubordinated obligations of the Company, will be issued
under the Indenture described in the accompanying Prospectus and will rank
equally and ratably with all other unsecured and unsubordinated debt of the
Company. The PEPS will mature on March 15, 2001 (subject to extension as
described below under "-- Extension for Non-Trading Days" but in no event later
than March 21, 2001). The PEPS will be issuable in denominations equal to
$ and integral multiples thereof.
At maturity, the holder of a PEPS will be entitled to receive an amount in
cash equal to the Market Value as of the second Business Day prior to the
Maturity Date of the Reference Property Relating to One PEPS (initially one
share of the Netscape Common Stock, subject to adjustment as a result of certain
dilution events involving Netscape, see "-- Dilution Adjustments" in this
Prospectus Supplement).
In certain events relating to delisting of the Netscape Common Stock (or
delisting of Reference Property Relating to One PEPS), the PEPS will be subject
to mandatory redemption. See "-- Mandatory Redemption; Delisting of the Netscape
Common Stock."
At any time and from time to time after December 15, 2000 and prior to the
Maturity Date, the Company will be entitled to redeem all, or from time to time
any part, of the outstanding PEPS and deliver to the holders thereof, in
exchange for each PEPS so called, cash in an amount equal to the product of the
Redemption Ratio and the Market Value of the Reference Property Relating to One
PEPS as of the second Business Day prior to the Redemption Date, plus cash in an
amount equal to all unpaid interest, whether or not accrued, that would have
been payable on the PEPS through the Maturity Date.
The Company will deposit with the Trustee (as defined below) the amount
payable in respect of the PEPS at maturity or upon redemption of the PEPS.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which Nasdaq or banking institutions or trust companies in The City of New York
are authorized or obligated by law or executive order to close.
The "Market Price" of any security as of the date of determination means
the last reported sale price of such security as reported by Nasdaq, or if such
security is not reported by Nasdaq, the closing sale price for such security
(or, if no closing sale price is reported, the average of the bid and ask prices
or, if more than one in either case, the average of the average bid and average
ask prices) on such date as reported in the composite transaction for the
principal United States securities exchange on which such security is traded or,
if such security is not listed on a United States national or regional
securities exchange, the high per share bid price for such security in the
over-the-counter market as reported on the National Quotation Bureau or similar
organization, or, if such bid price is not available, the value of such security
on such date as determined by a nationally recognized investment banking firm
retained for such purpose by the Company.
The "Market Value" of any security as of the date of determination means
the average of the Market Prices of such security for the 10 consecutive Trading
Days ending on such date of determination.
"Maturity Date" means March 15, 2001, subject to extension upon the
occurrence of Non-Trading Days as described below under "-- Extension for
Non-Trading Days."
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<PAGE> 15
"Redemption Date" means the date of any optional or mandatory redemption of
PEPS.
The "Redemption Ratio" with respect to any redemption of the PEPS will be
equal to (a) if the Market Value of the Reference Property Relating to One PEPS
is less than the Issue Price, 1.000, (b) if the Market Value is equal to or
greater than the Issue Price but less than or equal to $ (the "Threshold
Appreciation Price"), a fraction the numerator of which is the Issue Price and
the denominator of which is the Market Value and (c) if the Market Value is
greater than the Threshold Appreciation Price, 0. . For purposes of the
foregoing, the Market Value shall be determined as of the second Trading Day
prior to the date of the redemption notice (the "Redemption Notice Date")
relating to such redemption, provided, however, that if the Market Price of the
Reference Property Relating to One PEPS on the Trading Day immediately prior to
the Redemption Notice Date is less than 95% of such Market Value, then the
Market Value for purposes of determining the Redemption Ratio shall be the
Market Price on such Trading Day.
The term "Reference Property Relating to One PEPS" is defined below under
"-- Dilution Adjustments."
A "Trading Day" for any security means a Business Day on which the security
for which the Market Value is being determined (A) is not suspended from trading
on any United States national securities exchange or United States national
securities system at the close of business on such Business Day and (B) has
traded at least once on such Business Day on the United States national
securities exchange or United States national securities system that is the
primary market for the trading of such security.
EXTENSION FOR NON-TRADING DAYS
In the event that any of the 10 Business Days ending on the second Business
Day prior to March 15, 2001 or any optional Redemption Date, as the case may be,
is not a Trading Day (a "Non-Trading Day"), the PEPS will not mature or be
optionally redeemed on such date, but the Maturity Date or the optional
Redemption Date of the PEPS will be extended one Trading Day for each
Non-Trading Day; provided, however, that the PEPS will mature in any event not
later than on March 21, 2001. In the event that the Maturity Date or optional
Redemption Date of the PEPS is extended as a result of one or more Non-Trading
Days, interest will be payable to the holders of the PEPS on such extended
Maturity Date or optional Redemption Date and interest thereon will accrue from
March 15, 2001 or such optional Redemption Date, as the case may be, to but not
including such extended Maturity Date or optional Redemption Date. In the case
of a PEPS evidenced by a Certificate (as defined below), the Company shall
promptly notify the holder of such Certificate, by first-class mail, postage
prepaid, of such extension of maturity or redemption. In the case of Book-Entry
PEPS (as defined below), notice of such extension of maturity or redemption
shall promptly be sent by first-class mail, postage prepaid, to the Depositary
(as defined below). In each case, the Company also will contemporaneously
publish notice of such extension of maturity or redemption in a United States
newspaper with a national circulation (currently expected to be The Wall Street
Journal).
MANDATORY REDEMPTION; DELISTING OF THE NETSCAPE COMMON STOCK
The PEPS will be subject to mandatory redemption, in whole but not in part,
on any Delisting Date for cash in an amount equal to the Market Value as of the
second Business Day prior to such Delisting Date of the Reference Property
Relating to One PEPS plus interest accrued but unpaid to the mandatory
Redemption Date. In addition to providing notice of such mandatory redemption as
provided under the caption "-- Redemption Procedures," the Company will
contemporaneously publish notice of such Delisting Date in a United States
newspaper with a national circulation (currently expected to be The Wall Street
Journal).
The "Delisting Date" means the first date on which the Netscape Common
Stock (or equity securities comprising more than 25% of the fair market value
(as determined in good faith by the Board of Directors of the Company on the
date any such equity security is distributed and on the date any such equity
security is delisted) of the Reference Property Relating to One PEPS) is not
listed on any United States national securities exchange or United States
national securities system subject to last sale reporting or is permanently
suspended from trading (within the meaning of the Exchange Act and the rules and
regulations thereunder) on each such securities exchange and securities system
on which it is then listed. A Delisting Date will not
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<PAGE> 16
occur by reason of the occurrence of any event described under the caption
"-- Dilution Adjustments" in this Prospectus Supplement.
INTEREST
Each PEPS will bear interest from March , 1996 at a rate of % of the
Issue Price per annum (or $ per annum) until the amount payable at
maturity or upon redemption thereof, as the case may be, is paid or made
available for payment. Interest on the PEPS will be payable quarterly in arrears
on each March 15, June 15, September 15 and December 15 beginning June 15, 1996,
and on the Maturity Date and the Redemption Date (each an "Interest Payment
Date"). Interest on the PEPS will be computed on the basis of a 360-day year of
twelve 30-day months and on the basis of the actual number of days elapsed in
any such 30-day month. The interest to be paid on June 15, 1996 will accrue from
March , 1996 and will be $ per PEPS. Each payment of interest in
respect of an Interest Payment Date will include interest accrued to but not
including such Interest Payment Date. If an Interest Payment Date falls on a day
that is not a Business Day, the interest payment to be made on such Interest
Payment Date will be made on the next succeeding Business Day with the same
force and effect as if made on such Interest Payment Date, and no additional
interest will accrue as a result of such delayed payment. Interest payable on a
PEPS on any Interest Payment Date will be paid to the person in whose name such
PEPS is registered at the close of business on the applicable Record Date (as
defined below); provided that the interest payable upon maturity or redemption
will be payable to the person to whom principal is payable. Interest will cease
to accrue in respect of the PEPS on the Maturity Date or on any earlier
Redemption Date of the PEPS, provided that upon optional redemption, interest
will be payable through the Maturity Date. "Record Date" means, for any Interest
Payment Date, the date 15 calendar days prior to such Interest Payment Date,
whether or not such Record Date is a Business Day.
Payments of interest, other than interest payable at maturity or upon
redemption, will be made by check mailed to the address of the person entitled
thereto as shown on the register maintained by the registrar for the PEPS.
Payments of principal and interest at maturity or upon redemption will be made
in immediately available funds against presentation and surrender of the
Certificate representing a PEPS. Notwithstanding the foregoing, (a) if any of
the PEPS are held in book-entry form by the Depositary, the Depositary shall be
entitled to receive payments of interest by wire transfer of immediately
available funds and (b) a holder of $100,000 or more in aggregate Issue Price of
Certificates shall be entitled to receive payments of interest by wire transfer
of immediately available funds upon written request to the Trustee not later
than 15 calendar days prior to the applicable Interest Payment Date.
DILUTION ADJUSTMENTS
For purposes hereof "Reference Property" means,(A) initially that number of
shares of the Netscape Common Stock equal to the aggregate number of the PEPS
issued and (B) subject to the three immediately succeeding paragraphs, all
property received in respect of such shares of the Netscape Common Stock (either
directly or as the result of successive applications of this paragraph) upon the
following events: (i) the distribution of a dividend on Reference Property in
the same type of Reference Property, (ii) the combination of Reference Property
into a smaller number of shares or other units, (iii) the subdivision of
outstanding shares or other units of Reference Property, (iv) the conversion or
reclassification of Reference Property by issuance or exchange of other
securities, (v) any consolidation or merger of Netscape, or any surviving entity
or subsequent surviving entity of Netscape (a "Netscape Successor"), with or
into another entity (other than a merger or consolidation in which Netscape is
the continuing corporation and in which the Netscape Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash,
securities or other property of Netscape or another corporation), (vi) any
statutory exchange of securities of Netscape or any Netscape Successor with
another corporation (other than in connection with a merger or acquisition and
other than a statutory exchange of securities in which Netscape is the
continuing corporation and in which the Netscape Common Stock outstanding
immediately prior to the statutory exchange is not exchanged for cash,
securities or other property of Netscape or another corporation), (vii) any
liquidation, dissolution or winding up of Netscape or any Netscape Successor,
(viii) any distribution of cash or other
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<PAGE> 17
property on Reference Property of a particular type (excluding cash dividends or
other cash distributions other than Extraordinary Cash Dividends (as defined
below)) or (ix) any tender or exchange offer for Reference Property of a
particular type (any such event, an "Adjustment Event"). The term "Reference
Property Relating to One PEPS" shall mean one share of the Netscape Common Stock
and such additional or substitute Reference Property received with respect to
one share of the Netscape Common Stock, either directly or as the result of
successive Adjustment Events.
In the case of a tender or exchange offer for all Reference Property of a
particular type, Reference Property shall be deemed to include the amount of
cash or other property paid by the offeror in the tender or exchange offer with
respect to such Reference Property (in an amount determined on the basis of the
rate of exchange in such tender or exchange offer), whether or not the Company
tenders or exchanges such Reference Property. In the case of a partial tender or
exchange offer with respect to Reference Property of a particular type,
Reference Property shall be deemed to include the amount of cash or other
property paid by the offeror in the tender or exchange offer with respect to
such Reference Property in an amount determined as if the offeror had purchased
or exchanged such Reference Property in the proportion in which all property of
such type was purchased or exchanged from the holders thereof; provided that if
the Company tenders all its Reference Property of such type, the amount of cash
or other property received that will constitute Reference Property will be
determined on the basis of the amount of such cash or other property actually
received by the Company. Except as provided above, in the event of a tender or
exchange offer with respect to Reference Property in which an offeree may elect
to receive cash or other property, Reference Property shall be deemed to include
the kind and amount of cash and other property received by offerees who elect to
receive cash.
If Netscape or any Netscape Successor distributes to all holders of
Reference Property rights or warrants to subscribe for or purchase any of its
securities and the expiration date of such rights or warrants precedes the
maturity or earlier redemption of the PEPS, then Reference Property shall be
deemed to include an amount in cash equal to the Market Price as of the Trading
Day immediately preceding such expiration date of the portion of such rights or
warrants relating to the Reference Property, whether or not the Company
exercises such rights or warrants.
If cash is received, or deemed received, from time to time in respect of
any Reference Property, the amount of such cash at any date of determination
shall be increased by an amount per annum equal to the Applicable Treasury Rate
(as defined below) on such cash from the date such cash was received, or deemed
received, to such date of determination.
An "Extraordinary Cash Dividend" means, with respect to any Reference
Property consisting of capital stock, any distribution consisting of cash,
excluding any quarterly cash dividend on such stock to the extent that the
aggregate cash dividend per share of such stock in any quarter does not exceed
the greater of (x) the amount per share of such stock to the next preceding
quarterly cash dividend on such stock to the extent that such preceding
quarterly dividend did not constitute an Extraordinary Cash Dividend and (y)
3.75 percent of the Market Value of such stock as of the date of declaration of
such dividend, and excluding any dividend or distribution in connection with the
liquidation, dissolution or winding up of the issuer of such stock.
"Applicable Treasury Rate," with respect to any cash received or deemed
received, means the Reference Treasury Quotation, as of the date such cash was
received or deemed received, on the Reference Treasury Strip. "Reference
Treasury Strip" means the stripped principal Treasury note for which one or more
Reference Treasury Quotations are available with a maturity date on or, if no
such stripped principal Treasury note is then quoted, next preceding the first
possible Redemption Date. "Reference Treasury Quotation" means the average of
the bid and asked yields to maturity for the Reference Treasury Strip as quoted
by three primary U.S. Government securities dealers in New York City selected by
the Company, one of which shall be Morgan Stanley & Co. Incorporated.
OPTIONAL REDEMPTION
At any time and from time to time after December 15, 2000 and prior to the
Maturity Date, the Company will be entitled, upon a call for redemption of not
more than 60 nor less than 30 days' notice, to
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redeem all, or from time to time any part, of the outstanding PEPS and deliver
to the holders thereof, in exchange for each PEPS so called, cash in an amount
equal to the product of the Redemption Ratio and the Market Value of the
Reference Property Relating to One PEPS as of the second Business Day prior to
the Redemption Date, plus cash in an amount equal to all unpaid interest,
whether or not accrued, that would have been payable on the PEPS through the
Maturity Date.
If fewer than all the outstanding PEPS are to be called for redemption, the
PEPS to be called will be selected by the Trustee from the outstanding PEPS by
lot or pro rata (as nearly as may be) or by any other method determined by the
Trustee in its sole discretion to be equitable (or if the PEPS are then held by
a nominee for the Depositary such selection will be made in accordance with the
customary procedures of the Depositary). The holders of the PEPS have no right
to require the early redemption of the PEPS.
REDEMPTION PROCEDURES
The Company will provide notice of any optional redemption of the PEPS to
holders of record of the PEPS to be called for optional redemption not more than
60 days nor less than 30 days before the Redemption Date. Accordingly, the
earliest Redemption Notice Date for any call for optional redemption of the PEPS
will be October 16, 2000.
The Company will provide notice of any mandatory redemption of the PEPS to
all holders of record of the PEPS as soon as practicable, but in no event later
than 10 Trading Days prior to the Redemption Date. Any notice of optional or
mandatory redemption will be provided by mail, sent to the holders of record of
the PEPS to be called at each such holder's address as it appears on the
security register, first class mail, postage prepaid; provided, however, that
failure to give such notice or any defect therein will not affect the validity
of the proceeding for redemption of any of the PEPS to be redeemed except as to
the holder to whom the Company has failed to give such notice or whose notice is
defective. Such notice shall state, among other things, the Redemption Date and
the computation of the Redemption Ratio and the method for computing the Market
Value of the Reference Property Relating to One PEPS. A public announcement of
any call for redemption will be made by the Company before, or at the time of,
the Redemption Notice Date.
Each holder of a PEPS called for redemption must surrender such PEPS to the
Company at the place designated in the notice of redemption. On and after a
Redemption Date, all rights of the holders of the PEPS called for redemption
will terminate and interest will cease to accrue.
CERTIFICATES
The PEPS initially will be evidenced by certificates in fully registered
form (each, a "Certificate"). Citibank, N.A., as trustee (the "Trustee"), will
from time to time register the transfer of any outstanding Certificate upon
surrender thereof at the office of the Trustee which is currently located at 111
Wall Street, New York, New York 10043, Attention: Corporate Trust Operations,
5th Floor (the "Trustee's office"), duly endorsed by, or accompanied by a
written instrument or instruments of transfer in a form satisfactory to the
Company and the Trustee duly executed by the holder thereof or his or her
attorney duly authorized in writing. Such signature must be guaranteed by an
institution that is a member of the Securities Transfer Agent Medallion Program.
A new Certificate will be issued to the transferee upon any such registration of
transfer.
At the option of a holder, Certificates may be exchanged for other
Certificates representing a like number of PEPS, upon the surrender to the
Trustee at the Trustee's office of the Certificates to be exchanged. The Company
will thereupon execute, and the Trustee will authenticate and deliver, one or
more new Certificates representing such like number of PEPS.
If any Certificate is mutilated, lost, stolen or destroyed, the Company
shall execute, and the Trustee shall authenticate and deliver, in exchange and
substitution for such mutilated Certificate, or in replacement for such lost,
stolen or destroyed Certificate, a new Certificate representing the same number
of PEPS represented by such Certificate, but only upon receipt of evidence
satisfactory to the Company and to the Trustee of loss, theft or destruction of
such Certificate and security or indemnity, if requested, satisfactory to
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them. Holders requesting replacement Certificates must also comply with such
other reasonable regulations as the Company or the Trustee may prescribe.
No service charge will be made for any registration of transfer or exchange
of Certificates, but the Company may require the payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection
therewith, other than exchanges not involving any transfer. In the case of the
replacement of mutilated, lost, stolen or destroyed Certificates, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith and any other
expenses (including the fees and expenses of counsel and of the Trustee)
connected therewith.
BOOK-ENTRY PEPS
The Depositary. The Depository Trust Company (the "Depositary") has advised
the Company and the Underwriters as follows: The Depositary is a limited-purpose
trust company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. The Depositary was created to
hold securities of its participants and to facilitate the clearance and
settlement of securities transactions among its participants through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Optional Exchange for Book-Entry PEPS. Following the issuance of the PEPS,
the Company may, at its option, elect to make the PEPS available in book-entry
form ("Book-Entry PEPS"). If the Company makes such an election, holders may
(but are not required to) exchange Certificates for Book-Entry PEPS, which will
be represented by a beneficial interest in a Global Security (as defined below),
by causing the Certificates to be delivered to the Depositary, in proper form
for deposit into the Depositary's book-entry system, on or after the Initial
Exchange Date (as defined below). Certificates received by the Depositary for
exchange during the period commencing on a date designated by the Company (the
"Initial Exchange Date") and ending on the 45th day after the Initial Exchange
Date (the "Initial Exchange Period") will be exchanged for Book-Entry PEPS by
the close of business on the Business Day on which they are received by the
Depositary (if received by the Depositary by its then applicable cut-off time
for same-day credit) or on the following Business Day (if received by the
Depositary by its then applicable cut-off time for next-day credit). After the
last day of the Initial Exchange Period, the Depositary will not be required to
accept delivery of Certificates in exchange for Book-Entry PEPS, but the
Depositary may permit such Certificates to be so exchanged on a case-by-case
basis. It is anticipated that after the Initial Exchange Period, Certificates
delivered to the Depositary in good order and in proper form for deposit will be
accepted by the Depositary for exchange for Book-Entry PEPS generally within
three to four Business Days after delivery to the Depositary. However, there can
be no assurance that such Certificates will be accepted for exchange or, if
accepted, that such exchange will occur within such time period. Certificates
surrendered at any time for exchange for Book-Entry PEPS may not be delivered
for settlement or transfer until such exchange has been effected. Accordingly,
persons purchasing PEPS in secondary market trading after the Initial Exchange
Date may wish to make specific arrangements with brokers or the Depositary's
participants if they wish to purchase only Book-Entry PEPS and not Certificates.
In the event that the Company elects to make the PEPS available in
book-entry form, it will notify the Depositary and the Trustee by facsimile or
first-class mail and each holder of a Certificate by first-class mail. Exchanges
of Certificates for Book-Entry PEPS will commence on the Initial Exchange Date,
which will be approximately five Business Days after the date on which the
Company notifies the Depositary that it has elected to permit such exchanges.
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<PAGE> 20
In order to be exchanged for Book-Entry PEPS, a Certificate must be
delivered to the Depositary, in proper form for deposit, by a participant.
Accordingly, holders of PEPS that are not participants must deliver their
Certificates, in proper form for deposit, to a participant, either directly or
through a brokerage firm that maintains an account with a participant, in order
to have their Certificates exchanged for Book-Entry PEPS. Holders of PEPS that
desire to exchange their Certificates for Book-Entry PEPS should contact their
broker or a participant to ascertain whether the Company has elected to make
Book-Entry PEPS available, and if the Company has made such election, to obtain
information on procedures for submitting their Certificates to the Depositary,
including the proper form for submission and (during the Initial Exchange
Period) the cut-off times for same-day and next-day exchange. A Certificate that
is held on behalf of a beneficial owner in nominee or "street name" may be
automatically exchanged for Book-Entry PEPS by the broker or other entity that
is the registered holder of such PEPS, without any action of or consent by the
beneficial owner of the PEPS.
Book-Entry System. Any Book-Entry PEPS will be represented by a single
global security (a "Global Security"), which will be deposited with, or with the
Trustee on behalf of, the Depositary, and registered in the name of a nominee of
the Depositary. Certificates that have been exchanged for Book-Entry PEPS may
not be re-exchanged for Certificates. Unless and until it is exchanged in whole
or in part for Certificates, the Global Security may not be transferred except
as a whole by the Depositary to a nominee of the Depositary or by a nominee of
the Depositary to the Depositary.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Gibson, Dunn & Crutcher, counsel to the Company, the
following is an accurate summary of the material United States federal income
tax considerations that are generally relevant to holders of PEPS. The summary
is based on tax laws in effect as of the date of this Prospectus Supplement. The
tax laws are subject to change by legislative, judicial, or regulatory action,
which in some cases may have retroactive effect. This summary does not discuss
all of the tax considerations that may be relevant to a holder in light of such
holder's particular circumstances. In particular, this summary addresses only
persons who hold PEPS as capital assets within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"), and does not deal
with persons subject to special rules, such as certain financial institutions,
insurance companies, regulated investment companies, dealers in options or
securities or currencies, or purchasers holding PEPS as part of a hedging
transaction, a straddle, a "synthetic security," or other integrated investment.
This summary does not deal with holders other than initial holders of the PEPS
who purchase PEPS at the Issue Price. This summary also does not address the tax
consequences of investing in the PEPS arising under the laws of any state,
local, or foreign tax jurisdiction.
The Company currently intends to treat the PEPS as indebtedness of the
Company for United States federal income tax purposes. Such treatment is binding
on the Company and on all holders of the PEPS except for holders who disclose on
their income tax returns that they are treating the PEPS in a manner
inconsistent with the Company's treatment. The Company's treatment of the PEPS
is not, however, binding upon the Internal Revenue Service ("IRS") or the
courts, and there can be no assurance that such treatment will be respected.
There are no statutory, judicial, or administrative authorities that directly
address the characterization of the PEPS or instruments similar to the PEPS for
United States federal income tax purposes. Because of the absence of direct
authority, there are substantial uncertainties regarding the United States
federal income tax consequences of an investment in PEPS. No ruling is being
requested from IRS with respect to the PEPS.
As used herein, the term "U.S. Holder" means a holder of a PEPS that is (i)
a United States citizen or a resident of the United States for United States
federal income tax purposes, (ii) a corporation, a partnership, or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate or trust the income of which is
subject to United States federal income taxation regardless of its source, or
(iv) a person otherwise subject to United States federal income taxation on a
net income basis in respect of such holder's ownership of the PEPS. As used
herein, the term "Non-U.S. Holder" means a holder of a PEPS that is not a U.S.
Holder.
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This summary is for general information only. ACCORDINGLY, A PROSPECTIVE
INVESTOR IN THE PEPS SHOULD CONSULT ITS TAX ADVISOR FOR PURPOSES OF DETERMINING
THE TAX CONSEQUENCES OF AN INVESTMENT IN THE PEPS, INCLUDING THE APPLICATION OF
STATE, LOCAL OR OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF FUTURE CHANGES IN
FEDERAL OR OTHER TAX LAWS.
TAX CONSEQUENCES TO U.S. HOLDERS
Payments of Interest on the PEPS. The Company currently intends to treat
the full amount of each periodic interest payment on the PEPS as reportable
interest. Under this approach, such interest will be taxable to a U.S. Holder as
ordinary interest income at the time it accrues or is received in accordance
with the holder's method of accounting for United States federal income tax
purposes. However, if the PEPS are not treated as indebtedness of the Company,
it is possible that all or a portion of the interest paid on the PEPS could be
treated as ordinary income other than interest income.
Proposed Treasury regulations addressing the United States federal income
tax treatment of contingent debt instruments similar to the PEPS were issued on
December 15, 1994 (the "Proposed Regulations"). The Proposed Regulations
generally require the current accrual of contingent amounts (in addition to any
fixed periodic interest payments included in income under a holder's tax
accounting method) as ordinary interest income and also affect the character of
gain or loss on the sale, exchange, or retirement of a contingent debt
instrument. By their terms, however, the Proposed Regulations will apply only to
contingent debt instruments issued on or after the 60th day after such
regulations are finalized. Thus, if Treasury does not change the proposed
effective date, the Proposed Regulations, when and if finalized, should not
apply to the PEPS.
Sale, Exchange, or Retirement of a PEPS. Upon the sale, exchange, or
retirement of a PEPS, a U.S. Holder will recognize gain or loss equal to the
difference between the amount realized and such holder's tax basis in the PEPS.
For these purposes, the amount realized does not include any amount attributable
to accrued interest on the PEPS. Amounts attributable to accrued interest are
treated as interest as described under "-- Payments of Interest on the PEPS."
In general, any gain or loss recognized by the holder upon the sale or
exchange of a PEPS will be long-term capital gain or loss if the U.S. Holder has
held the PEPS for more than one year at the time of the sale or exchange. It is
also likely that any loss on the retirement (as opposed to a sale or exchange)
of a PEPS will be a capital loss. It is unclear, however, whether the character
of gain recognized by a holder on the retirement of a PEPS will be capital or
ordinary. Under Section 1271 of the Code, amounts received by a holder on
retirement of a debt instrument is considered as amounts received in exchange
therefor. Under the Proposed Regulations, however, any gain recognized on
retirement of a contingent debt instrument is treated as interest income and any
such loss is generally treated as a capital loss. Based on the Company's
treatment of the PEPS as indebtedness of the Company and Section 1271 of the
Code, the Company currently intends to treat the payment of principal at
maturity as proceeds received in exchange for the PEPS and not as reportable
interest.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
Under present United States federal income and estate tax law and subject
to the discussion of backup withholding below, the Company intends to take the
position that:
(a) Payments of periodic interest and principal at maturity on the
PEPS by the Company to any Non-U.S. Holder should not be subject to United
States federal withholding tax, provided that (i) the holder does not
actually or constructively own 10 percent or more of the total combined
voting power of all classes of stock of the Company entitled to vote, (ii)
the holder is not a controlled foreign corporation that is related to the
Company actually or constructively through stock ownership, (iii) the
holder is not a bank receiving interest described in Section 881(c)(3)(A)
of the Code, and (iv) either (a) the beneficial owner of the PEPS certifies
to the Company or its withholding agent, under penalties of perjury, that
it is not a U.S. Holder and provides its name and address on United States
Treasury Form W-8 (or a suitable substitute form) or (b) a securities
clearing organization, bank, or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
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"financial institution") and holds the PEPS certifies to the Company or its
withholding agent under penalties of perjury that a Form W-8 (or suitable
substitute form) has been received by it (or by a financial institution
between it and the beneficial owner) from the beneficial owner and
furnishes the payor with a copy thereof. Provided that proper
certifications as described above are furnished, the Company does not
currently intend to withhold on payments of interest and principal on the
PEPS. In the event of a change of United States federal income tax law
(including a change in the interpretation of law or regulation by any
judicial or regulatory authority), United States federal withholding tax
may be imposed on payments of interest and principal on the PEPS, unless a
treaty exception or some other exception applies.
(b) Generally, a Non-U.S. Holder will not be subject to United States
federal income taxes on any amount recognized upon the sale, exchange, or
retirement of a PEPS unless in the case of an individual Non-U.S. Holder,
such holder is present in the United States for 183 days or more in the
year of such sale, exchange, or retirement and has a "tax home" (as defined
in Section 911(d)(3) of the Code) or an office or other fixed place of
business in the United States.
(c) Based upon the Company's intended treatment of the PEPS, the fair
market value of the PEPS should not be includible in the gross estate of a
non-resident alien individual for United States federal income tax
purposes.
There is, however, no legal authority that has addressed the United States
federal income tax treatment of the PEPS or a debt instrument similar to the
PEPS held by a Non-U.S. Holder. IRS may take the position that certain payments
under the PEPS received by a Non-U.S. Holder constitute income subject to United
States federal withholding tax, and may also take the position that all or a
portion of a PEPS is includable in a non-resident alien's gross estate for
United States federal estate tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of principal and interest and proceeds from the sale or exchange
of a PEPS may be subject to a United States backup withholding at the rate of
31% if the holder fails to provide appropriate certificates (generally, by
completing a Form W-9 or an acceptable substitute form in the case of a U.S.
Holder and by completing a Form W-8, Form 1001 or an acceptable substitute form
in the case of a Non-U.S. Holder). Any amounts withheld under the backup
withholding rules from a payment to a beneficial owner would be allowed as a
refund or a credit against such beneficial owner's United States federal income
tax provided the required information is furnished to IRS.
Payments to Non-U.S. Holders will generally be subject to annual tax
reporting on IRS Form 1042S.
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<PAGE> 23
UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof among the Company and the Underwriters (the
"Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters named below (the "Underwriters") and each of the Underwriters has
severally agreed to purchase, the number of PEPS set forth opposite its name
below:
<TABLE>
<CAPTION>
NAME NUMBER OF PEPS
---- --------------
<S> <C>
Morgan Stanley & Co. Incorporated............................
---------
Total.............................................. 1,305,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the PEPS are subject to the
approval of certain legal matters by its counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the PEPS
if any such PEPS are taken.
The Underwriters initially propose to offer the PEPS directly to the public
at the applicable public offering price set forth on the cover page hereof and
to certain dealers at a price that represents a concession not in excess of
$ per PEPS. After the initial offering of the PEPS, the offering price
and other selling terms may from time to time be varied by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriters may be required to make in respect
thereof.
The PEPS have been approved for listing on the NYSE, subject to official
notice of issuance. The Company will use its best efforts to maintain the
listing of the PEPS on the NYSE or a United States national securities system or
another self-regulatory organization whose rules and regulations are filed with
the Commission pursuant to the Exchange Act. In addition, the Company has been
advised by the Underwriters that they currently intend to make a market in the
PEPS as permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the PEPS and any such market-making may
be discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurances can be given as to the liquidity of the market for
the PEPS.
The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus Supplement, to purchase up to 195,000
additional PEPS at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The Underwriters may exercise such
option solely for the purpose of covering over-allotments, if any, incurred in
the sale of the PEPS offered hereby.
Certain of the Underwriters have from time to time performed various
investment banking services for the Company and its subsidiaries, for which
customary compensation has been received.
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P R O S P E C T U S
THE TIMES MIRROR COMPANY
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
------------------------
The Times Mirror Company, a Delaware corporation (the "Company" or "Times
Mirror"), may offer and sell, from time to time, up to an initial aggregate
offering price of $200 million, its: (i) debt securities ("Debt Securities") in
one or more series, consisting of debentures, notes or other evidences of
indebtedness and having such prices and terms as are determined at the time of
sale; (ii) shares of Preferred Stock, par value $1.00 per share ("Preferred
Stock"), which may be issued in one or more series; (iii) shares of Series A
Common Stock, par value $1.00 per share ("Series A Common Stock"), and shares of
Series B Common Stock, par value $1.00 per share ("Series B Common Stock" and
collectively with Series A Common Stock, the "Common Stock"), which may be
issued in one or both series; and (iv) Warrants ("Warrants") to purchase Debt
Securities, Preferred Stock or Common Stock. The Debt Securities, Preferred
Stock, Common Stock and Warrants are collectively referred to herein as
"Securities." The Securities may be issued as units and in any combination.
Specific terms of the Securities ("Offered Securities") in respect of which
this Prospectus is being delivered will be set forth in an accompanying
Prospectus Supplement ("Prospectus Supplement"), together with the terms of the
offering of the Offered Securities and the initial price and net proceeds to the
Company from the sale thereof. The Prospectus Supplement will set forth with
regard to the particular Offered Securities, without limitation, the following:
(i) in the case of Debt Securities, the specific designation, aggregate
principal amount, ranking as senior or subordinated debt, authorized
denomination, maturity, rate or rates of interest (or method of calculation
thereof) and dates for payment thereof, any exchangeability, conversion,
redemption, prepayment or sinking fund provisions, the currency or currencies or
currency unit or currency units in which principal, premium, if any, or
interest, if any, is payable, and any listing on a national securities exchange;
(ii) in the case of Preferred Stock, the designation, number of shares,
liquidation preference per share, initial public offering price, dividend rate
(or method of calculation thereof), dates on which dividends shall be payable
and dates from which dividends shall accrue, any redemption or sinking fund
provisions, any voting rights, any conversion or exchange rights and any listing
on a national securities exchange; (iii) in the case of Common Stock, the number
of shares of Common Stock and the terms of the offering and sale thereof and any
listing on a national securities exchange; and (iv) in the case of Warrants, the
number and terms thereof, the designation and number of Debt Securities,
Preferred Stock or Common Stock issuable upon their exercise, the exercise
price, the terms of the offering and sale thereof, where applicable, the
duration and detachability thereof, and any listing of the Warrants or the
underlying Debt Securities, Preferred Stock or Common Stock on a national
securities exchange. The Prospectus Supplement will also contain information,
where applicable, about certain federal income tax considerations relating to
the Securities covered by the Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
Prior to issuance there will have been no market for the Debt Securities,
Preferred Stock, Series B Common Stock or Warrants and there can be no assurance
that a secondary market for the Debt Securities or Warrants will develop. This
Prospectus may not be used to consummate sales of Securities unless accompanied
by a Prospectus Supplement. The Securities may be offered through one or more
different plans of distribution, including offerings through underwriters. See
"Plan of Distribution."
THE DATE OF THIS PROSPECTUS IS FEBRUARY 28, 1996
<PAGE> 26
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (together with all amendments and
exhibits thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Debt Securities,
Preferred Stock, Common Stock and Warrants. This Prospectus, which constitutes
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the Rules and Regulations of the Commission. For further
information with respect to the Company, reference is made to the Registration
Statement.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such registration statement and the other reports and information
filed by Times Mirror with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; and at its regional
offices located at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained from the public
reference section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Series A Common Stock and Conversion Preferred
Stock, Series B, par value $1.00 per share ("Series B Preferred Stock"), of
Times Mirror are listed on the New York Stock Exchange (the "NYSE") and Series A
Common Stock is also listed on the Pacific Stock Exchange and reports, proxy and
information statements and other information concerning Times Mirror can be
inspected at such exchanges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
(File No. 1-13492) pursuant to the Exchange Act are incorporated by reference
and shall be deemed a part hereof:
(a) Times Mirror's Annual Report on Form 10-K for the year ended
December 31, 1994;
(b) Times Mirror's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995, June 30, 1995 and September 30, 1995;
(c) Times Mirror's Current Reports on Form 8-K dated February 1, 1995
and March 23, 1995; and
(d) The description of the Company's Series A Common Stock and Series
B Preferred Stock set forth under the caption "Description of Registrant's
Securities to be Registered" in Times Mirror's Registration Statements on
Form 8-A dated November 21, 1994 and December 22, 1994, respectively,
together with any amendment or report filed with the Commission for the
purpose of updating such descriptions.
All other reports filed by Times Mirror pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering of the securities hereby are incorporated herein
by reference and shall be deemed a part hereof when filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. Subject to the
foregoing, all information appearing in this Prospectus is qualified in its
entirety by the information appearing in the documents incorporated by
reference.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement. The delivery of this Prospectus
together with a Prospectus Supplement relating to particular Offered Securities
in any jurisdiction shall not constitute an offer in the jurisdiction of any
other securities covered by this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WITH RESPECT TO THE
COMPANY THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE
AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST TO CORPORATE
SECRETARY, THE TIMES MIRROR COMPANY, TIMES MIRROR SQUARE, LOS ANGELES,
CALIFORNIA 90053, TELEPHONE (213) 237-3700.
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<PAGE> 27
THE COMPANY
Times Mirror is engaged principally in the newspaper publishing,
professional information and consumer media publishing businesses. Times Mirror
publishes the Los Angeles Times, Newsday, The Baltimore Sun, The Hartford
Courant, The Morning Call, The (Stamford) Advocate, the Greenwich Times, and
several smaller newspapers. Through its subsidiaries, the Company also provides
professional information to the legal, aviation and health care industries,
publishes college texts, other categories of books and magazines and also
provides training information and services. Times Mirror was incorporated in the
State of Delaware in June 1994 for the purpose of owning and operating these
businesses after a reorganization of Times Mirror's predecessor was completed in
February 1995. Times Mirror's predecessor was incorporated in 1884 in the State
of California and was reincorporated in the State of Delaware in 1986. All
references herein to the Company and Times Mirror shall include Times Mirror's
predecessor, Times Mirror's subsidiaries and Times Mirror, collectively, unless
the context suggests otherwise.
Times Mirror's principal executive offices are located at Times Mirror
Square, Los Angeles, California 90053 and its telephone number is (213)
237-3700.
USE OF PROCEEDS
Unless otherwise set forth in the accompanying Prospectus Supplement, the
net proceeds from the sale of the Securities will be used for general corporate
purposes.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS
TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to fixed charges and preferred stock dividends for the
Company for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31 ENDED
---------------------------------------- SEPTEMBER 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges 2.6x 1.3x (a) 2.0x 3.8x (b)
Ratio of earnings to fixed charges and
preferred stock dividends N/A N/A N/A N/A N/A (c)
</TABLE>
- ---------------
(a) Earnings are approximately $7 million lower than the amount needed to cover
fixed charges in this year, as earnings in 1992 were impacted by over $200
million in restructuring charges.
(b) Earnings are approximately $237 million lower than the amount needed to
cover fixed charges in this period, as earnings were impacted by
approximately $383 million in restructuring charges.
(c) Earnings are approximately $291 million lower than the amount needed to
cover fixed charges and preferred stock dividends in this period, as
earnings were impacted by approximately $383 million in restructuring
charges.
The ratio of earnings to fixed charges was computed by dividing earnings
(income from continuing operations before income taxes, adjusted for fixed
charges (net of capitalized interest), equity income or loss from unconsolidated
affiliates and amortization of capitalized interest) by fixed charges for the
periods indicated. Fixed charges include interest incurred on long-term and
other debt, capitalized interest, the interest factor deemed to be included in
rental expense, and certain amortization.
The ratio of earnings to fixed charges and preferred stock dividends was
computed as described above, except that fixed charges were combined with the
preferred stock dividends for the period indicated. The preferred stocks were
issued in 1995 and began accruing dividends on March 1, 1995.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities to which any Prospectus Supplement
may relate ("Offered Debt Securities"). Offered Debt Securities may be issued
from time to time in one or more series. The particular terms of each series of
Offered Debt Securities will be described in the Prospectus Supplement or
Prospectus Supplements relating to such series.
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<PAGE> 28
The Offered Debt Securities will be issued under an Indenture (the
"Indenture"), between Times Mirror and a trustee (the "Trustee"), the form of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The following summaries of certain provisions of the
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all of the provisions of the Indenture,
including the definitions therein of certain terms capitalized in this
Prospectus. Wherever particular sections, articles or defined terms of the
Indenture are referred to herein or in a Prospectus Supplement, such sections,
articles or defined terms are incorporated herein or therein by reference.
GENERAL
The Indenture does not limit the aggregate amount of Offered Debt
Securities that may be issued thereunder, and Offered Debt Securities may be
issued thereunder from time to time in one or more separate series up to the
aggregate principal amount from time to time authorized by Times Mirror for each
series. The Offered Debt Securities will be unsecured and unsubordinated
obligations of Times Mirror and will rank equally and ratably with other
unsecured and unsubordinated indebtedness of Times Mirror.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, to the extent applicable, each of the following terms of the series of
Offered Debt Securities in respect of which this Prospectus is being delivered:
(i) the title of the Offered Debt Securities; (ii) any limit on the aggregate
principal amount of the Offered Debt Securities; (iii) whether any of the
Offered Debt Securities are to be issuable in permanent global form and, if so,
the terms and conditions, if any, upon which interests in such Offered Debt
Securities in global form may be exchanged, in whole or in part, for the
individual Offered Debt Securities represented thereby; (iv) the person to whom
any interest on any Offered Debt Security of the series will be payable if other
than the person in whose name the Offered Debt Security is registered on the
Regular Record Date; (v) the date or dates on which the Offered Debt Securities
will mature; (vi) the rate or rates at which the Offered Debt Securities will
bear interest (or the method by which such rate or rates will be determined), if
any; (vii) the date or dates from which any such interest will accrue, the
Interest Payment Dates on which any such interest on the Offered Debt Securities
will be payable and the Regular Record Date for any interest payable on any
Interest Payment Date; (viii) each office or agency where the principal of,
premium, if any, and interest, if any, on the Offered Debt Securities will be
payable; (ix) the period or periods within which, the events upon the occurrence
of which, and the price or prices at which, the Offered Debt Securities may,
pursuant to any optional or mandatory provisions, be redeemed or purchased, in
whole or in part, by Times Mirror and any terms and conditions relevant thereto;
(x) the denominations in which any Offered Debt Securities will be issuable, if
other than denominations of $1,000 and any integral multiple thereof; (xi) the
currency or currencies, including composite currencies, of payment of principal
of, and any premium and interest on, the Offered Debt Securities if other than
United States dollars; (xii) any index or formula used to determine the amount
of payments of principal of and any premium and any interest on the Offered Debt
Securities; (xiii) if other than the principal amount thereof, the portion of
the principal amount of the Offered Debt Securities of the series that will be
payable upon declaration of the acceleration of the maturity thereof; (xiv) the
applicability of the provisions described under "Restrictive Covenants"; (xv)
any Events of Default with respect to the Securities of such series, if not
otherwise set forth under "Events of Default"; (xvi) the applicability of the
provisions described under "Defeasance and Discharge"; (xvii) whether the
Offered Debt Securities are convertible or exchangeable into shares of Common
Stock or any other security of the Company or other entities and the terms of
any such conversion or exchange; and (xviii) any other terms of the Offered Debt
Securities not inconsistent with the provisions of the Indenture.
Offered Debt Securities may be issued at a discount from their principal
amount. Certain federal income tax considerations and other special
considerations applicable to any such original issue discount securities will be
described in the applicable Prospectus Supplement.
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal, premium, if any, and interest, if any, on the Offered Debt
Securities will be payable, and the exchange of and the transfer of Offered Debt
Securities will be registrable, at the office or agency of Times Mirror
maintained for such
4
<PAGE> 29
purpose and at any other office or agency maintained for such purpose. Unless
otherwise indicated in the applicable Prospectus Supplement, the Offered Debt
Securities will be issued in denominations of $1,000 or integral multiples
thereof. No service charge will be made for any registration of transfer or
exchange of the Offered Debt Securities, but Times Mirror may require payment of
a sum sufficient to cover any tax or other governmental charge imposed in
connection therewith.
GLOBAL SECURITIES
If the Offered Debt Securities are represented by one or more Global
Securities, the applicable Prospectus Supplement will describe the terms of the
depositary arrangement with respect to such Global Securities.
RESTRICTIVE COVENANTS
Affirmative Covenants. In addition to such other covenants, if any, as may
be described in the accompanying Prospectus Supplement and except as may
otherwise be set forth therein, the Indenture for the Offered Debt Securities
will require the Company, subject to certain limitations described therein, to,
among other things, do the following: (i) deliver to the Trustee copies of all
reports filed with the Commission; (ii) deliver to the Trustee annual officers'
certificates with respect to the Company's compliance with its obligations under
the Indenture; (iii) maintain its corporate existence subject to the provisions
described below relating to mergers and consolidations; and (iv) pay all taxes
when due except where such taxes are being contested in good faith. Except as
may be set forth in the accompanying Prospectus Supplement, the Indenture will
not restrict the business or operations of the Company or its subsidiaries,
limit their indebtedness or prohibit any liens, charges or other encumbrances on
any properties or other assets they may have from time to time.
REDEMPTION
If and to the extent set forth in the accompanying Prospectus Supplement,
the Company will have the right to redeem the Offered Debt Securities, from time
to time, in whole or in part, after the date and at the redemption prices set
forth in the accompanying Prospectus Supplement.
CONSOLIDATION, MERGER AND SALE OR LEASE OF ASSETS
Times Mirror, without consent of any holders of outstanding Debt
Securities, may consolidate with or merge into, or transfer or lease its assets
substantially as an entirety to any Person, and any Person may consolidate with
or merge into, or transfer or lease its assets substantially as an entirety to
Times Mirror, provided that (i) the Person (if other than Times Mirror) formed
by such consolidation or into which Times Mirror is merged or the Person which
acquires or leases the assets of Times Mirror substantially as an entirety is a
corporation, partnership or trust organized and existing under the laws of any
United States jurisdiction and expressly assumes Times Mirror's obligations on
the Offered Debt Securities and under the Indenture, (ii) immediately after
giving effect to such transaction no Event of Default (as defined below), and no
event which, after notice or lapse of time or both, would become an Event of
Default, happened and is continuing, and (iii) certain other conditions are met.
EVENTS OF DEFAULT
Except as may be described in the accompanying Prospectus Supplement, an
"Event of Default" will be defined under the Indenture for the Offered Debt
Securities as being any one of the following events: (i) default for 30 days in
payment of any interest on the Offered Debt Securities; (ii) default in payment
of any principal of (or premium, if any, on) the Offered Debt Securities, either
at maturity, upon redemption or otherwise; (iii) default for 90 days after
written notice in the performance of, or breach of, any covenants or warranty of
Times Mirror in the Indenture; and (iv) certain events of bankruptcy, insolvency
or reorganization.
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<PAGE> 30
The Indenture for the Offered Debt Securities will provide that if an Event
of Default (other than an Event of Default due to certain events of bankruptcy,
insolvency or reorganization) has occurred and is continuing, either the Trustee
or the holders of not less than 25% in principal amount of the Offered Debt
Securities outstanding under the Indenture for the Offered Debt Securities, or
such other amount as may be specified in the Prospectus Supplement, may declare
the principal amount of all Offered Debt Securities under that Indenture to be
due and payable immediately.
The Indenture will provide that the Trustee shall, within 90 days after the
occurrence of a default under the Indenture with respect to Offered Debt
Securities of any series, mail to all holders of Offered Debt Securities of such
series notice of such default known to the Trustee, unless such default shall
have been cured or waived; provided that, except in the case of default in the
payment of principal of or interest on any of such series, the Trustee may
withhold such notice if it in good faith determines that the withholding of such
notice is in the interest of the holders.
The Indenture will provide that Times Mirror is required to furnish to the
Trustee annually a statement of certain officers of Times Mirror to the effect
that, to the best of their knowledge, Times Mirror is not in default in the
performance and observance of any of the terms of the Indenture or, if they have
knowledge that Times Mirror is in default, specifying such default.
The Indenture will provide that the holders of not less than a majority in
aggregate principal amount of all outstanding Offered Debt Securities of any
series will have the right, on behalf of the holders of all outstanding Offered
Debt Securities of such series, to waive certain defaults and, subject to
certain limitations, 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 Offered Debt Securities of that
series. The Indenture will also provide that in case an Event of Default with
respect to Offered Debt Securities of any series has occurred and is continuing,
the Trustee shall exercise, with respect to such series, such of the rights and
powers vested in it under the Indenture, and use the same degree of care and
skill in its exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs. Subject to such provisions, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders unless
such holders shall have offered to the Trustee reasonable security or indemnity.
DEFEASANCE AND DISCHARGE
Except as may otherwise be provided in the accompanying Prospectus
Supplement, the Company can discharge or defease its obligations under the
Indenture for the Offered Debt Securities as set forth below.
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to holders of the Offered Debt Securities that have not already been
delivered to the Trustee for cancellation and that have either become due and
payable or are by their terms due and payable within one year (or scheduled for
redemption within one year) by irrevocably depositing with the Trustee funds, as
trust funds in an amount certified to be sufficient to pay at maturity (or upon
redemption) the principal of and premium, if any, and interest on such Offered
Debt Securities.
The Company may also discharge any and all of its obligations to holders of
the Offered Debt Securities at any time ("defeasance"), but may not thereby
avoid its duty to register the transfer or exchange of the Offered Debt
Securities, to replace any temporary, mutilated, destroyed, lost or stolen
Offered Debt Securities or to maintain an office or agency in respect of such
Offered Debt Securities and certain other obligations. Alternatively, the
Company may be released with respect to the Offered Debt Securities from the
obligations imposed by specific sections of the Indenture for the Offered Debt
Securities (including the covenant described above limiting consolidations,
mergers, asset sales and leases) and omit to comply with such provisions without
creating an Event of Default ("covenant defeasance"). Defeasance or covenant
defeasance may be effected only if, among other things: (i) the Company
irrevocably deposits with the Trustee cash or U.S. Government Obligations, or a
combination thereof, as trust funds in an amount certified to be sufficient to
pay at maturity the principal of and premium, if any, and interest on all
outstanding Offered Debt Securities; (ii) no Event of Default under the
Indenture for the Offered Debt Securities has occurred and is
6
<PAGE> 31
then continuing; (iii) the defeasance or covenant defeasance will not result in
a breach or violation of, or constitute a default under, under any agreement to
which the Company is a party or by which it is bound; and (iv) the Company
delivers to the Trustee an opinion of counsel to the effect that the holders of
Debt Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance or covenant defeasance and that such
defeasance or covenant defeasance will not otherwise alter such holders' federal
income tax treatment of principal and interest payments on the Offered Debt
Securities.
MODIFICATIONS TO THE INDENTURE
Except as may otherwise be set forth in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities will provide that the
Company and the Trustee may enter into supplemental indentures without the
consent of the holders of Offered Debt Securities to, among other things: (i)
add covenants, conditions and restrictions for the protection of the holders of
Offered Debt Securities; (ii) surrender any right of or power conferred upon the
Company; (iii) cure any ambiguity or correct any inconsistency in the Indenture
for the Offered Debt Securities; (iv) make any change that does not adversely
affect the legal rights of holders of Offered Debt Securities; (v) modify,
eliminate or add to the provisions of the Indenture for the Offered Debt
Securities to the extent necessary to qualify that Indenture under applicable
federal statutes; or (vi) make any other changes in the Indenture before Offered
Debt Securities are issued thereunder, provided that such changes are not
prohibited by the Trust Indenture Act.
Except as may otherwise be set forth in the accompanying Prospectus
Supplement, the Indenture for the Offered Debt Securities also will contain
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than a majority in principal amount of Offered Debt
Securities outstanding affected by such supplemental indenture, to enter into
supplemental indentures in order to add any provision to, change in any manner
or eliminate any of the provisions of the Indenture for the Offered Debt
Securities or modify in any manner the rights of the holders of the Offered Debt
Securities so affected; provided that no such supplemental indenture shall,
among other things, without the consent of the holder of each outstanding
Offered Debt Security affected thereby: (i) reduce the percentage in principal
amount of Offered Debt Securities whose holders must consent to an amendment to
the Indenture or supplemental indenture or waiver with respect to the Indenture;
(ii) reduce the rate of or change the time for payment of interest on any
Offered Debt Security; (iii) reduce the principal of or change the fixed
maturity of any Offered Debt Security; or (iv) waive a default in the payment of
the principal of, or interest on, any Offered Debt Security. The holders of at
least a majority in principal amount of Offered Debt Securities outstanding of
any series may, on behalf of the holders of all Offered Debt Securities of that
series, waive any past default under the Indenture with respect to that series,
except a default in the payment of the principal of, or premium, if any, or
interest on, any Offered Debt Security of that series or in respect of a
covenant or provision that under the Indenture cannot be modified or amended
without the consent of the holder of each Offered Debt Security outstanding of
the series affected.
REGARDING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of Times Mirror, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. The Trustee will be
permitted to engage in certain other transactions; provided, however, that if it
acquires any conflicting interest, it must eliminate such conflict or resign.
GOVERNING LAW
Unless otherwise specified in the accompanying Prospectus Supplement, the
Indenture for the Offered Debt Securities and the Offered Debt Securities will
be governed by New York law.
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<PAGE> 32
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue: (i) 500,000,000 shares of Series A
Common Stock, of which 76,860,290 shares were issued and outstanding at February
22, 1996; (ii) 100,000,000 shares of Series B Common Stock, none of which is
outstanding; (iii) 300,000,000 shares of Series C Common Stock, par value $1.00
per share ("Series C Common Stock"), of which 27,937,624 shares were issued and
outstanding at February 22, 1996; and (iv) 33,000,000 shares of Preferred Stock,
of which (a) 900,000 shares are designated Preferred Stock, Series A, par value
$1.00 per share ("Series A Preferred Stock"), of which 823,568 were issued and
outstanding at February 22, 1996 and (b) 25,000,000 shares are designated Series
B Preferred Stock, of which 7,789,276 were issued and outstanding at February
22, 1996.
COMMON STOCK
General
The following description of the Common Stock and the Series C Common Stock
sets forth general terms and provisions of the Common Stock to which any
Prospectus Supplement may relate, including a Prospectus Supplement providing
that Common Stock will be issuable upon conversion of Debt Securities or
Preferred Stock by the Company, upon exercise of Warrants or under the terms of
the Stock Purchase Contracts, as the case may be.
The following description of the Series A Common Stock and Series C Common
Stock is summarized from, and qualified in its entirety by reference to, the
Amended and Restated Certificate of Incorporation of the Company (the "Restated
Certificate") and the Certificate of Designation of the Series C Common Stock
(the "Series C Certificate of Designation"), filed as exhibits to the
Registration Statement of which this Prospectus constitutes a part. Except with
respect to transfer and voting, Series C Common Stock are identical in all
respects to Series A Common Stock. Series C Common Stock is entitled to 10 votes
per share and, as described below, will be subject to significant transfer
restrictions. The Series A Common Stock is listed on the NYSE and the Pacific
Stock Exchange. As discussed below, as a result of restrictions on transfer, the
Series C Common Stock is not traded.
Rights to Designate Series B Common Stock
Pursuant to the Restated Certificate, the Board of Directors of the Company
is entitled to designate certain rights, powers and preferences of a class of
Series B Common Stock in addition to the outstanding Series A Common Stock and
the Series C Common Stock, as discussed below. First, the Board may determine
the exact number of votes per share of Series B Common Stock at not less than
1/10 nor more than 1. Second, the Board may also make other changes in the
rights, powers and preferences of the Series B Common Stock, provided that in no
such case may the rights, powers and preferences of any such series be greater
than those described herein. Subject to the foregoing, it is anticipated that
Series B Common Stock, if authorized by the Board of Directors, will be
identical in all respects to the Series A Common Stock currently outstanding,
except with respect to voting. Specifically, it is anticipated that each share
of Series B Common Stock will be entitled to one-tenth (1/10) of a vote rather
than one vote per share.
The description herein of the rights, powers and preferences of the Series
B Common Stock is subject to the discretionary authority of the Board as
described above. The Board presently has no intention of issuing any shares of
Series B Common Stock or of utilizing such authority to vary the terms of the
Series B Common Stock from those described herein unless it determines that such
change is necessary in light of legal developments or in order to comply with,
or establish an exemption from, any applicable law, regulation or rule of any
governmental authority, national securities exchange or national market system.
Voting
Except as set forth below, all actions submitted to a vote of the Company's
stockholders will be voted on by holders of Series A Common Stock, Series B
Common Stock, Series C Common Stock and Series B Preferred Stock voting together
as a single class. The affirmative vote of the holders of a majority of the
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<PAGE> 33
outstanding shares of Series A Common Stock, Series B Common Stock and/or Series
C Common Stock, voting separately as a class, is required (i) to approve any
amendment to the Restated Certificate that would alter or change the powers,
preferences or special rights of such series so as to affect it adversely and
(ii) to approve such other matters as may require class votes under the General
Corporation Law of the State of Delaware.
Dividends and Other Distributions (including Distributions upon Liquidation
or Sale of the Company)
Unless otherwise determined by the Board in the resolutions providing for
the issuance of Series B Common Stock, each share of Series A Common Stock,
Series B Common Stock and Series C Common Stock is equal in respect of dividends
and other distributions in cash, stock or property (including distributions upon
liquidation of the Company and consideration to be received upon a merger or
consolidation of the Company or a sale of all or substantially all of the
Company's assets), except that in the case of dividends or other distributions
payable on the Series A Common Stock, Series B Common Stock or Series C Common
Stock in shares of such stock, including distributions pursuant to stock splits
or dividends, only Series A Common Stock is to be distributed with respect to
Series A Common Stock; only Series B Common Stock is to be distributed with
respect to Series B Common Stock; and only Series C Common Stock is to be
distributed with respect to Series C Common Stock. In no event will either
Series A Common Stock, Series B Common Stock or Series C Common Stock be split,
divided or combined unless each other class is proportionately split, divided or
combined. The Series A Preferred Stock and Series B Preferred Stock rank prior
to the Common Stock. See "Preferred Stock -- Ranking" below.
Restrictions on Transfer of Series C Common Stock; Convertibility of Series
C Common Stock into Series A Common Stock
As more fully described below, the transferability of the Series C Common
Stock is significantly restricted. For example, in the case of holders of Series
C Common Stock who are individuals, permitted transferees include certain family
members of the holder and certain entities controlled by, or for the benefit of,
the holder and such family members.
As a result of such restrictions on transfer, no trading market will
develop in Series C Common Stock. The Series C Common Stock is, however,
convertible at all times and without cost to the holder (except any transfer
taxes which may be payable, as in the case of any transfer of Series A Common
Stock, if certificates are to be issued in a name other than that in which the
certificate surrendered is registered) into Series A Common Stock on a share for
share basis. To effect such a conversion, the Series C Common Stock holder must
deliver to the Company's transfer agent a certificate or certificates
representing Series C Common Stock to be converted and a written notice of the
election of such holder to convert such Series C Common Stock into Series A
Common Stock indicating, among other things, the names and addresses of persons
to whom certificates representing Series A Common Stock shall be issued.
Stockholders desiring to sell their equity interest in the Company represented
by their shares of Series C Common Stock may convert those shares into an equal
number of shares of Series A Common Stock and sell the shares of Series A Common
Stock in the public market.
A stockholder who does not wish to complete the conversion process prior to
a sale may effect a sale of the Series A Common Stock into which such
stockholder's Series C Common Stock is convertible by delivering the certificate
or certificates for such shares of Series C Common Stock to a broker, properly
endorsed. The broker will then present the Series C Common Stock certificate or
certificates to the Company's transfer agent who will issue to the purchaser a
certificate for the number of shares of Series A Common Stock sold in settlement
of the transaction. (If the stockholder sells fewer than all of the shares of
Series A Common Stock into which such Series C Common Stock certificate or
certificates could be converted, the transfer agent will return to such
stockholder a certificate for Series C Common Stock representing the balance of
such shares unless the stockholder specifies that the transfer agent should
return a certificate for Series A Common Stock). Accordingly, there should be no
delay or extra expense involved in selling the equity interest in the Company
represented by the Series C Common Stock. Series A Common Stock and Series B
Common Stock is not convertible by the holders thereof into any other class of
stock.
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The Company does not believe that Series C Common Stock will be accepted as
security for the extension of credit by securities brokers or dealers. It is
however, permissible to pledge Series C Common Stock to secure loans from banks
and other lenders, provided that such shares are not transferred to or
registered in the name of the pledgee and that upon a foreclosure of the pledge,
the pledgee may only convert such shares into Series A Common Stock or transfer
such shares only to a person to whom the pledging holder of Series C Common
Stock holder could have transferred them.
Series C Common Stock issued in a stockholder's own name is not
transferable into "nominee" or "street" name. However, if on the date that the
Series C Stock was initially distributed by the Corporation as a dividend the
("Distribution Record Date") shares of Series C Common Stock are registered in
nominee or street name, the shares of Series C Common Stock issued in respect
thereof will be registered in the same nominee or street name. Such shares of
Series C Common Stock may be transferred out of the nominee or street name into
the name of the person who was the beneficial owner of the Series C Common Stock
on the Distribution Record Date (or a "Permitted Transferee," as hereinafter
described, of such person), and once so transferred, may not be transferred back
into nominee or street name. Series C Common Stock held in nominee or street
name may be converted into Series A Common Stock, and the Series A Common Stock
received will, depending on the nature of the transaction and the instructions
of the parties, be registered in the name of the original beneficial owner, a
transferee of such owner or a nominee for such owner or transferee. (If a
certificate for Series C Common Stock is to be returned in connection with a
partial conversion or sale of Series C Common Stock held in nominee name, such
returned certificate will be registered in the name of the nominee that
presented the original certificate or certificates to the transfer agent unless
contrary instructions are given.)
Other than pursuant to conversions into Series A Common Stock as described
above, a record or beneficial owner of shares of Series C Common Stock may
transfer such shares (whether by sale, assignment, gift, bequest, appointment or
otherwise) only to a "Permitted Transferee," as defined. A brief description of
permitted transfers is set forth below. The description is intended to be
illustrative only and is subject to the provisions set forth in the Restated
Certificate and Series C Certificate of Designation.
In the case of a holder of shares of Series C Common Stock of record who is
a natural person and the beneficial owner of the shares of Series C Common Stock
to be transferred, Permitted Transferees include:
(A) such holder of Series C Common Stock's spouse;
(B) any of the lineal descendants of a grandparent of such holder of
Series C Common Stock, including adopted children, and their spouses (such
persons and their spouses, together with the spouse of the holder of Series
C Common Stock, are hereinafter referred to as "such holder of Series C
Common Stock's family members");
(C) the guardian or conservator of a holder of Series C Common Stock
who has been adjudged disabled or incompetent by a court of competent
jurisdiction;
(D) the executor or administrator of the estate of a deceased holder
of Series C Common Stock;
(E) the trustee of the estate of a bankrupt or insolvent holder of
Series C Common Stock;
(F) the trustee of a trust principally for the benefit of such holder
of Series C Common Stock or such holder of Series C Common Stock's family
members;
(G) certain charitable organizations established by such holder of
Series C Common Stock or such holder of Series C Common Stock's family
members;
(H) a partnership, if, and only for so long as, all of the partners
are, and all of the partnership interests are owned by, such holder of
Series C Common Stock and/or one or more of the Permitted Transferees of
such holder of Series C Common Stock; and
(I) a corporation, if, and only for so long as, sufficient shares
entitled to elect at least a majority of the entire board of directors of
such corporation are beneficially owned by such holder of Series C
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Common Stock and/or one or more of the Permitted Transferees of such holder
of Series C Common Stock.
Series C Common Stock held beneficially and of record by partnerships may
be transferred to a partner who was also a partner on the Distribution Record
Date, any person transferring Series C Common Stock to such partnership after
the Distribution Record Date (up to the amount of shares so transferred) and any
Permitted Transferee of any such partner or person. Series C Common Stock held
beneficially and of record by corporations may be transferred (i) to any
stockholder of such corporation who was also a stockholder on the Distribution
Record Date and who is generally entitled to vote in the election of directors
of such corporation, provided that such corporation does not have more than 30
voting stockholders of record on the Distribution Record Date (or such greater
number of voting stockholders as may be allowed under the applicable state law
of such corporation in order to qualify as a close corporation), (ii) to any
stockholder through a pro rata dividend or liquidation, (iii) to any person
transferring Series C Common Stock to such corporation after the Distribution
Record Date (up to the amount of shares so transferred), (iv) to any Permitted
Transferee of any such stockholder or person and, (v) to the survivor of a
merger or consolidation of such corporation if those persons who owned
beneficially sufficient shares entitled to elect at least a majority of the
entire board of directors of such constituent corporation immediately prior to
the merger or consolidation own beneficially sufficient shares entitled to
elect at least a majority of the entire board of directors of the surviving
corporation. Series C Common Stock held of record by a trustee of a trust that
is irrevocable on the Distribution Record Date may be transferred (i) to a
successor trustee who is described in subparagraph (ii), (iii) or (iv), below,
or who is not and by becoming successor trustee will not otherwise become, a
Related Person, (ii) to any person to whom or for whose benefit income may be
distributed during the term of the trust, (iii) to any person to whom or for
whose benefit principal may be distributed either during or at the end of the
term of the trust, and (iv) to any lineal descendant of a grandparent of the
creator of such trust, the spouse of such creator and the spouse of any such
lineal descendant. Shares of Series C Common Stock held by a trustee of any
other trust may be transferred to a successor trustee who is not and will not
thereby become a Related Person, to the person who established such trust and
to such person's Permitted Transferees.
Each certificate representing Series C Common Stock bears a legend stating
that the shares represented thereby are subject to restrictions on transfer and
the registration of transfer. Any transfer of Series C Common Stock not
permitted under the Series C Certificate of Designation will result in the
conversion of the transferee's Series C Common Stock into Series A Common Stock,
generally effective on the date on which certificates representing such shares
are presented for transfer on the books of the Company, provided, however, that
if the Company should determine that such shares were not so presented for
transfer within 20 days after the date of such sale, transfer assignment or
other disposition, the transfer date shall be the actual date of such sale,
transfer, assignment or other disposition, as determined in good faith by the
Board or its appointed agent. As a condition to the transfer or registration of
transfer of Series C Common Stock, the Company may require the furnishing of
such affidavits or other proof as it deems necessary to establish that the
transferee is a Permitted Transferee. If no indication to the contrary is
supplied at the time shares of Series C Common Stock are presented for transfer,
the transfer shall be presumed by the Company to be a transfer to a
non-Permitted Transferee. Series C Common Stock converted into Series A Common
Stock by the holder or by the holder's transfer to a person who is not a
Permitted Transferee shall resume the status of authorized but unissued shares
of Series C Common Stock.
Termination and Conversion of Series B and/or Series C Common Stock
Either or both the Series B Common Stock and Series C Common Stock will
automatically be converted into Series A Common Stock on a share-for-share basis
(i) at any time the Board and the holders of a majority of the outstanding
shares of the series approve the conversion of all of such series into Series A
Common Stock, (ii) if, as a result of the existence of the series, the Series A
Common Stock becomes excluded from trading on the NYSE, the American Stock
Exchange and all other national securities exchanges and is also excluded from
quotation on NASDAQ or any other national quotation system then in use, (iii) if
the Board, in its sole discretion, elects to effect a conversion of such series
in connection with its approval of any sale or lease of all or any substantial
part of the Company's assets or any merger, consolidation,
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liquidation or dissolution of the Company, or (iv) if the Board, in its sole
discretion, elects to effect a conversion of such series after a determination
that there has been a material adverse change in the liquidity, marketability or
market value of the outstanding Series A Common Stock, considered in the
aggregate (a) due to the exclusion of the Series A Common Stock from trading on
a national securities exchange or the exclusion of the Series A Common Stock
from quotation on NASDAQ, or such other national quotation system then in use,
or (b) due to requirements of federal or state law, in any such case, as a
result of the existence of such series. To the extent that the Board has
discretion, the decision whether or not to exercise its authority to effect a
conversion of Series B Common Stock or Series C Common Stock would be made in
light of all the existing facts and circumstances affecting the interests of the
Company and its stockholders, including the effect such conversion could have on
the Company's vulnerability to an unsolicited hostile takeover attempt and any
of the other factors referred to herein.
In the event of any such termination of Series B Common Stock or Series C
Common Stock, certificates formerly representing outstanding shares of that
series shall thereafter be deemed to represent a like number of shares of Series
A Common Stock. If both Series B Common Stock and Series C Common Stock are
terminated, all outstanding shares of Series A Common Stock shall again be
denominated common stock and all certificates representing outstanding shares of
Series A Common Stock shall thereafter be deemed to represent a like number of
shares of common stock.
Preemptive Rights
Neither the Series A Common Stock, the Series B Common Stock nor the Series
C Common Stock carries any preemptive rights enabling a holder to subscribe for
or receive shares of stock of the Company of any class or any other securities
convertible into shares of stock of the Company. The Board will continue to
possess the power to issue shares of authorized but unissued Series A Common
Stock, Series B Common Stock, Series C Common Stock and preferred stock without
further stockholder action.
PREFERRED STOCK
The following summary contains a description of certain general terms of
the Company's Preferred Stock to which any Prospectus Supplement may relate.
Certain terms of any series of Preferred Stock offered by any Prospectus
Supplement will be described in the Prospectus Supplement relating thereto.
Preferred Stock may be convertible and, if so convertible, may be converted into
one or both of Common Stock and Debt Securities. The Preferred Stock may also be
exchangeable, at the option of the Company, for Debt Securities (see
"Description of Debt Securities"). If Preferred Stock or Warrants exercisable
for Preferred Stock are being offered, if Preferred Stock is issued under Stock
Purchase Contracts, or if Preferred Stock is exchangeable for Debt Securities,
the accompanying Prospectus Supplement will describe the rights, privileges,
preferences and restrictions of such Preferred Stock, including, without
limitation, (i) the designation, (ii) the number of authorized shares of the
series in question, (iii) the dividend rate (or method of calculation), (iv) any
voting rights, conversion rights, anti-dilution protections, exchangeability
provisions and terms of the Debt Securities that are exchangeable for the
Preferred Stock, (v) any redemption provisions, liquidation preferences and (vi)
any sinking fund provisions. If fractional interests in shares of Preferred
Stock may be issued, there will be a depositary for the shares of Preferred
Stock involved and the applicable Prospectus Supplement will describe the terms
of the depositary arrangement and related matters.
Upon issuance, against full payment of the purchase price therefor, shares
of Preferred Stock will be fully paid and nonassessable. Preferred Stock
issuable upon exercise of any Warrants exercisable for Preferred Stock (upon
payment in full of the Warrant exercise price) or conversion of any Debt
Securities convertible into Preferred Stock or under the Stock Purchase
Contracts will be fully paid and nonassessable.
The following description of the Series A Preferred Stock and Series B
Preferred Stock is summarized from, and is qualified in its entirety by
reference to, the Restated Certificate, the Certificate of Designation of the
Series A Preferred Stock (the "Series A Certificate of Designation") and the
Certificate of Designation of the Series B Preferred Stock (the "Series B
Certificate of Designation"), which are filed as exhibits to the Registration
Statement of which this Prospectus constitutes a part.
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Ranking
The Series A Preferred Stock ranks on a parity with the Series B Preferred
Stock, and ranks prior to the Common Stock with respect to dividend rights and
rights on liquidation, winding up or dissolution of the Company, and to all
other classes and series of equity securities of the Company hereafter issued,
other than any class or series of equity securities of the Company expressly
designated as being on a parity with (the "Parity Stock") or senior to (the
"Senior Stock") the Series A Preferred Stock and Series B Preferred Stock (the
Series A Preferred Stock and Series B Preferred Stock are collectively referred
to herein as the "Series A and Series B Preferred Stock"). Such other classes or
series of equity securities of the Company not expressly designated as being on
a parity with or senior to the Series A and Series B Preferred Stock are
referred to hereinafter as "Junior Stock." The rights of holders of shares of
Series A and Series B Preferred Stock are subordinate to the rights of the
Company's general creditors. The Series A and Series B Preferred Stock are
subject to creation of Senior Stock, Parity Stock and Junior Stock to the extent
not expressly prohibited by the Restated Certificate, the Series A Certificate
of Designation and the Series B Certificate of Designation.
Dividend Rights
Holders of Series A Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors of the Company out of funds legally
available therefor, cumulative cash dividends at an annual rate of 8%.
Holders of Series B Preferred Stock are entitled to receive, when, as and
if dividends on the Series B Preferred Stock are declared by the Board of
Directors of the Company out of funds legally available therefor, cumulative
cash dividends, accruing at the rate of $1.374 per share per annum. Dividends
will cease to accrue in respect of the Series B Preferred Stock on the earliest
to occur of (i) March 31, 1998 (the "Mandatory Conversion Date"), (ii) the date
of their redemption by the Company or (iii) in the event of an automatic
conversion due to a Fundamental Transaction (as defined below), on the business
day (the "Settlement Date") immediately preceding the effective date of the
Fundamental Transaction.
Dividends on the Series A and Series B Preferred Stock are payable
quarterly following each quarterly dividend period (a "Dividend Period"), or, if
any such day is a non-business day, on the next business day (each a "Dividend
Payment Date"). Dividends payable for any period less than a full Dividend
Period are computed on the basis of a 360-day year with equal months of 30 days.
Dividends are fully cumulative and accrue on a daily basis. Dividends declared
are payable to holders of record of Series A and Series B Preferred Stock as
they appear on the stock books of the Company as of the close of the business on
such record dates, not more than 60 calendar days preceding the applicable
Dividend Payment Date therefor, as determined by the Board of Directors of the
Company or a duly authorized committee thereof. Dividends are payable on March
15, June 15, September 15 and December 15, and commenced June 15, 1995.
Dividends on the Series A and Series B Preferred Stock will accrue whether
or not such dividends are declared and accumulate to the extent they are not
paid on the Dividend Payment Date for the quarter for which they accrue.
Accumulated unpaid dividends will not bear interest. Holders of the Series A and
Series B Preferred Stock are not entitled to any dividends, whether payable in
cash, property or stock, in excess of full cumulative accrued dividends as
described herein.
No dividends in any form shall be declared or paid or set apart for payment
on any Parity Stock or Junior Stock for any Dividend Period unless full
dividends on the Series A and Series B Preferred Stock for the prior Dividend
Period shall have been paid or declared and set aside. No cash dividends shall
be declared or paid or set aside for payment on Parity Stock for any Dividend
Period unless full cash dividends on the Series A and Series B Preferred Stock
for the prior Dividend Period shall have been paid or declared and set aside.
The Company shall not declare or pay any dividend or other distribution
(other than in Common Stock or other Junior Stock) with respect to any Junior
Stock or Parity Stock, including Common Stock, or redeem or set apart funds for
the purchase or redemption of any Junior Stock or Parity Stock through a sinking
fund or otherwise, or purchase any shares of its Common Stock, unless and until
(i) the Company shall have paid full cash dividends on the Series A and Series B
Preferred Stock for the most recent Dividend Period, or funds
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have been paid over to the dividend disbursing agent for the Company for payment
of such dividends, and (ii) the Company has declared a cash dividend on the
Series A and Series B Preferred Stock at the annual dividend rate for the
current Dividend Period, and sufficient funds have been paid over to the
dividend disbursing agent of the Company for the payment of a cash dividend at
the end of such Dividend Period.
No dividend shall be paid or set aside for holders of the Series A and
Series B Preferred Stock for any Dividend Period unless full dividends have been
paid or set aside for the holders of each class or series of Senior Stock.
Therefore, the Company's ability to pay dividends on the Series A and Series B
Preferred Stock may be subject to prior and superior rights of holders of
another class or series of equity securities of the Company. The Company does
not currently have outstanding any class or series of Senior Stock.
Liquidation Preference
Holders of shares of Series A and Series B Preferred Stock then outstanding
are entitled to receive the liquidation preference of each of the Series A and
Series B Preferred Stock, as the case may be, plus an amount per share equal to
any dividends accrued but unpaid, without interest, in the event of any
liquidation, dissolution or winding up of the Company whether voluntary or
involuntary, out of or to the extent of the net assets of the Company legally
available for such distribution, before any distributions are made with respect
to any Common Stock or any other Junior Stock. If the net liquidation proceeds
then available for distribution are insufficient to pay the liquidation
preferences of the Series A and Series B Preferred Stock and any Parity Stock,
such proceeds will be distributed on a pro rata basis to the Series A and Series
B Preferred Stock and Parity Stock. Following payment of such liquidation
preferences, the Series A and Series B Preferred Stock will not share in any
additional net liquidation proceeds. The liquidation preference of the Series B
Preferred Stock in the aggregate is $350 million and the per share liquidation
preference is equal to $21.131 (the "Series B Price").
Upon any such liquidation, dissolution or winding up of the Company, such
preferential amounts with respect to the Series A and Series B Preferred Stock
and any class or series of Parity Stock if not paid in full shall be distributed
pro rata in accordance with the aggregate preferential amounts of the Series A
and Series B Preferred Stock and such other classes or series of stock, if any.
The liquidation preferences of the Series A and Series B Preferred Stock
are not indicative of the price at which the shares trade.
Voting Rights of Series A Preferred Stock
The holders of shares of Series A Preferred Stock are not entitled to any
voting rights, except as required by applicable law and as summarized below.
So long as any shares of the Series A Preferred Stock are outstanding,
Times Mirror will not, without the consent of the holders of at least a majority
of the outstanding shares of Series A Preferred Stock, voting together with
holders of shares of any Parity Stock upon which like voting vote have been
conferred and are exercisable other than the Series B Preferred Stock (the
"Voting Parity Stock"), voting together as a class, (i) amend, alter or repeal
or otherwise change any provision of the Restated Certificate or the Series A
Certificate of Designation so as to materially and adversely affect the rights,
preferences, power or privileges of the Series A Preferred Stock, or (ii)
authorize, create, issue or increase the authorized or issued amount of any
class or series of any equity securities of Times Mirror, or any warrants,
options or other rights convertible or exchangeable into any class or series of
any Senior Stock or Parity Stock of Times Mirror. See "Ranking" and "Dividend
Rights" above. The creation or issuance of Junior Stock with respect to the
payment of dividends, or the distribution of assets upon liquidation,
dissolution or winding-up of Times Mirror, or a merger, consolidation,
reorganization or other business combination in which Times Mirror is not the
surviving entity, or any amendment which increases the number of authorized
shares of Series A Preferred Stock or Junior Stock with respect to the payment
of dividends, or substitutes the surviving entity in a merger or consolidation
for Times Mirror, shall not be considered to be a material and adverse change
requiring a separate vote of the holders of the Series A Preferred Stock and
Voting Parity Stock.
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At any time that dividends in an amount equal to dividend payments for six
Dividend Periods have accrued and remain unpaid, holders of Series A Preferred
Stock will have the right to a separate class vote to elect two directors to the
Board of Directors of Times Mirror (in addition to the then authorized number of
directors and any directors elected by the holders of Series B Preferred Stock)
at the next annual meeting of stockholders. Upon payment of all dividend
arrearages, holders of Series A Preferred Stock will be divested of such voting
rights until any future time when dividends in an amount equal to dividend
payments for six Dividend Periods have accrued and remained unpaid. The terms of
the special directors will thereupon terminate and the authorized number of
directors will be reduced by two.
Voting Rights of Series B Preferred Stock
The Series B Preferred Stock votes together with the Common Stock as a
single class with respect to all matters submitted to the stockholders of the
Company, except as otherwise required by law. Each share of Series B Preferred
Stock is entitled to one vote, provided that the number of votes per share will
be adjusted in the event and to the extent that the Common Equivalent Rate (as
defined below) is adjusted in the future. See "Mandatory Conversion of Series B
Preferred Stock" below.
In addition, upon the failure of the Company to pay dividends on the Series
B Preferred Stock for six Dividend Periods, the holders of Series B Preferred
Stock will be entitled to a separate class vote to elect two additional
directors to the Company's Board of Directors (in addition to the then
authorized number of directors and any directors elected by the holders of
Series A Preferred Stock) at the next annual meeting of stockholders. Upon
payment of all dividend arrearages, holders of Series B Preferred Stock will be
divested of such voting rights until any future time when dividends in an amount
equal to dividend payments for six Dividend Periods have accrued and remain
unpaid. The terms of the special directors will thereupon terminate and the
authorized number of directors will be reduced by two.
Any amendment of any of the provisions of the Restated Certificate or the
Series B Certificate of Designation that would either (i) authorize or create
any class of Senior Stock or (ii) alter or change the rights, preferences or
limitations of Series B Preferred Stock so as to affect such rights, preferences
or limitations in any material respect prejudicial to the holders thereof would
require the affirmative vote or written consent of the holders of at least
two-thirds of the total number of outstanding shares of Series B Preferred
Stock. Any amendment of any of the provisions of the Restated Certificate that
would either (A) increase the total number of authorized shares of Preferred
Stock or (B) authorize or create any class of Parity Stock would require the
affirmative vote or written consent of the holders of a majority of the total
number of outstanding shares of Series B Preferred Stock; provided, however,
that no such votes or affirmative consents of the holders of shares of Series B
Preferred Stock shall be required if, at or prior to the issuance of any Senior
Stock or Parity Stock, provision is made for the redemption of all of the shares
of Series B Preferred Stock then outstanding. Any amendment that would authorize
or create any series of Preferred Stock out of the existing authorized shares of
Preferred Stock, or that would authorize or create any class of Junior Stock
shall not be considered to affect adversely the rights, preferences or
limitations of the outstanding shares of Series B Preferred Stock and will not
require the consent of the holders of Series B Preferred Stock voting as a
separate class.
Except as otherwise required by law, the Series A Preferred Stock and the
Series B Preferred Stock do not vote together as a single class.
Optional Conversion of Series A Preferred Stock
The Series A Preferred Stock may be converted into Common Stock by Times
Mirror or by the holders thereof after the latest to occur of (i) the date on
which the assets of either Chandler Trust No. 1 or Chandler Trust No. 2
(collectively, the "Chandler Trusts") are distributed to the beneficiaries
thereof or (ii) February 1, 2025 (such later date being the "Redeemability
Date") at a conversion price measured by the average market value of Series A
Common Stock during the 20 trading days prior to the notice of election to
convert Series A Preferred Stock. It is not possible to identify the date on
which the assets of the Chandler Trusts may be distributed to their respective
beneficiaries as the assets of those trusts are to be distributed
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upon the death of the last of a list of specified persons. In lieu of such
conversion, each of the Chandler Trusts may elect to exchange shares of Series A
Preferred Stock for shares of Series A Common Stock and Series C Common Stock,
in the same proportion as its relative ownership of Series A Common Stock and
Series C Common Stock immediately prior to such redemption; provided, however,
that if the total votes represented by all shares of Common Stock owned by such
holder immediately after such exchange (expressed as a percentage of the total
voting power of Times Mirror outstanding immediately after such exchange) exceed
the greater of (i) the total votes represented by all Common Stock of Times
Mirror's predecessor ("Old Times Mirror Common Stock") owned by such holder as
of June 5, 1994 (expressed as a percentage of the total voting power of Times
Mirror's predecessor outstanding as of June 5, 1994) and (ii) the total votes
represented by all Common Stock owned by such holder immediately prior to such
exchange (expressed as a percentage of the total voting power of Times Mirror
outstanding immediately prior to such exchange), then, with respect to all such
excess votes, such holder has agreed that, to the extent any of such excess
votes are voted, it will cause such excess votes to be cast on all matters
proportionately on the same basis as the other votes cast at a meeting of
stockholders of Times Mirror.
Mandatory Conversion of Series B Preferred Stock
On the Mandatory Conversion Date (i.e., March 31, 1998), each outstanding
share of Series B Preferred Stock will convert automatically into (i) Series A
Common Stock at the Common Equivalent Rate and (ii) the right to receive an
amount in cash equal to all accrued and unpaid dividends on such Series B
Preferred Stock. The "Common Equivalent Rate" initially will be one share of
Series A Common Stock for each share of Series B Preferred Stock, subject to
adjustment in the event of certain stock dividends or distributions,
subdivisions, splits, combinations, issuances of certain rights or warrants or
distributions of certain assets with respect to the Series A Common Stock.
In addition, immediately prior to the effectiveness of a merger,
consolidation or similar extraordinary transaction involving the Company that
results in the conversion or exchange of Series A Common Stock into, or results
in the holders of Series A Common Stock having the right to receive, other
securities or other property (a "Fundamental Transaction"), each outstanding
share of Series B Preferred Stock will convert automatically into (i) Series A
Common Stock at the Common Equivalent Rate and (ii) the right to receive (A) an
amount in cash equal to the accrued and unpaid dividends on such Series B
Preferred Stock to and including the Settlement Date plus (B) an amount in cash
equal to the Dividend Premium (as defined below).
At the option of the Company, it may deliver on the Settlement Date, in
lieu of some or all of the cash consideration described in clause (ii) of the
preceding paragraph, a number of shares of Series A Common Stock to be
determined by dividing (i) the amount of cash consideration that the Company has
elected to pay in Series A Common Stock by (ii) the Current Market Price (as
defined below) as of the end of the second trading day immediately preceding the
date on which the Company gives notice regarding the Fundamental Transaction to
the holders of Series B Preferred Stock.
The term "Dividend Premium" with respect to a share of Series B Preferred
Stock shall mean an amount initially equal to $3.402. The amount constituting
the Dividend Premium shall be reduced following the issuance of the Series B
Preferred Stock by $.003127 per day on each day following March 23, 1995 to
$.190571 on January 30, 1998 and thereafter will be equal to zero.
The term "Current Market Price" on any date of determination means the
average closing price of a share of Series A Common Stock on the NYSE for the
five consecutive trading days ending on and including such date of
determination; provided, however, that if the closing price of the Series A
Common Stock on the NYSE on the trading day next following such five-day period
(the "next-day closing price") is less than 95% of such average closing price,
then the Current Market Price per share of Series A Common Stock on such date of
determination will be the next-day closing price; and provided further that,
with respect to any redemption or conversion of the Series B Preferred Stock, if
any event that results in an adjustment of the Common Equivalent Rate occurs
during the period beginning on the first day of such five-day period and
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ending on the applicable redemption or conversion date, the Current Market Price
as determined pursuant to the foregoing will be appropriately adjusted to
reflect the occurrence of such event.
The holders of Series B Preferred Stock do not have the right to require
conversion of the Series B Preferred Stock.
Optional Redemption of Series B Preferred Stock
At any time or from time to time prior to the Mandatory Conversion Date,
the Company shall have the right to call, in whole or in part, the outstanding
shares of Series B Preferred Stock for redemption. Upon any such redemption,
each holder of Series B Preferred Stock will receive in exchange for each share
of Series B Preferred Stock so called (i) a number of shares of Series A Common
Stock determined by dividing (A) the Call Price (as described below) then in
effect by (B) the Current Market Price as of the end of the second trading day
immediately preceding the date on which the Company gives notice regarding the
redemption to the holders of the Series B Preferred Stock and (ii) an amount in
cash equal to accrued and unpaid dividends on such Series B Preferred Stock to
and including the date of redemption (the "Redemption Date"). Notice of a
redemption must be given to the holders of Series B Preferred Stock at least 30
but not more than 60 days prior to the Redemption Date.
The Call Price was $31.92885 on March 23, 1995 and declines at a rate of
$.003127 on each day thereafter to $28.717421 on January 30, 1998 and thereafter
will equal $28.52685. The Call Price in effect at any time is equal to the sum
of (i) 135% of the Series B Price plus (ii) the Dividend Premium then in effect.
Market for Series A and Series B Preferred Stock
The Series A Preferred Stock is not traded on an exchange. The Series B
Preferred Stock is, however, traded on the NYSE.
BUSINESS COMBINATIONS
The Restated Certificate of Incorporation requires, subject to certain
exceptions summarized below, that any Business Combination (as defined below),
be approved by (i) an affirmative vote of the holders of not less than 80% of
all outstanding shares of capital stock entitled to vote generally in the
election of directors of the Company (the "80% Voting Requirement") and (ii) the
affirmative vote of the holders of a majority of the Disinterested Shares (as
defined below). Business Combinations include generally the following: (i)
mergers or reorganizations of the Company or its subsidiaries with or into a
Related Person (as defined below) or of a Related Person with or into the
Company or a subsidiary; (ii) reorganizations that would have the effect of
increasing the voting power of a Related Person; (iii) certain acquisitions by
the Company or a subsidiary of securities issued by or assets of a Related
Person; and (iv) liquidations, sales or transfers to a Related Person of assets
of the Company or one or more subsidiaries constituting a substantial part of
the Company.
A Business Combination does not need to satisfy the foregoing approval
requirements if the Business Combination has been approved by a majority of the
Directors who are unaffiliated with the Related Person and who were members of
the Board of Directors of the Company before the Company was incorporated in the
State of Delaware, or who became a member of the Board before the Related Person
became a Related Person. Business Combinations in which the shareholders of the
Company are to receive cash, securities or other property in exchange for their
shares of capital stock do not need to satisfy the 80% Voting Requirement if (i)
the value of the consideration meets certain thresholds of fairness, as
specified in the Restated Certificate of Incorporation, and (ii) the Business
Combination is approved by the affirmative vote of the holders of a majority of
the Disinterested Shares.
As used in the Restated Certificate of Incorporation, a Related Person is a
person or entity, or an affiliate or associate (as defined in Rule 12b-2 under
the Exchange Act) of such person or entity, that beneficially owns, in the
aggregate, five percent or more of the outstanding voting interests of the
Company; provided, however, the term Related Person does not include (i) any
person or entity that beneficially owned five percent or more of the common
stock of the Company on the date upon which the Company was incorporated
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in the State of Delaware, or (ii) any employee benefit plan established to
provide benefits for employees of the Company or its subsidiaries, any trust
plan thereto, or any trustee or fiduciary when acting in such capacity with
respect to any such plan or trust. The term Disinterested Shares means, as to
any Related Person, shares of voting stock held by stockholders other than such
Related Person.
DESCRIPTION OF WARRANTS
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants") and Warrants to purchase Common Stock or Preferred
Stock ("Stock Warrants"). Warrants may be issued independently of or together
with any other Securities and may be attached to or separate from such
Securities. Each series of Warrants will be issued under a separate Warrant
Agreement (each a "Warrant Agreement") to be entered into between the Company
and a Warrant Agent ("Warrant Agent") the form of which will be filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
Warrant Agent will act solely as an agent of the Company in connection with the
Warrant of such series and will not assume any obligation or relationship of
agency for or with holders or beneficial owners of Warrants. The following sets
forth certain general terms and provisions of the Warrants offered hereby.
Further terms of the Warrants and the applicable Warrant Agreement will be set
forth in the applicable Prospectus Supplement.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of any Debt
Warrants, including the following: (i) the title of such Debt Warrants; (ii) the
offering price for such Debt Warrants, if any; (iii) the aggregate number of
such Debt Warrants; (iv) the designation and terms of the Debt Securities
purchasable upon exercise of such Debt Warrants; (v) if applicable, the
designation and terms of the Securities with which such Debt Warrants are issued
and the number of such Debt Warrants issued with each such Security; (vi) if
applicable, the date from and after which such Debt Warrants and any Securities
issued therewith will be separately transferable; (vii) the principal amount of
Debt Securities purchasable upon exercise of a Debt Warrant and the price at
which such principal amount of Debt Securities may be purchased upon exercise;
(viii) the date on which the right to exercise such Debt Warrants shall commence
and the date on which such right shall expire; (ix) if applicable, the minimum
or maximum amount of such Debt Warrants that may be exercised at any one time;
(x) whether the Debt Warrants represented by the Debt Warrant certificates or
Debt Securities that may be issued upon exercise of the Debt Warrants will be
issued in registered or bearer form; (xi) information with respect to book-entry
procedures, if any; (xii) the currency, currencies or currency units in which
the offering price, if any, and the exercise price are payable; (xiii) if
applicable, a discussion of certain United States federal income tax
considerations; (xiv) the antidilution provisions of such Debt Warrants, if any;
(xv) the redemption or call provisions, if any, applicable to such Debt
Warrants; and (xvi) any additional terms of the Debt Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such Debt
Warrants.
STOCK WARRANTS
The applicable Prospectus Supplement will describe the terms of any Stock
Warrants, including the following: (i) the title of such Stock Warrants; (ii)
the offering price of such Stock Warrants, if any; (iii) the aggregate number of
such Stock Warrants; (iv) the designation and terms of the Common Stock or
Preferred Stock purchasable upon exercise of such Stock Warrants; (v) if
applicable, the designation and terms of the Securities with which such Stock
Warrants are issued and the number of such Stock Warrants issued with each such
Security; (vi) if applicable, the date from and after which such Stock Warrants
and any Securities issued therewith will be separately transferable; (vii) the
number of shares of Common Stock or Preferred Stock purchasable upon exercise of
a Stock Warrant and the price at which such shares may be purchased upon
exercise; (viii) the date on which the right to exercise such Stock Warrants
shall commence and the date on which such right shall expire; (ix) if
applicable, the minimum or maximum amount of such Stock Warrants that may be
exercised at any one time; (x) the currency, currencies or currency units in
which the offering price, if any, and the exercise price are payable; (xi) if
applicable, a discussion of certain United States federal income tax
considerations; (xii) the antidilution provisions of such Stock warrants, if
any;
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(xiii) the redemption or call provisions, if any, applicable to such Stock
Warrants; and (xiv) any additional terms of such Stock Warrants, including
terms, procedures and limitations relating to the exchange and exercise of such
Stock Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for public
offering and sale by them or may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Securities will be named in the applicable Prospectus Supplement. The
Company may sell Securities directly to investors on its own behalf in those
jurisdictions where it is authorized to do so.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Company
also may offer and sell the Securities in exchange for one or more of its
outstanding debt securities or other securities. The Company also may, from time
to time, authorize dealers, acting as Company agents, to offer and sell the
Securities upon such terms and conditions as may be set forth in the Prospectus
Supplement. In connection with the sale of the Securities, underwriters may
receive compensation from the Company in the form of underwriting discounts,
concessions or commissions and may also receive commissions from purchasers of
the Securities for whom they may act as agent. Underwriters may sell the
Securities to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters or
commissions from the purchasers for which they may act as agents.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Securities, and any discounts or
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Dealers and agents
participating in the distribution of the Securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the Securities may be deemed to be underwriting
discounts and commissions. Underwriters, dealers and agents may be entitled,
under agreements entered into with the Company, to indemnification against and
contribution toward certain civil liabilities.
Certain of the underwriters, dealers and agents and their associates may
engage in transactions with, and perform services for, the Company in the
ordinary course of business.
The Debt Securities, Preferred Stock, Series B Common Stock and Warrants
will be new issues of securities with no established trading market. Any
underwriters or agents to or through which Securities are sold by the Company
for public offering and sale may make a market in such Securities, but such
underwriters or agents will not be obligated to do so and any of them may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of or trading market for any Debt Securities,
Preferred Stock, Series B Common Stock or Warrants.
CERTAIN LEGAL MATTERS
Gibson, Dunn & Crutcher has rendered an opinion (filed as an exhibit to the
Registration Statement of which this Prospectus is a part) with respect to the
validity of the Securities covered by this Prospectus. Certain legal matters in
connection with offerings made by this Prospectus may be passed on for any
underwriters, agents or dealers by counsel named in the Prospectus Supplement.
EXPERTS
The consolidated financial statements of The Times Mirror Company appearing
in The Times Mirror Company's Annual Report (Form 10-K) for the year ended
December 31, 1994, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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TIMES MIRROR
