<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 1998
REGISTRATION NO. 333-49119
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
McKESSON CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
<TABLE>
<S> <C> <C>
DELAWARE 5122 94-3207296
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
McKESSON PLAZA
ONE POST STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 983-8300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S EXECUTIVE OFFICES)
----------------
NANCY A. MILLER
VICE PRESIDENT AND CORPORATE SECRETARY
McKESSON CORPORATION
McKESSON PLAZA, ONE POST STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 983-8300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPY TO:
IVAN D. MEYERSON GREGG A. NOEL
VICE PRESIDENT AND GENERAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER
McKESSON CORPORATION & FLOM LLP
McKESSON PLAZA, ONE POST STREET 300 SOUTH GRAND AVENUE
SAN FRANCISCO, CALIFORNIA 94104 LOS ANGELES, CALIFORNIA 90071
(415) 983-8300 (213) 687-5000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the Securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PROSPECTUS
OFFERS TO EXCHANGE
$150,000,000 6.30% EXCHANGE NOTES DUE MARCH 1, 2005 AND
$150,000,000 6.40% EXCHANGE NOTES DUE MARCH 1, 2008
OF
McKESSON CORPORATION
THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON MAY , 1998, UNLESS EXTENDED.
McKesson Corporation, a Delaware corporation (the "Company" or "McKesson"),
is hereby offering (the "Exchange Offers"), upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying applicable Letter
of Transmittal (the "Letter of Transmittal"), to exchange an aggregate
principal amount of up to $300,000,000 of its 6.30% Exchange Notes due March
1, 2005 (the "Exchange Notes due 2005") and 6.40% Exchange Notes due March 1,
2008 (the "Exchange Notes due 2008," and with the Exchange Notes due 2005,
collectively, the "Exchange Notes"), which exchange has been registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
registration statement of which this Prospectus is a part, for its 6.30% Notes
due March 1, 2005 (the "Private Notes due 2005," and with the Exchange Notes
due 2005, the "Notes due 2005") and 6.40% Notes due March 1, 2008 (the
"Private Notes due 2008," and with the Exchange Notes due 2008, the "Notes due
2008," and with the Private Notes due 2005, collectively, the "Private
Notes"), respectively, which Private Notes were issued on February 24, 1998
(the "Closing Date"). The forms and terms of the Exchange Notes and the
corresponding Private Notes are identical in all material respects except that
(i) the exchange will have been registered under the Securities Act, and
therefore, the Exchange Notes will not bear legends restricting the transfer
thereof and (ii) holders of the Exchange Notes will not be entitled to certain
rights of holders of the Private Notes ("Holders") under the Registration
Rights Agreement (as defined herein), which rights will terminate upon the
consummation of the Exchange Offers. The Exchange Notes will evidence the same
indebtedness as the corresponding Private Notes (which they replace) and will
be entitled to the benefits of an indenture dated as of March 11, 1997
governing the Private Notes and the Exchange Notes (the "Indenture"). The
Private Notes and the Exchange Notes are sometimes referred to herein
collectively as the "Notes." See "The Exchange Offers" and "Description of
Notes."
The Exchange Notes will be, as are the Private Notes, redeemable as a whole
or in part, at the option of the Company, at any time at a redemption price
equal to the greater of (i) 100% of their principal amount and (ii) the sum of
the present values of the remaining scheduled payments of principal and
interest thereon discounted to the date of redemption on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the applicable
Treasury Yield (as defined herein) plus 10 basis points for each series of
Exchange Notes, plus in each case accrued interest to the date of redemption.
See "Description of Notes--Optional Redemption."
(Continued on following page)
-----------
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DESCRIPTION OF CERTAIN RISKS TO
BE CONSIDERED BY HOLDERS WHO TENDER THEIR PRIVATE NOTES IN THE EXCHANGE OFFERS.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is April 17, 1998
<PAGE>
(Continued from previous page)
McKESSON WILL ACCEPT FOR EXCHANGE ANY AND ALL VALIDLY TENDERED PRIVATE NOTES
NOT WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON MAY , 1998, UNLESS
ANY OF THE EXCHANGE OFFERS ARE EXTENDED BY McKESSON IN ITS SOLE DISCRETION
(THE "EXPIRATION DATES"). TENDERS OF PRIVATE NOTES MAY BE WITHDRAWN AT ANY
TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE APPLICABLE EXPIRATION
DATE. THE EXCHANGE OFFERS ARE NOT CONDITIONED UPON ANY MINIMUM PRINCIPAL
AMOUNT OF PRIVATE NOTES BEING TENDERED FOR EXCHANGE. PRIVATE NOTES MAY BE
TENDERED ONLY IN INTEGRAL MULTIPLES OF $1,000. IN THE EVENT McKESSON
TERMINATES THE EXCHANGE OFFERS AND DOES NOT ACCEPT FOR EXCHANGE ANY PRIVATE
NOTES, McKESSON WILL PROMPTLY RETURN ALL PREVIOUSLY TENDERED PRIVATE NOTES TO
THE HOLDERS THEREOF.
Prior to the Exchange Offers, there has been no public market for the Notes.
McKesson does not intend to list the Notes on any securities exchange or to
seek approval for quotation through any automated quotation system. There can
be no assurance that an active market for the Notes will develop. To the
extent that a market for the Notes does develop, the market value of the Notes
will depend on market conditions (such as yields on alternative investments),
general economic conditions, McKesson's financial condition and certain other
factors. Such conditions might cause the Notes, to the extent that they are
traded, to trade at a significant discount from face value. See "Risk
Factors--Absence of Public Market."
The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of McKesson contained in the Registration Rights Agreement. See
"The Exchange Offers--Consequences of Failure to Exchange" for a discussion of
McKesson's belief, based on interpretations by the staff (the "Staff") of the
Securities and Exchange Commission (the "Commission") as set forth in no
action letters issued to third parties, as to the transferability of the
Exchange Notes upon satisfaction of certain conditions. Each broker-dealer
that receives Exchange Notes for its own account pursuant to the Exchange
Offers must acknowledge that it will deliver a prospectus in connection with
any resale of such Exchange Notes. Each Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes acquired by such broker-
dealer as a result of market-making activities or other trading activities.
The Company has agreed that, ending on the close of business on the 180th day
following the Expiration Date (as defined herein), it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
McKesson will not receive any proceeds from, and has agreed to bear the
expenses of, the Exchange Offers. No underwriter is being used in connection
with the Exchange Offers.
THE EXCHANGE OFFERS ARE NOT BEING MADE TO, NOR WILL McKESSON ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFERS OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
2
<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes part of a Registration Statement on Form S-4
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act
with respect to the Exchange Notes. This Prospectus omits certain of the
information contained in the Registration Statement, and reference hereby is
made to the Registration Statement and to the exhibits thereto for further
information with respect to the Company and the Exchange Notes offered hereby.
Any statements contained herein concerning the provisions of any document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission or incorporated by reference herein are not necessarily complete,
and, in each instance, reference is made to the copy of such document so filed
for a more complete description of the matter involved. Each such statement
herein is qualified in its entirety by such reference.
Each of the Company and AmeriSource Health Corporation ("AmeriSource") is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information may be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the following Regional Offices of the
Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material may also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington D.C. 20549, at
prescribed rates. The Commission also maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants (including McKesson and AmeriSource) that file
electronically with the Commission (at http://www.sec.gov). The McKesson
common stock is listed on each of the New York Stock Exchange (the "NYSE") and
the Pacific Exchange, Inc. (the "PE"), and the AmeriSource common stock is
listed on the NYSE. Reports, proxy statements and other information relating
to each of McKesson and AmeriSource can be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005 and, in the case of McKesson,
at the offices of the PE, 301 Pine Street, San Francisco, California 94104.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents previously filed or to be filed by the Company with the Commission
pursuant to the Exchange Act:
1. Annual Report of the Company on Form 10-K for the fiscal year ended
March 31, 1997 (the "Form 10-K").
2. Quarterly Reports of the Company on Form 10-Q for the quarters ended
June 30, 1997, September 30, 1997 and December 31, 1997.
3. Current Reports of the Company on Form 8-K dated November 22, 1996 (as
amended by Amendment No. 1 on Form 8-K/A filed on January 21, 1997 as
further amended by Amendment No. 2 on Form 8-K/A, filed on April 28, 1997),
April 7, 1997, June 13, 1997, June 24, 1997, September 5, 1997, September
24, 1997, October 31, 1997, February 24, 1998 and March 19, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
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.
3
<PAGE>
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL
OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHALL BE
DIRECTED TO NANCY A. MILLER, VICE PRESIDENT AND CORPORATE SECRETARY, McKESSON
CORPORATION, McKESSON PLAZA, ONE POST STREET, SAN FRANCISCO, CALIFORNIA 94104
(TELEPHONE NUMBER (415) 983-8301). IN ORDER TO INSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY 5 BUSINESS DAYS PRIOR TO THE
APPLICABLE EXPIRATION DATE.
4
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in its
entirety by the detailed information appearing elsewhere in the Prospectus or
incorporated by reference herein.
THE COMPANY
McKesson is the leading health care supply management company in North
America. The Company also develops and manages innovative marketing programs
for pharmaceutical manufacturers and, through McKesson Water Products Company,
processes and markets pure drinking water. The Company's objective is to become
the world leader in health care supply and comprehensive pharmaceutical
management across the entire supply chain, from manufacturer to patient. For a
more complete discussion of the Company and its recent acquisitions, see "The
Company."
THE EXCHANGE OFFERS
Securities Offered ......... The Company is offering to exchange pursuant to
the Exchange Offers up to (i) $150,000,000
principal amount of Exchange Notes due 2005 for
$150,000,000 principal amount of Private Notes
due 2005 and (ii) $150,000,000 principal amount
of Exchange Notes due 2008 for $150,000,000
principal amount of Private Notes due 2008, all
of which have been registered under the
Securities Act. The forms and terms of the
Exchange Notes and the corresponding Private
Notes are identical in all material respects,
except for certain transfer restrictions and
registration rights relating to the Private Notes
and except that Holders of Private Notes of
Exchange Offers that have not been consummated by
October 7, 1998 will be entitled to liquidated
damages in an amount equal to 0.25% per annum on
the Private Notes held by such Holders.
Liquidated damages, if any, will accrue from and
including October 8, 1998 and will cease to
accrue from the consummation of the applicable
Exchange Offer.
The Exchange Offers......... The Exchange Notes are being offered in exchange
for a like principal amount of corresponding
Private Notes. The issuance of the Exchange Notes
is intended to satisfy obligations of the Company
contained in the Registration Rights Agreement.
The Exchange Notes evidence the same debt as the
Private Notes and will be issued, and Holders
thereof are entitled to the same benefits as
Holders of the Private Notes, under the
Indenture. See "The Exchange Offers."
Tenders, Expiration Date,
Withdrawals................. The Exchange Offers will expire at 5:00 p.m., New
York City time, on May , 1998, or such later
time and date to which any of them may be
extended by the Company in its sole discretion.
Tenders of Private Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time on
the applicable Expiration Date. Private Notes not
accepted for exchange for any reason will be
returned without expense to the tendering holder
thereof as promptly as practicable after the
expiration or termination of the applicable
Exchange Offer. See "The Exchange Offers."
5
<PAGE>
Procedures for Tendering
Private Notes .............. Brokers, dealers, commercial banks, trust
companies and other nominees who hold Private
Notes through the Depository Trust Company
("DTC") must effect tenders by book-entry
transfer in accordance with DTC's Automated
Tender Offer Program ("ATOP"). Beneficial owners
of Private Notes registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee are urged to contact such person
promptly if they wish to tender Private Notes
pursuant to the Exchange Offers. Tendering
Holders of Private Notes that do not use ATOP
must complete and sign the applicable Letter of
Transmittal (the YELLOW Letter of Transmittal for
the Private Notes due 2005 and the BLUE Letter of
Transmittal for the Private Notes due 2008) in
accordance with the instructions contained
therein and forward the same by mail, facsimile
or hand delivery, together with any other
required documents, to the Exchange Agent, either
with the certificates of the Private Notes to be
tendered or in compliance with the specified
procedures for guaranteed delivery of Private
Notes. Tendering holders of Private Notes that
use ATOP will, by so doing, acknowledge that they
are bound by the terms of the applicable Letter
of Transmittal. See "The Exchange Offers--
Procedures for Tendering Private Notes."
Letters of Transmittal and certificates
representing Private Notes should not be sent to
the Company. Such documents should only be sent
to the Exchange Agent.
Federal Income Tax
Consequences ............... The exchange pursuant to the Exchange Offers will
not be a taxable transaction for Federal income
tax purposes. See "Certain United States Federal
Tax Consequences."
Exchange Agent ............. The First National Bank of Chicago is serving as
Exchange Agent (the "Exchange Agent") in
connection with the Exchange Offers.
6
<PAGE>
CONSEQUENCES OF FAILURE TO EXCHANGE PRIVATE NOTES
PURSUANT TO THE EXCHANGE OFFERS AND CERTAIN REQUIREMENTS FOR TRANSFER OF
EXCHANGE NOTES
Holders of Private Notes who do not exchange their Private Notes for the
corresponding Exchange Notes pursuant to the Exchange Offers will continue to
be subject to the provisions in the Indenture regarding transfer and exchange
of the Private Notes and the restrictions on transfer of such Private Notes as
set forth in the legend thereon as a consequence of the issuance of the Private
Notes pursuant to exemptions from, or in transactions not subject to, the
registration requirements of the Securities Act and applicable state securities
laws. In general, the Private Notes may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or
in a transaction not subject to, the Securities Act and applicable state
securities laws. The Company does not currently anticipate that it will
register Private Notes under the Securities Act. See "Description of Notes--
Registration Rights." Based on existing interpretations by the Staff, as set
forth in several no-action letters to third parties, and subject to the
immediately following sentence, the Company believes that Exchange Notes issued
pursuant to the Exchange Offers in exchange for Private Notes may be offered
for resale, resold and otherwise transferred by the holders thereof (other than
holders who are broker-dealers) without further compliance with the
registration and prospectus delivery provisions of the Securities Act. However,
any purchaser of Private Notes who is an affiliate of the Company within the
meaning of Rule 405 under the Securities Act ("affiliate") or who intends to
participate in the Exchange Offers for the purpose of distributing the Exchange
Notes, or any broker-dealer who purchased the Private Notes from the Company to
resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any
other available exemption under the Securities Act, (i) will not be able to
rely on the interpretations of the Staff set forth in the above-mentioned no-
action letters, (ii) will not be entitled to tender its Private Notes in the
Exchange Offers and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the Private Notes unless such sale or transfer is made pursuant to
an exemption from such requirements. The Company does not intend to request the
Commission to consider, and the Commission has not considered, the Exchange
Offers in the context of a no-action letter and there can be no assurance that
the Staff would make a similar determination with respect to the Exchange
Offers as in such other circumstances.
Each Holder of the Private Notes who wishes to exchange the Private Notes for
Exchange Notes in the Exchange Offers will be required to represent that (i) it
is not an affiliate of the Company, (ii) the Exchange Notes to be received by
it were acquired in the ordinary course of its business and (iii) at the time
of the Exchange Offers, it has no arrangement with any person to participate in
the distribution within the meaning of the Securities Act ("distribution") of
the Exchange Notes. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Private Notes, where such Private Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution." The
information set forth above concerning certain interpretations of and positions
taken by the Staff is not intended to constitute legal advice, and prospective
investors should consult their own legal advisors with respect to such matters.
7
<PAGE>
THE EXCHANGE NOTES
The forms and terms of the Exchange Notes and the corresponding Private Notes
are identical in all material respects except for certain transfer restrictions
and registration rights relating to the Private Notes and except that Holders
of Private Notes of Exchange Offers that have not been consummated by October
7, 1998 will be entitled to liquidated damages in an amount equal to 0.25% per
annum on the Private Notes held by such Holders. Liquidated damages, if any,
will accrue from and including October 8, 1998 and will cease to accrue from
the consummation of the applicable Exchange Offer. The Exchange Notes will bear
interest from the most recent date to which interest has been paid on the
applicable Private Notes or, if no interest has been paid, from February 24,
1998. Accordingly, if the relevant record date for interest payment occurs
after the consummation of the applicable Exchange Offer, registered holders of
such Exchange Notes on such record date will receive interest accruing from the
most recent date to which interest has been paid or, if no interest has been
paid, from February 24, 1998. If, however, the relevant record date for
interest payment occurs prior to the consummation of the applicable Exchange
Offer, registered holders of such Private Notes on such record date will
receive interest accruing from the most recent date to which interest has been
paid or, if no interest has been paid, from February 24, 1998. Holders of
Private Notes whose Private Notes are accepted for exchange will not receive
any payment in respect of accrued interest on such Private Notes otherwise
payable on any interest payment date the record date for which occurs on or
after consummation of the Exchange Offers.
Securities Offered ......... Up to (i) $150,000,000 principal amount of
Exchange Notes due 2005 and (ii) $150,000,000
principal amount of Exchange Notes due 2008.
Interest Rates; Payment
Dates ...................... Interest on the Exchange Notes due 2005 and the
Exchange Notes due 2008 will accrue at the rates
of 6.30%, and 6.40% per annum, respectively,
payable semiannually in arrears on March 1 and
September 1 of each year, commencing September 1,
1998, to the persons in whose name the Exchange
Notes are registered at the close of business on
the immediately preceding February 15th and
August 15th, respectively.
Maturity Dates ............. Exchange Notes due 2005: March 1, 2005.
Exchange Notes due 2008: March 1, 2008.
Optional Redemption ........ The Exchange Notes due 2005 and the Exchange
Notes due 2008 will be redeemable as a whole or
in part, at the option of the Company, at any
time at a redemption price equal to the greater
of (i) 100% of their principal amount and (ii)
the sum of the present values of the remaining
scheduled payments of principal and interest
thereon discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the
applicable Treasury Yield plus 10 basis points
for each series of Exchange Notes, plus in each
case accrued interest to the date of redemption.
Ranking .................... The Exchange Notes will constitute unsecured,
unsubordinated obligations of the Company.
Payment of the principal of and interest on the
Exchange Notes will rank pari passu with all
other unsecured, unsubordinated debt of the
Company. The Exchange Notes will rank pari passu
in right of payment to the Private Notes. See
"Description of Notes--General."
8
<PAGE>
Certain Covenants .......... The Indenture contains certain covenants,
including limitations on the ability of the
Company to: (i) incur certain liens; (ii) engage
in certain sale and lease-back transactions; or
(iii) engage in mergers, consolidations or
transfer or lease its assets substantially as an
entirety to another person. See "Description of
Notes--Certain Covenants of the Company."
Use of Proceeds ............ The Company will not receive any proceeds from
the Exchange Offers.
Registration Rights ........ Holders of Exchange Notes are not entitled to any
registration rights with respect to the Exchange
Notes. Pursuant to the Registration Rights
Agreement, McKesson agreed to file, at its
expense, a registration statement with respect to
the Exchange Offers. The Registration Statement
of which this Prospectus is a part constitutes
the registration statement for the Exchange
Offers. See "Description of Notes--Registration
Rights."
RISK FACTORS
Prospective holders of Exchange Notes should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate
the specific factors set forth under "Risk Factors" before making a decision to
tender their Private Notes in the Exchange Offers.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the captions "Risk Factors,"
"Financial Review," "The Company" and elsewhere in this Prospectus or in the
information incorporated by reference herein may constitute forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Certain of such forward-looking statements can be
identified by the use of forward-looking terminology such as, "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "estimates," or "anticipates" or the negative thereof or other
comparable terminology, or by discussions of strategy, plans or intentions.
Forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those projected. These include the
speed of integration of acquired businesses, continued competitive pressures,
success of strategic initiatives, the changing United States health care
environment and other factors discussed herein or incorporated by reference
herein.
9
<PAGE>
RISK FACTORS
Prospective holders of Exchange Notes should consider carefully all of the
information set forth in this Prospectus and, in particular, should evaluate
the following risks before making a decision to tender their Private Notes in
the Exchange Offers.
CONSEQUENCES OF FAILURE TO EXCHANGE AND REQUIREMENTS FOR TRANSFER OF EXCHANGE
NOTES
Holders of Private Notes who do not exchange their Private Notes for
corresponding Exchange Notes pursuant to the Exchange Offers will continue to
be subject to the provisions in the Indenture regarding transfer and exchange
of the Private Notes and the restrictions on transfer of such Private Notes as
set forth in the legend thereon as a consequence of the issuance of the
Private Notes pursuant to exemptions from, or in transactions not subject to,
the registration requirements of the Securities Act and applicable state
securities laws. In general, the Private Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate that it will
register Private Notes under the Securities Act. See "Description of Notes--
Registration Rights." To the extent that Private Notes are tendered and
accepted in the Exchange Offers, the trading market for the remaining
untendered Private Notes could be adversely affected. Based on existing
interpretations by the Staff, as set forth in several no-action letters to
third parties, and subject to the immediately following sentence, the Company
believes that Exchange Notes issued pursuant to the Exchange Offers in
exchange for Private Notes may be offered for resale, resold and otherwise
transferred by the holders thereof (other than holders who are broker-dealers)
without further compliance with the registration and prospectus delivery
provisions of the Securities Act. However, any purchaser of Private Notes who
is an affiliate of the Company or who intends to participate in the Exchange
Offers for the purpose of distributing the Exchange Notes, or any broker-
dealer who purchased the Private Notes from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, (i) will
not be able to rely on the interpretations of the Staff set forth in the
above-mentioned no-action letters, (ii) will not be entitled to tender its
Private Notes in the Exchange Offers and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Private Notes unless such sale or
transfer is made pursuant to an exemption from such requirements. The Company
does not intend to request the Commission to consider, and the Commission has
not considered, the Exchange Offers in the context of a no-action letter and
there can be no assurance that the Staff would make a similar determination
with respect to the Exchange Offers as in such other circumstances.
Each Holder of the Private Notes who wishes to exchange the Private Notes
for Exchange Notes in the Exchange Offers will be required to represent that
(i) it is not an affiliate of the Company, (ii) the Exchange Notes to be
received by it were acquired in the ordinary course of its business and (iii)
at the time of the Exchange Offers, it has no arrangement with any person to
participate in the distribution of the Exchange Notes. Each broker-dealer that
receives Exchange Notes for its own account pursuant to the Exchange Offers
must acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Notes. See "Plan of Distribution." The Letters of
Transmittal state that by so acknowledging and by delivering a Prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Private Notes acquired
by such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, ending on the close of business on
the 180th day following the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
EXCHANGE OFFERS PROCEDURES
Subject to the conditions set forth under "The Exchange Offers--Certain
Conditions to the Exchange Offers," delivery of Exchange Notes in exchange for
corresponding Private Notes tendered and accepted for exchange pursuant to the
Exchange Offers will be made only after timely receipt by the Exchange Agent
of (i) a
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Book-Entry Confirmation (as defined below) evidencing the tender of such
Private Notes through ATOP or (ii) certificates representing such Private
Notes, a properly completed and duly executed applicable Letter of
Transmittal, with any required signature guarantees, and all other required
documents. See "The Exchange Offers--Procedures for Tendering Private Notes."
Therefore, Holders of the Private Notes desiring to tender such Private Notes
in exchange for corresponding Exchange Notes should allow sufficient time to
ensure timely delivery. The Company is under no duty to give notification of
defects or irregularities with respect to tenders of Private Notes for
exchange. Private Notes that are not tendered or that are tendered but not
accepted by the Company for exchange will, following consummation of the
Exchange Offers, continue to be subject to the existing restrictions upon
transfer thereof under the Securities Act and, upon consummation of the
Exchange Offers, certain registration rights under the Registration Rights
Agreement will terminate.
RISKS GENERALLY ASSOCIATED WITH ACQUISITIONS
An element of the Company's growth strategy is to pursue strategic
acquisitions that either expand or complement its business, and McKesson
routinely reviews such potential acquisition opportunities. Acquisitions
involve a number of special risks, including the diversion of management's
attention to the assimilation of the operations from other business concerns,
difficulties in the integration of operations and systems, delays or
difficulties in opening and operating larger distribution centers in an
integrated distribution network, the assimilation and retention of the
personnel of the acquired companies, challenges in retaining the customers of
the combined businesses and potential adverse short-term effects on operating
results. In addition, the Company may require additional debt or equity
financing for future acquisitions, which may not be available on terms
favorable to the Company, if at all. The inability of the Company to
successfully finance, complete and integrate strategic acquisitions in a
timely manner could have an adverse impact on the Company's results of
operations and its ability to effect a portion of its growth strategy.
In September 1997, the Company entered into a merger agreement (the "Merger
Agreement") to acquire AmeriSource. On March 3, 1998, the U.S. Federal Trade
Commission (the "FTC") voted to block the proposed merger (the "Merger"). On
March 9, 1998, the FTC filed a complaint with the United States District Court
for the District of Columbia seeking a preliminary injunction to halt the
Merger. On March 18, 1998, McKesson and AmeriSource each announced that they
will oppose the FTC's motion for a preliminary injunction. A pre-trial hearing
on the matter is set for June 10, 1998. Although the Merger and the
transactions contemplated thereby have been approved by stockholders of both
companies, there can be no assurance that McKesson and AmeriSource will
prevail in their opposition to the FTC's request for a preliminary injunction,
that the Merger will be completed, or that it will be completed as
contemplated or what the results of the Merger might be.
CHANGING UNITED STATES HEALTH CARE ENVIRONMENT
In recent years, the health care industry has undergone significant change
driven by various efforts to reduce costs, including potential national health
care reform, trends toward managed care, cuts in Medicare, consolidation of
pharmaceutical and medical/surgical supply distributors and the development of
large, sophisticated purchasing groups. This industry is expected to continue
to undergo significant changes for the foreseeable future. Changes in
governmental support of health care services, the method by which such
services are delivered or the prices for such services, or other legislation
or regulations governing such services or mandated benefits, or changes in
pharmaceutical manufacturers' pricing or distribution policies, may have a
material adverse effect on the Company's results of operations.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
To the extent that Private Notes are tendered and accepted in the applicable
Exchange Offer, the trading market for the remaining untendered Private Notes
could be adversely affected. There is no existing trading market for the
Exchange Notes. Although Salomon Brothers Inc, BancAmerica Robertson Stephens
and J.P. Morgan Securities Inc. (collectively, the "Initial Purchasers") have
advised the Company that they currently intend to make a market in the
Exchange Notes, they are not obligated to do so and may discontinue such
market making at any time without
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<PAGE>
notice. In addition, such market making activity will be subject to the limits
imposed by the Securities Act and the Exchange Act. Accordingly, there can be
no assurance that any market for the Exchange Notes will develop, or, if one
does develop, that it will be maintained. If an active market for the Exchange
Notes fails to develop or be sustained, the trading price of the Exchange
Notes could be materially adversely affected. The Company does not intend to
apply for listing or quotation of the Exchange Notes on any securities
exchange, stock market or interdealer quotation system.
COMPUTER TECHNOLOGIES
McKesson relies heavily on computer technologies to operate its business.
McKesson has conducted an assessment of its computer systems and has begun to
make the changes necessary to make its computer systems Year 2000 compliant.
McKesson believes that with modifications to or replacements of its existing
computer-based systems, it will be Year 2000 compliant by March 31, 1999,
although the Company cannot provide any assurance in this regard. McKesson's
systems rely in part on the computer-based systems of its trading partners. As
part of the Company's assessment, an overview of certain of its trading
partners' Year 2000 compliance strategies is being performed and the Company
plans to conduct extensive systems testing with such trading partners during
calendar 1999. Nevertheless, if any trading partner or other entity upon which
they rely failed to become Year 2000 compliant, McKesson could be adversely
affected. The Company incurred approximately $7 million in fiscal 1998 and
expects to incur between $10 and $15 million in each of the next two fiscal
years in costs associated with modifications to the Company's existing systems
to make them Year 2000 compliant and related testing, including planned
testing with trading partners. Such costs are being expensed as incurred. Year
2000 project costs are difficult to estimate accurately and the projected cost
could change due to unanticipated technological difficulties, project vendor
delays and project vendor cost overruns.
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THE COMPANY
GENERAL
McKesson is the leading health care supply management company in North
America. The Company also develops and manages innovative marketing programs
for pharmaceutical manufacturers and, through McKesson Water Products Company
("Water Products"), processes and markets pure drinking water.
The Company's objective is to become the world leader in health care supply
and comprehensive pharmaceutical management across the entire supply chain,
from manufacturer to patient. In pursuit of this goal, the Company has
completed a number of acquisitions in its core health care business. Since
late 1995, the Company has acquired General Medical Inc. (now "McKesson
General Medical"), the nation's leading distributor of medical and surgical
supplies to the total acute care, physician care and extended care market, the
pharmaceutical distribution business of FoxMeyer Corporation ("FoxMeyer"),
Automated Healthcare, Inc. (now "McKesson Automated Healthcare, Inc."), a
manufacturer of automated pharmaceutical dispensing equipment for hospitals,
and Ogden BioServices Corporation (now "McKesson BioServices Corporation"), a
provider of support services to government and commercial organizations
engaged in pharmaceutical research and development. In addition, on September
23, 1997, the Company announced an agreement to acquire AmeriSource, a leading
distributor of pharmaceutical and related health care products and services.
However, the FTC is seeking a preliminary injunction to block the Merger.
The Company conducts its operations through two operating business segments
which generated annual sales in fiscal 1997 of $12.9 billion, approximately
98% of which were generated by the Health Care Services segment and
approximately 2% of which were generated primarily by Water Products. In
fiscal 1997, operating profits for the Health Care Services business and the
Water Products business were $92.8 million (including charges for
restructuring, asset impairment, write-off of in-process purchased technology
and other operating items of $140.0 million) and $34.6 million (including $7.0
million of charges for asset impairment), respectively.
The principal executive offices of the Company are located at McKesson
Plaza, One Post Street, San Francisco, California 94104, and the telephone
number is (415) 983-8300.
RECENT ACQUISITIONS AND DISPOSITIONS
McKesson has undertaken several initiatives in recent years to further focus
the Company on its core health care business:
. In September 1997, the Company signed a definitive merger agreement
providing for the Company to acquire AmeriSource.
. In March 1997, the Company disposed of Millbrook Distribution Services
Inc. ("Millbrook"), a non-health care business, for an amount on an
after-tax basis which approximated Millbrook's book value.
. In March 1997, the Company sold its Aqua-Vend vended water business
("Aqua-Vend"), a unit of Water Products.
. In February 1997, the Company acquired McKesson General Medical for
approximately $775 million.
. In December 1996, the Company disposed of its 55% equity interest in
Armor All Products Corporation ("Armor All"), a non-health care business.
. In November 1996, the Company acquired FoxMeyer out of bankruptcy for
approximately $598 million.
. In April 1996, the Company acquired McKesson Automated Healthcare, Inc.
for approximately $65 million.
. In December 1995, the Company acquired McKesson BioServices Corporation
for approximately $20 million.
McKESSON HEALTH CARE SERVICES
Through its Health Care Services segment, the Company is the leading
distributor of ethical and proprietary drugs and health and beauty care
products in North America, generating approximately 73% of the Company's
operating profits from continuing operations in fiscal 1997. U.S. health care
operations also include Healthcare
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Delivery Systems, Inc. ("HDS") and McKesson BioServices Corporation, through
which the Company provides marketing and other support services to
pharmaceutical manufacturers; McKesson Automated Healthcare, Inc., a business
that specializes in the manufacture and sale of automated pharmaceutical
dispensing systems for hospitals; Zee Medical, Inc., a distributor of first-
aid and safety products and supplies to industrial and commercial customers;
and McKesson General Medical, the nation's leading supplier of medical-
surgical supplies to the full range of alternate-site health care facilities,
including physicians and clinics (primary care), long-term care and home-care
sites (extended care), and the third largest distributor of medical-surgical
supplies to hospitals (acute care). International operations include Medis
Health and Pharmaceutical Services Inc. ("Medis"), a wholly-owned subsidiary
and the largest pharmaceutical distributor in Canada; and the Company's 22.7%
equity interest in Nadro, S.A. de C.V., the largest pharmaceutical distributor
in Mexico.
The Company's domestic distribution operations supply pharmaceuticals and
health and beauty care products to independent and chain pharmacies,
hospitals, alternate-site health care facilities, food stores and mass
merchandisers in all fifty states. Using the names Economost(R) and
Econolink(R) and a number of related service marks, the Company has promoted
electronic order entry systems and a wide range of computerized merchandising
and asset management services for pharmaceutical retailers and hospitals. The
Company also supplies computer-based practice management systems to
pharmaceutical retailers. The Company believes that its financial strength,
purchasing leverage, nationwide network of distribution centers, and advanced
logistics and information technologies provide competitive advantages to its
pharmaceutical distribution operations.
Health Care Services serves three primary customer segments: institutional
providers (including hospitals, health care facilities and pharmacy service
operators), retail independent pharmacies and retail chains which represented
approximately 32%, 35% and 33%, respectively, of U.S. Health Care Services
revenues in the third fiscal quarter of 1998.
Health Care Services has been organized into three groups to address the
specific needs of the Company's key market segments and the pharmaceutical
manufacturers: McKesson Health Systems Group, McKesson Pharmaceutical Services
and International Group, and McKesson Customer Operations Group.
McKESSON HEALTH SYSTEMS GROUP. McKesson Health Systems Group comprises
McKesson Health Systems, McKesson General Medical, and McKesson Automated
Healthcare Inc. These three business units provide distribution services for
pharmaceuticals, medical and surgical products, automated technologies, and
related logistics and management information systems support to the
institutional market, which includes hospitals, alternate-site providers, and
integrated health networks. The McKesson Health Systems unit serves the
pharmaceutical and supply management needs of hospitals, health care
organizations, and integrated health networks. McKesson General Medical
provides medical-surgical supply management across the continuum of care,
including acute care, primary care and extended care. McKesson Automated
Healthcare, Inc. manufactures and markets automated pharmacy systems,
including the RxOBOT(TM) system, a robotic pharmacy dispensing and utilization
tracking system that enables hospitals to lower pharmacy costs while
significantly improving the accuracy of pharmaceutical dispensing.
McKESSON PHARMACEUTICAL SERVICES AND INTERNATIONAL GROUP. McKesson
Pharmaceutical Services and International Group combines the Company's
pharmaceutical procurement and product management functions in a single group
that is focused on (i) helping manufacturers meet their marketing goals and
(ii) creating affiliation programs and information technologies for the
Company's retail customers. The linkage of these functions allows the Company
to enhance the flow of pharmaceutical products from manufacturers to retailers
to patients through advanced marketing programs and information services,
including the Valu-Rite(R), Valu-Rite/CareMaxSM and Health Mart(R) retail
networks, the OmniLink(R) centralized pharmacy technology platform, which
offers streamlined transaction processing through OmniLink's connectivity with
managed care organizations while promoting compliance with managed care plans,
and Pay$ystems, which provides 24-hour advanced funding of third-party
reimbursements. The group includes HDS, which performs specialized logistics
and patient services for manufacturers, and McKesson BioServices Corporation,
which provides biomedical support services to the pharmaceutical and
biotechnology industries, the U.S. Government, universities and institutions,
and contract research organizations. Also included in this group is Medis, the
largest pharmaceutical distributor in Canada.
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McKESSON CUSTOMER OPERATIONS GROUP. McKesson Customer Operations Group
comprises the Company's pharmaceutical distribution operations and retail
pharmacy sales and service, addressing the needs of independent pharmacies,
retail pharmacy chains, food stores and mass merchandisers. The Company is in
the process of implementing its Acumax(R) Plus warehouse management system in
its pharmaceutical distribution centers, providing real-time inventory
statistics and tracking product from the receiving dock to shipping through
scanned bar-code information with accuracy levels of more than 99%. This
ensures that the right product arrives at the right time and place for both
the Company's customers and their patients.
McKESSON WATER PRODUCTS COMPANY
Water Products is a leading provider in the $3.4 billion bottled water
industry in the United States. It is one of the largest bottled water
companies in most of the geographic markets in which it competes. In fiscal
1997, Water Products generated $34.6 million in pretax operating profit, and
its operating margin was 13%. Water Products is primarily engaged in the
processing and sale of bottled drinking water delivered to more than 530,000
homes and businesses under its Sparkletts(R), Alhambra(R), and Crystal(TM)
brands in California, Arizona, Nevada, Oklahoma, Washington, Texas and New
Mexico. It also sells packaged water through retail stores.
AMERISOURCE MERGER AGREEMENT
On September 23, 1997, the Company and AmeriSource announced the execution
of a definitive Merger Agreement providing for the Company to acquire
AmeriSource. On March 3, 1998, the FTC voted to block the proposed Merger. On
March 9, 1998, the FTC filed a complaint with the United States District Court
for the District of Columbia seeking a preliminary injunction to halt the
Merger. On March 18, 1998, McKesson and AmeriSource each announced that they
will oppose the FTC's motion for preliminary injunction. A pre-trial hearing
on the matter is set for June 10, 1998. Although the Merger and the
transactions contemplated thereby have been approved by stockholders of both
companies, there can be no assurance that McKesson and AmeriSource will
prevail in their opposition to the FTC's request for a preliminary injunction,
that the Merger will be completed, or that it will be completed as
contemplated or what the results of the Merger might be.
Under the terms of the Merger Agreement, stockholders of AmeriSource would
receive a fixed exchange ratio of 1.42 shares of McKesson Common Stock for
each share of AmeriSource common stock. The Company would issue up to 36.4
million new shares of Common Stock in the Merger, and would assume the long-
term debt of AmeriSource which was approximately $781.0 million at December
31, 1997. The merger of the two companies has been structured as a tax-free
transaction and would be accounted for as a pooling of interests. The combined
company would operate under the McKesson name and would be headquartered in
San Francisco. Upon completion of the Merger, R. David Yost, currently
president and chief executive officer of AmeriSource, would become group
president of the AmeriSource Services Group and a McKesson corporate vice
president. Also upon completion of the Merger, McKesson's board of directors
would be expanded from nine to twelve members, which would include Mr. Yost
and two other directors from the current AmeriSource board.
AmeriSource has reported that it is one of the nation's top three
distributors in serving the hospital and managed care market segment and the
fourth largest full-service wholesale distributor of pharmaceutical products
and related health care services in the United States. AmeriSource is a
publicly traded company for which certain information is available. See
"Available Information."
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
as described in this Prospectus, the Company will receive tendered Private
Notes in like principal amount, the terms of which are identical in all
material respect to those of the Exchange Notes. The Private Notes surrendered
in exchange for the Exchange Notes will be retired and cancelled and cannot be
reissued. Accordingly, the issuance of the Exchange Notes will not result in
any change in the indebtedness of the Company.
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RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges was computed by dividing fixed
charges (interest expense including the interest portion of capital and
operating leases) into earnings available for fixed charges (income from
continuing operations plus income taxes and fixed charges). The December 31,
1996 and fiscal 1995 ratios of earnings to fixed charges were less than 1.0x,
0.43x and (0.01x), respectively and the deficiencies amounted to $23.2 million
and $53.5 million, respectively.
The following table sets forth the ratios of earnings to fixed charges for
the Company for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31, FISCAL YEAR ENDED MARCH 31,
------------------ ----------------------------
1997 1996 1997 1996 1995 1994 1993
--------- -------- ----- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges...................... 3.26x -- 1.55x 4.71x -- 3.42x 2.97x
</TABLE>
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THE EXCHANGE OFFERS
PURPOSE OF THE EXCHANGE OFFERS
The Private Notes were sold by the Company on the Closing Date to the
Initial Purchasers, pursuant to a Purchase Agreement entered into by the
Company and the Initial Purchasers on February 19, 1998 (the "Purchase
Agreement"). The Initial Purchasers subsequently sold the Private Notes to
"qualified institutional buyers," as defined in Rule 144A, in reliance on Rule
144A. As a condition to the sale of the Private Notes, the Company and the
Initial Purchasers entered into the Registration Rights Agreement on February
24, 1998 (the "Registration Rights Agreement"). Pursuant to the Registration
Rights Agreement, the Company agreed that, unless the Exchange Offers are not
permitted by applicable law or Commission policy, it would file with the
Commission a registration statement under the Securities Act with respect to
the Exchange Notes and use its reasonable efforts to cause such registration
statement to become effective under the Securities Act within 180 days after
the Closing Date. A copy of the Registration Rights Agreement has been filed
as an exhibit to the Registration Statement. The Registration Statement is
intended to satisfy certain of the Company's obligations under the
Registration Rights Agreement and the Purchase Agreement.
TERMS OF THE EXCHANGE OFFERS
Promptly after the Registration Statement has been declared effective, the
Company will offer Exchange Notes in exchange for surrender of the
corresponding Private Notes. The Company will keep the Exchange Offers open
for not less than 30 calendar days (or longer if required by applicable law)
after the date on which notice of the Exchange Offers is mailed to the holders
of the Private Notes. For each Private Note validly tendered to the Company
pursuant to the Exchange Offers and not withdrawn by the Holder thereof, the
Holder of such Private Note will receive a corresponding Exchange Note having
a principal amount equal to the principal amount of such surrendered Private
Note. The Exchange Notes will bear interest from the most recent date to which
interest has been paid on the applicable Private Notes or, if no interest has
been paid, from February 24, 1998. Accordingly, if the relevant record date
for interest payment occurs after the consummation of the applicable Exchange
Offer registered holders of such Exchange Notes on such record date will
receive interest accruing from the most recent date to which interest has been
paid or, if no interest has been paid, from February 24, 1998. If, however,
the relevant record date for interest payment occurs prior to the consummation
of the applicable Exchange Offer registered holders of such Private Notes on
such record date will receive interest accruing from the most recent date to
which interest has been paid or, if no interest has been paid, from February
24, 1998. Holders of Private Notes whose Private Notes are accepted for
exchange will not receive any payment in respect of accrued interest on such
Private Notes otherwise payable on any interest payment date the record date
for which occurs on or after consummation of the Exchange Offers. The Exchange
Notes evidence the same debt as the corresponding Private Notes and are issued
under and are entitled to the same benefits under the Indenture as the Private
Notes.
In the event that (i) the Company is permitted under the law and currently
prevailing interpretations of the Commission's staff to effect the Exchange
Offers and the Registration Statement is not declared effective on or prior to
the 180th day following the Closing Date, (ii) either of the Exchange Offers
are not consummated and the applicable Shelf Registration Statement (as
defined herein) is not declared effective on or prior to the 225th day
following the Closing Date or (iii) after a Shelf Registration Statement is
declared effective, it thereafter ceases to be effective or the Shelf
Registration Statement or the related Prospectus ceases to be usable in
connection with resales of Private Notes or Exchange Notes, as the case may
be, covered by such Shelf Registration Statement for the period specified in
the Registration Rights Agreement due to certain circumstances (each such
event referred to in clauses (i) through (iii) above a "Registration
Default"), then the Company will pay to each Holder of any applicable Private
Notes, accruing from and including the next day following such Registration
Default (or if such Registration Default has been cured, from and including
the next day following the next Registration Default), liquidated damages in
an amount equal to 0.25% per annum of the principal amount of the Private
Notes held by such Holder, which provision for liquidated damages will
continue until such Registration Default has been cured. Any amounts of
Liquidated Damages due pursuant to the foregoing paragraphs will be payable in
cash on March 1 and September 1 of each year to the holders of record on the
preceding February 15 and August 15, respectively.
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PERIOD FOR TENDERING PRIVATE NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying applicable Letter of Transmittal (which together
constitute the Exchange Offers), the Company will accept for exchange Private
Notes which are properly tendered on or prior to the Expiration Date and not
withdrawn as permitted below. As used herein, the term "Expiration Date" means
5:00 p.m., New York City time, on May , 1998; provided, however, that if the
Company, in its sole discretion, has extended the period of time for which any
of the Exchange Offers are open, the term "Expiration Date" means the latest
time and date to which the applicable Exchange Offer is extended.
As of the date of this Prospectus, $150,000,000 aggregate principal amount
of the Private Notes due 2005 and $150,000,000 aggregate principal amount of
the Private Notes due 2008 are outstanding. This Prospectus, together with the
applicable Letter of Transmittal, is first being sent on or about April ,
1998, to all holders of Private Notes known to the Company. The Company's
obligation to accept Private Notes for exchange pursuant to the Exchange
Offers are subject to certain conditions as set forth below under "--Certain
Conditions to the Exchange Offers."
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which any of the Exchange Offers are open,
and thereby delay acceptance for exchange of any Private Notes, by giving oral
or written notice of such extension to the Holders thereof as described below.
During any such extension, all Private Notes previously tendered will remain
subject to the Exchange Offers and may be accepted for exchange by the
Company. Any Private Notes not accepted for exchange for any reason will be
returned without expense to the tendering Holder thereof as promptly as
practicable after the expiration or termination of the applicable Exchange
Offer.
Private Notes tendered in the Exchange Offers must be in integral multiples
of $1,000.
The Company expressly reserves the right (i) to terminate any or all of the
Exchange Offers, and not to accept for exchange any Private Notes not
therefore accepted for exchange, upon the occurrence of any of the events
specified below under "--Certain Conditions to the Exchange Offers" and
(ii) to amend any or all of the Exchange Offers. The Company will give oral or
written notice of any extension, amendment, non-acceptance or termination to
the Holders of the Private Notes as promptly as practicable, such notice in
the case of any extension to be issued by means of a press release or other
public announcement no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING PRIVATE NOTES
The tender to the Company of Private Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
applicable Letter of Transmittal.
Book-Entry Transfer. For purposes of the Exchange Offers, the Exchange Agent
will establish an account with respect to the Private Notes at DTC within two
business days after the date of this Prospectus. Any tendering financial
institution that is a participant in DTC's book-entry transfer facility system
must make a book-entry delivery of the Private Notes by causing DTC to
transfer such Private Notes into the Exchange Agent's account at DTC in
accordance with DTC's ATOP procedure for transfers. Such holder of Private
Notes using ATOP should transmit its acceptance to DTC on or prior to the
Expiration Date (or comply with the guaranteed delivery procedures set forth
below). DTC will verify such acceptance, execute a book-entry transfer of the
tendered Private Notes into the Exchange Agent's account at DTC and then send
to the Exchange Agent confirmation of such book-entry transfer, including an
agent's message confirming that DTC has received an express acknowledgment
from such holder that such holder has received and agrees to be bound by the
applicable Letter of Transmittal and that the Company may enforce the
applicable Letter of Transmittal against such holder (a "Book-Entry
Confirmation").
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A beneficial owner of Private Notes that are held by or registered in the
name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial owner
wishes to participate in the Exchange Offers.
Certificates. If the tender is not made through ATOP, certificates
representing Private Notes, as well as the applicable Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any
required signature guarantees, and any other documents required by the
applicable Letter of Transmittal, must be received by the Exchange Agent at
its address set forth under "--Exchange Agent" on or prior to the Expiration
Date in order for such tender to be effective (or the guaranteed delivery
procedures set forth below must be complied with).
If less than all of the Private Notes are tendered, a tendering holder
should fill in the amount of Private Notes being tendered in the appropriate
box on the applicable Letter of Transmittal. The entire amount of Private
Notes delivered to the Exchange Agent will be deemed to have been tendered
unless otherwise indicated.
THE METHOD OF DELIVERY OF PRIVATE NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR PRIVATE
NOTES SHOULD BE SENT TO THE COMPANY.
Signature Guarantees. Signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed unless the Private Notes
surrendered for exchange pursuant thereto are tendered (i) by a registered
holder of the Private Notes who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on such Letter of
Transmittal or (ii) for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is
a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution" and, collectively,
"Eligible Institutions"). In the event that signatures on a Letter of
Transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, such guarantees must be by an Eligible Institution. If Private
Notes are registered in the name of a person other than a signer of a Letter
of Transmittal, the Private Notes surrendered for exchange must be endorsed
by, or be accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by the Company in its sole
discretion, duly executed by, the registered Holder with the signature thereon
guaranteed by an Eligible Institution.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of Private Notes
tendered for exchange will be determined by the Company in its sole
discretion, which determination shall be final and binding. The Company
reserves the absolute right to reject any and all tenders of any particular
Private Notes not properly tendered or to not accept any particular Private
Notes which acceptance might, in the judgment of the Company or its counsel,
be unlawful. The Company also reserves the absolute right to waive any defects
or irregularities or conditions of the Exchange Offers as to any particular
Private Notes either before or after the Expiration Date (including the right
to waive the ineligibility of any Holder who seeks to tender Private Notes in
the Exchange Offers). The interpretation of the terms and conditions of the
Exchange Offers as to any particular Private Notes either before or after the
Expiration Date (including the applicable Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of Private Notes for exchange must be cured within such reasonable
period of time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of
Private Notes for exchange, nor shall any of them incur any liability for
failure to give such notification.
If a Letter of Transmittal is signed by a person or persons other than the
registered holder or holders of Private Notes, such Private Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case
signed exactly as the name or names of the registered holder or holders that
appear on the Private Notes.
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If a Letter of Transmittal or any Private Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
By tendering, each Holder of the Private Notes will represent to the Company
that, among other things, (i) it is not an affiliate of the Company, (ii) the
Exchange Notes to be received by it were acquired in the ordinary course of
its business and (iii) at the time of the Exchange Offers, it has no
arrangement with any person to participate in the distribution of the Exchange
Notes. If any Holder is an affiliate of the Company or intends to participate
in the Exchange Offers for the purpose of distributing the Exchange Notes, or
any broker-dealer who purchased the Private Notes from the Company to resell
pursuant to Rule 144A or any other available exemption under the Securities
Act, (i) will not be able to rely on the interpretations of the Staff set
forth in the above-mentioned no-action letters, (ii) will not be entitled to
tender its Private Notes in the Exchange Offers and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Private Notes unless such sale or
transfer is made pursuant to an exemption from such requirements. Each broker-
dealer that receives Exchange Notes for its own account in exchange for
Private Notes, where such Private Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities, must
acknowledge that it will deliver a Prospectus in connection with any resale of
such Exchange Notes. See "Plan of Distribution." Each Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
ACCEPTANCE OF PRIVATE NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the applicable
Exchange Offers, the Company will accept, promptly after the applicable
Expiration Date, all applicable Private Notes properly tendered and will issue
the applicable Exchange Notes promptly after acceptance of such Private Notes.
See "--Certain Conditions to the Exchange Offers." For purposes of the
Exchange Offers, the Company shall be deemed to have accepted properly
tendered Private Notes for exchange when, as and if the Company has given oral
or written notice thereof to the Exchange Agent, with written confirmation of
any oral notice to be given promptly thereafter.
In all cases, issuance of Exchange Notes for Private Notes that are accepted
for exchange pursuant to the Exchange Offers will be made only after timely
receipt by the Exchange Agent of (i) a Book-Entry Confirmation with respect to
such Private Notes or (ii) certificates for such Private Notes and a properly
completed and duly executed applicable Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and all other required
documents. If any tendered Private Notes are not accepted for any reason set
forth in the terms and conditions of the Exchange Offers or if Private Notes
are submitted for a greater principal amount than the holder desired to
exchange, such unaccepted or non-exchanged Private Notes will be returned
without expense to the tendering holder thereof (or, in the case of Private
Notes tendered by book-entry transfer into the Exchange Agent's account at DTC
pursuant to the book-entry procedures described above, such non-exchanged
Private Notes will be credited to an account maintained with DTC) as promptly
as practicable after the expiration or termination of the applicable Exchange
Offer.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Private Notes desires to tender such Private
Notes and the Private Notes are not immediately available, or time will not
permit such holder's Private Notes or other required documents to reach the
Exchange Agent before the applicable Expiration Date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made by or through an Eligible Institution, (ii)
prior to the applicable Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
telegram, telex, facsimile transmission, mail or hand delivery), setting forth
the name and address of the holder of Private Notes and the amount of Private
Notes tendered, stating that the tender
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is being made thereby and guaranteeing that within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Private Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the applicable Letter of Transmittal will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) (a) a Book-
Entry Confirmation or (b) the certificates for all physically tendered Private
Notes, in proper form for transfer, and a duly executed applicable Letter of
Transmittal (or facsimile thereof) with any required signature guarantees, and
all other documents required by such Letter of Transmittal, are received by
the Exchange Agent within three NYSE trading days after the date of execution
of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Private Notes may be withdrawn at any time prior to the
applicable Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by telegram, facsimile transaction (receipt confirmed by telephone)
or letter to the Exchange Agent at its address as set forth below under "--
Exchange Agent" on or prior to the applicable Expiration Date. Any such notice
of withdrawal must specify the name of the person having tendered the Private
Notes to be withdrawn, identify the Private Notes to be withdrawn (including
the series and the principal amount of such Private Notes), and (where
certificates for Private Notes have been transmitted) specify the name in
which such Private Notes are registered, if different from that of the
withdrawing holder. If certificates for Private Notes have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the certificate numbers
of the particular certificates to be withdrawn and signed notice of withdrawal
with signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Private Notes have been tendered pursuant to the
procedure for book entry transfer described above, any notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawn Private Notes and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Private Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offers. Any Private Notes which have been tendered
for exchange but which are not exchanged for any reason will be returned to
the Holder thereof without cost to such Holder (or, in the case of Private
Notes tendered by book-entry transfer into the Exchange Agent's account at DTC
pursuant to the book-entry transfer procedures described above, such Private
Notes will be credited to an account maintained with DTC for the Private
Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the applicable Exchange Offer. Properly withdrawn Private Notes
may be retendered by following one of the procedures described under "--
Procedures for Tendering Private Notes" above at any time on or prior to the
applicable Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFERS
Notwithstanding any other provision of the applicable Exchange Offer, the
Company shall not be required to accept for exchange, or to issue Exchange
Notes in exchange for, any applicable Private Notes and may terminate the
applicable Exchange Offer, if at any time before the acceptance of such
Private Notes for exchange or the exchange of the applicable Exchange Notes
for such Private Notes, any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order of decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission with respect to the
applicable Exchange Offer; or
(b) such acceptance or issuance would violate applicable law or any
applicable interpretation of the Staff of the Commission; or
(c) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by any governmental agency or authority which may adversely affect the
ability of the Company to complete the transactions contemplated by any of
the Exchange Offers, (iii) a declaration of a banking moratorium or
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any suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving
the United States, or, in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offers, a material acceleration or
worsening thereof; or
(d) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company and its subsidiaries taken as a whole that, in the
sole judgment of the Company, is or may be adverse to the Company, or the
Company shall have become aware of facts that, in the sole judgment of the
Company, have or may have adverse significance with respect to the value of
any of the Private Notes or the Exchange Notes;
which in the sole judgment of the Company in any case, and regardless of the
circumstances (including any action by the Company) giving rise to any event
described above, prohibits the Company from or makes it inadvisable for the
Company to proceed with any of the Exchange Offers and/or with such acceptance
for exchange or with such exchange.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Private Notes
tendered, and no Exchange Notes will be issued in exchange for any such
Private Notes, if at such time any stop order shall be threatened or in effect
with respect to the Registration Statement or the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended (the "TIA").
EXCHANGE AGENT
The First National Bank of Chicago has been appointed as the Exchange Agent
for the Exchange Offers. All executed Letters of Transmittal should be
directed to the Exchange Agent as set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the
applicable Letter of Transmittal and requests for Notices of Guaranteed
Delivery should be directed to the Exchange Agent addressed as follows:
By Mail: By Hand or Overnight Delivery:
(Registered or Certified Mail
recommended)
The First National Bank of Chicago The First National Bank of Chicago
c/o First Chicago Trust c/o First Chicago Trust
Company of New York Company of New York
14 Wall Street 14 Wall Street
8th Floor, Window 2 8th Floor, Window 2
New York, New York 10005 New York, New York 10005
Facsimile Transmissions:
(Eligible Institutions Only)
(212) 240-8938
To Confirm by Telephone
or for Information Call:
(212) 240-8801
DELIVERY OF LETTERS OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
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FEES AND EXPENSES
The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offers.
The Company will pay certain other expenses to be incurred in connection
with the Exchange Offers, including the fees and expenses of the Exchange
Agent, accounting and certain legal fees.
TRANSFER TAXES
Holders who tender their Private Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that Holders who
instruct the Company to register Exchange Notes in the name of, or request
that Private Notes not tendered or not accepted in the Exchange Offers be
returned to, a person other than the registered tendering Holder will be
responsible for the payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Private Notes who do not exchange their Private Notes for the
corresponding Exchange Notes pursuant to the Exchange Offers will continue to
be subject to the provisions in the Indenture regarding transfer and exchange
of the Private Notes and the restrictions on transfer of such Private Notes as
set forth in the legend thereon as a consequence of the issuance of the
Private Notes pursuant to exemptions from, or in transactions not subject to,
the registration requirements of the Securities Act and applicable state
securities laws. In general, the Private Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. The Company does not currently anticipate that it will
register Private Notes under the Securities Act. See "Description of the
Notes--Registration Rights." To the extent that Private Notes are tendered and
accepted in the Exchange Offers, the trading market for the remaining
untendered Private Notes could be adversely affected. Issuance of the Exchange
Notes in exchange for Private Notes pursuant to the Exchange Offers will be
made only after timely receipt by the Exchange Agent of (i) a Book-Entry
Confirmation with respect to such Private Notes or (ii) certificates for such
Private Notes and a properly completed and duly executed applicable Letter of
Transmittal (or facsimile thereof), with any required signature guarantees and
all other required documents. Therefore, Holders of the Private Notes desiring
to tender such Private Notes in exchange for corresponding Exchange Notes
should allow sufficient time to ensure timely delivery. The Company is under
no duty to give notification of defects or irregularities with respect to
tenders of Private Notes for exchange. Private Notes that are not tendered or
that are tendered but not accepted by the Company for exchange will, following
consummation of the applicable Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof under the Securities Act and, upon
consummation of the applicable Exchange Offer, certain registration rights
under the Registration Rights Agreement will terminate.
Based on existing interpretations by the Staff, as set forth in several no-
action letters to third parties, and subject to the immediately following
sentence, the Company believes that Exchange Notes issued pursuant to the
Exchange Offers in exchange for Private Notes may be offered for resale,
resold and otherwise transferred by the holders thereof (other than holders
who are broker-dealers) without further compliance with the registration and
prospectus delivery provisions of the Securities Act. However, any purchaser
of Private Notes who is an affiliate of the Company or who intends to
participate in the Exchange Offers for the purpose of distributing the
Exchange Notes, or any broker-dealer who purchased the Private Notes from the
Company to resell pursuant to Rule 144A or any other available exemption under
the Securities Act, (i) will not be able to rely on the interpretations of the
Staff set forth in the above-mentioned no-action letters, (ii) will not be
entitled to tender its Private Notes in the Exchange Offers and (iii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of the Private Notes
unless such sale or transfer is made pursuant to an exemption from such
requirements. The Company does not intend to request the Commission to
consider, and the Commission has not considered, the Exchange Offers in the
context of a no-action letter and there can be no assurance that the Staff
would make a similar determination with respect to the Exchange Offers as in
such other circumstances.
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Each Holder of the Private Notes who wishes to exchange the Private Notes
for Exchange Notes in the Exchange Offers will be required to represent that
(i) it is not an affiliate of the Company, (ii) the Exchange Notes to be
received by it were acquired in the ordinary course of its business and (iii)
at the time of the Exchange Offers, it has no arrangement with any person to
participate in the distribution of the Exchange Notes. Each broker-dealer that
receives Exchange Notes for its own account in exchange for Private Notes,
where such Private Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
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DESCRIPTION OF NOTES
The Private Notes were issued and the Exchange Notes will be issued pursuant
to an Indenture, dated as of March 11, 1997 (the "Indenture") between the
Company and The First National Bank of Chicago, as trustee (the "Trustee"), a
copy of which is filed as an exhibit to the Registration Statement of which
this Prospectus constitutes a part. Upon the effectiveness of the Registration
Statement, the Indenture will be subject to and governed by the TIA. The
Private Notes and the Exchange Notes are treated as two series of Notes under
the Indenture and holders thereof are entitled to the benefit of the
Indenture. Accordingly, unless specifically stated to the contrary, the
following description applies equally to all Notes. The following summary of
certain provisions of the Indenture and the Notes does not purport to be
complete and such summary is subject to the detailed provisions of the
Indenture to which reference is hereby made for a full description of such
provisions, including the definition of certain terms used herein, and for
other information regarding the Notes. Wherever particular sections or defined
terms of the Indenture are referred to, such sections or defined terms are
incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by such reference. As used under this
caption, the term "Company" means McKesson Corporation and not any of its
subsidiaries unless otherwise expressly stated or the context otherwise
requires. The forms and terms of the Exchange Notes and the corresponding
Private Notes are identical in all material respects, except for certain
transfer restrictions and registration rights relating to the Private Notes
and except that Holders of Private Notes of Exchange Offers that have not been
consummated by October 7, 1998 will be entitled to liquidated damages in an
amount equal to 0.25% per annum on the Private Notes held by such Holders.
Liquidated damages, if any, will accrue from and including October 8, 1998 and
will cease to accrue from the consummation of the applicable Exchange Offer.
GENERAL
The Exchange Notes due 2005 will be unsecured, unsubordinated obligations of
the Company limited in aggregate principal amount to $150 million and will
mature on March 1, 2005. The Exchange Notes due 2008 will be unsecured,
unsubordinated obligations of the Company limited in aggregate principal
amount to $150 million and will mature on March 1, 2008.
Payment of the principal of and interest on the Exchange Notes will rank
pari passu with all other unsecured, unsubordinated debt of the Company. The
Exchange Notes due 2005 and the Exchange Notes due 2008 will be redeemable in
whole or in part at any time at the option of the Company. See "--Optional
Redemption." The Exchange Notes will not be entitled to the benefit of any
mandatory redemption or sinking fund. The Indenture does not limit the amount
of additional indebtedness the Company or any of its subsidiaries may incur.
The Indenture does not limit the amount of notes, debentures or other
evidences of indebtedness ("Debt Securities") that the Company may issue
thereunder and provides that Debt Securities may be issued from time to time
in one or more series. As of the date of this Prospectus, $525 million of Debt
Securities were outstanding under the Indenture in addition to the Private
Notes.
The Exchange Notes will bear interest from February 24, 1998 at the
respective rates per annum set forth on the cover page of this Prospectus and
such interest will be payable semiannually in arrears on March 1 and September
1 of each year, commencing on September 1, 1998, to the persons in whose names
the Exchange Notes are registered at the close of business on the immediately
preceding February 15 and August 15, respectively. Interest on the Exchange
Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from February 24, 1998. Principal of,
premium, if any, and interest on the Exchange Notes will be payable, and the
transfer of Exchange Notes will be registrable, at the office or agency of the
Company to be maintained for such purpose in the Borough of Manhattan, The
City of New York, except that, at the option of the Company, interest may be
paid by mailing a check to the address of the person entitled thereto as it
appears on the Exchange Notes register. Exchange Notes may be presented for
exchange at the corporate trust offices of the Trustee. Such services will be
provided without charge, other than any tax or other governmental charge
payable in connection therewith, but subject to the limitations provided in
the Indenture.
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Interest on the Exchange Notes will be computed on the basis of a 360-day
year comprised of twelve 30-day months. The amount of interest payable for any
period shorter than a full semi-annual period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which principal, premium, if any, or
interest is payable on the Exchange Notes is not a Business Day (as defined in
the Indenture), then payment of the principal, premium, if any, or interest
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay). The Exchange Notes will be issued in integral multiples of $1,000.
For each Private Note accepted for exchange, the holder of such Private Note
will receive a corresponding Exchange Note having a principal amount equal to
that of the surrendered Private Note.
BOOK ENTRY; DELIVERY AND FORM
The certificates representing the Exchange Notes will be issued in fully
registered form. Except as set forth below, the Exchange Notes will be
deposited with, or on behalf of, DTC, and registered in the name of Cede & Co.
("Cede"), as DTC's nominee in the form of one or more global Exchange Note
certificates (the "Global Securities") for each of the Exchange Notes due 2005
and the Exchange Notes due 2008, respectively.
Except as set forth below, the record ownership of any Global Security may
be transferred, in whole or in part, only to DTC, another nominee of DTC or to
a successor of DTC or its nominee. Investors may hold their interests in any
of the Global Securities directly through DTC, or indirectly through
organizations which are participants in DTC ("Participants"). Transfers
between Participants will be effected in the ordinary way in accordance with
DTC rules and will be settled in immediately available funds.
Investors who are not Participants may beneficially own interests in a
Global Security held by DTC only through Participants, including certain
banks, brokers, dealers, trust companies and other parties that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly, and have indirect access to the DTC system ("Indirect
Participants"). So long as Cede, as the nominee of DTC, is the registered
owner of any Global Security, Cede for all purposes will be considered the
sole holder of such Global Security. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have
certificates registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form, and will not be
considered the holder thereof.
Neither McKesson nor the Trustee (nor any registrar or paying agent) will
have any responsibility for the performance by DTC or its Participants or
Indirect Participants of its obligations under the rules and procedures
governing, its operations. DTC has advised McKesson that it will take any
action permitted to be taken by a holder of Exchange Notes only at the
direction of one or more Participants whose accounts are credited with DTC
interests in a Global Security.
DTC has advised McKesson as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions, such as transfers and pledges, among Participants
in deposited securities through electronic book-entry changes to accounts of
its Participants, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
Certain of such Participants (or their representatives), together with other
entities, own DTC. The Rules applicable to DTC and its Participants are on
file with the Commission.
Purchases of Exchange Notes under the DTC system must be made by or through
Participants, which will receive a credit for the Exchange Notes on DTC's
records. The ownership interest of each actual purchaser of each Exchange Note
(a "Beneficial Owner") is in turn to be recorded on the Participants and
Indirect
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Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Participant or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Exchange Notes are to be accomplished
by entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Exchange Notes, except in the event that use of the
book-entry system for the Exchange Notes is discontinued.
The deposit of Exchange Notes with DTC and their registration in the name of
Cede effect no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Exchange Notes; DTC's records reflect only the
identity of the Participants to whose accounts such Exchange Notes are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in each Global Security.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time. Redemption notices shall be sent to Cede. If less than all of
the Exchange Notes due 2005 or the Exchange Notes due 2008 are being redeemed,
DTC's practice is to determine by lot the interest of each Participant in such
Exchange Notes to be redeemed.
Principal and interest payments on the Exchange Notes will be made to DTC by
wire transfer of immediately available funds. DTC's practice is to credit
Participants' accounts on the payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the payable date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers
in bearer form or registered in "street name," and will be the responsibility
of such Participant and not of DTC or McKesson, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of McKesson, disbursement
of such payments to Participants shall be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners shall be the
responsibility of Participants and Indirect Participants. Neither McKesson nor
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Certificated Notes. DTC may discontinue providing its services as securities
depositary with respect to the Exchange Notes at any time by giving reasonable
notice to McKesson. In the event that DTC notifies McKesson that it is
unwilling or unable to continue as depositary for any Global Security or if at
any time DTC ceases to be a clearing agency registered as such under the
Exchange Act when DTC is required to be so registered to act as such
depositary and no successor depositary shall have been appointed within 90
days of such notification or of McKesson becoming aware of DTC's ceasing to be
so registered, as the case may be, certificates for the relevant Exchange
Notes will be printed and delivered in exchange for interests in such Global
Security. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for relevant Exchange Notes registered in such
names as DTC shall direct. It is expected that such instructions will be based
upon directions received by DTC from its Participants with respect to
ownership of beneficial interests in such Global Security.
McKesson may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event,
certificates representing the Exchange Notes will be printed and delivered.
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that McKesson believes to be reliable, but
McKesson does not take responsibility for the accuracy thereof.
OPTIONAL REDEMPTION
The Exchange Notes will be redeemable as a whole or in part, at the option
of the Company, at any time at a redemption price equal to the greater of (i)
100% of their principal amount and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted to
the date of redemption on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the applicable Treasury Yield plus 10
basis points for each series of Exchange Notes, plus in each case accrued
interest to the date of redemption.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the applicable
Comparable Treasury Issue, assuming a price for the applicable Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to
the applicable Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term of the Exchange Notes due 2005 or Exchange Notes due
2008, as applicable, that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Exchange Notes due 2005 or Exchange Notes due 2008, as applicable.
"Independent Investment Banker" means Salomon Brothers Inc and its successor
or, if such firm is unwilling or unable to select the applicable Comparable
Treasury Issue, an independent investment banking institution of national
standing appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the applicable Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or (ii) if such release (or any successor release)
is not published or does not contain such prices on such business day, (A) the
average of the applicable Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices of the applicable Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted
in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on
the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica
Robertson Stephens and J.P. Morgan Securities Inc., and their respective
successors; provided however, that if any of the foregoing shall cease to be a
primary U.S. Government Securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer.
Holders of Exchange Notes to be redeemed will receive notice thereof by
first-class mail at least 10 and not more than 60 days prior to the date fixed
for redemption.
CERTAIN COVENANTS OF THE COMPANY
Definitions. The term "Attributable Debt" shall mean in connection with a
sale and lease-back transaction the lesser of (a) the fair value of the assets
subject to such transaction or (b) the present value of the obligations of the
lessee for net rental payments during the term of any lease discounted at the
rate of interest set forth or implicit in the terms of such lease or, if not
practicable to determine such rate, the weighted average interest rate
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per annum borne by the Debt Securities of each series outstanding pursuant to
the Indenture and subject to limitations on sale and lease-back transaction
covenants, compounded semiannually in either case as determined by the
principal accounting or financial officer of the Company. The term
"Subsidiary" shall mean any corporation of which at least a majority of the
outstanding stock having voting power under ordinary circumstances for the
election of the board of directors of said corporation shall at the time be
owned by the Company or by the Company and one or more Subsidiaries or by one
or more Subsidiaries. The term "Consolidated Subsidiary" shall mean any
Subsidiary substantially all the property of which is located, and
substantially all the operations of which are conducted, in the United States
of America whose financial statements are consolidated with those of the
Company in accordance with generally accepted accounting principles. The term
"Exempted Debt" shall mean the sum of the following as of the date of
determination: (i) Indebtedness of the Company and its Consolidated
Subsidiaries incurred after the date of issuance of the Private Notes and
secured by liens not permitted by the limitation on liens provisions, and (ii)
Attributable Debt of the Company and its Consolidated Subsidiaries in respect
of every sale and lease-back transaction entered into after the date of
issuance of the Private Notes, other than leases permitted by the limitation
on sale and lease-back provisions. The term "Indebtedness" shall mean all
items classified as indebtedness on the most recently available consolidated
balance sheet of the Company and its Consolidated Subsidiaries, in accordance
with generally accepted accounting principles.
Limitation on Liens. The Company covenants that, so long as any of the Notes
remain outstanding, it will not, nor will it permit any Consolidated
Subsidiary, to create or assume any Indebtedness for money borrowed which is
secured by a lien (as defined) upon any assets, whether now owned or hereafter
acquired, of the Company or any such Consolidated Subsidiary without equally
and ratably securing the Notes by a lien ranking ratably with and equally to
such secured Indebtedness, except that the foregoing restriction shall not
apply to (a) liens on assets of any corporation existing at the time such
corporation becomes a Consolidated Subsidiary; (b) liens on assets existing at
the time of acquisition thereof, or to secure the payment of the purchase
price of such assets, or to secure indebtedness incurred or guaranteed by the
Company or a Consolidated Subsidiary for the purpose of financing the purchase
price of such assets or improvements or construction thereon, which
indebtedness is incurred or guaranteed prior to, at the time of or within 360
days after such acquisition (or in the case of real property, completion of
such improvement or construction or commencement of full operation of such
property, whichever is later); (c) liens securing indebtedness owed by any
Consolidated Subsidiary to the Company or another wholly owned Subsidiary; (d)
liens on any assets of a corporation existing at the time such corporation is
merged into or consolidated with the Company or a Subsidiary or at the time of
a purchase, lease or other acquisition of the assets of a corporation or firm
as an entirety or substantially as an entirety by the Company or a Subsidiary;
(e) liens on any assets of the Company or a Consolidated Subsidiary in favor
of the United States of America or any state thereof, or in favor of any other
country, or political subdivision thereof, to secure certain payments pursuant
to any contract or statute or to secure any indebtedness incurred or
guaranteed for the purpose of financing all or any part of the purchase price
(or, in the case of real property, the cost of construction) of the assets
subject to such liens (including, but not limited to, liens incurred in
connection with pollution control, industrial revenue or similar financing);
(f) any extension, renewal or replacement (or successive extensions, renewals
or replacements) in whole or in part, of any lien referred to in the foregoing
clauses (a) to (e), inclusive; (g) certain statutory liens or other similar
liens arising in the ordinary course of business of the Company or a
Consolidated Subsidiary, or certain liens arising out of government contracts;
(h) certain pledges, deposits or liens made or arising under the worker's
compensation or similar legislation or in certain other circumstances; (i)
certain liens in connection with legal proceedings, including certain liens
arising out of judgments or awards; (j) liens for certain taxes or
assessments, landlord's liens and liens and charges incidental to the conduct
of the business or the ownership of the assets of the Company or of a
Consolidated Subsidiary, which were not incurred in connection with the
borrowing of money and which do not, in the opinion of the Company, materially
impair the use of such assets in the operation of the business of the Company
or such Consolidated Subsidiary or the value of such assets for the purposes
thereof or (k) liens relating to accounts receivable of the Company or any of
its Subsidiaries which have been sold, assigned or otherwise transferred to
another Person in a transaction classified as a sale of accounts receivable in
accordance with generally accepted accounting principles (to the extent the
sale by the Company or the applicable Subsidiary is deemed to give rise
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to a lien in favor of the purchaser thereof in such accounts receivable or the
proceeds thereof). Notwithstanding the above, the Company or any Consolidated
Subsidiary may, without securing the Notes, create or assume any Indebtedness
which is secured by a lien which would otherwise be subject to the foregoing
restrictions, provided that after giving effect thereto the Exempted Debt then
outstanding at such time does not exceed 10% of the total assets of the
Company and its Subsidiaries on a consolidated basis.
Limitation on Sale and Lease-Back Transactions. Sale and lease-back
transactions (except such transactions involving leases for less than three
years) by the Company or any Consolidated Subsidiary of any assets are
prohibited unless (a) the Company or such Consolidated Subsidiary would be
entitled to incur Indebtedness secured by a lien on the assets to be leased in
an amount at least equal to the Attributable Debt in respect of such
transaction without equally and ratably securing the Exchange Notes, or (b)
the proceeds of the sale of the assets to be leased are at least equal to
their fair market value and the proceeds are applied to the purchase or
acquisition (or, in the case of real property, the construction) of assets or
to the retirement of indebtedness. The foregoing limitation will not apply, if
at the time the Company or any Consolidated Subsidiary enters into such sale
and lease-back transaction, and after giving effect thereto, Exempted Debt
does not exceed 10% of the total assets of the Company and its Subsidiaries on
a consolidated basis.
SUCCESSOR CORPORATION
The Indenture provides that the Company shall not consolidate or merge with
or into, or transfer or lease its assets substantially as an entirety to any
person unless the Company shall be the continuing corporation, or the
successor corporation or person to which such assets are transferred or leased
shall be a corporation organized under the laws of the United States, any
state thereof or the District of Columbia and shall expressly assume the
Company's obligations on the Debt Securities and under the Indenture, and
immediately after giving effect to such transaction no Event of Default (as
defined in the Indenture) shall have occurred and be continuing, and certain
other conditions are met. Upon assumption of the Company's obligations by a
person to whom such assets are transferred or leased, subject to certain
exceptions, the Company shall be discharged from all obligations under the
Notes and the Indenture.
This covenant would not apply to any recapitalization transaction, a change
of control of the Company or a highly leveraged transaction unless such
transaction or change of control were structured to include a merger or
consolidation or transfer or lease of the Company's assets substantially as an
entirety. There are no covenants or other provisions in the Indenture
providing for a put or increased interest or that would otherwise afford
holders of Notes protection in the event of a recapitalization transaction, a
change of control of the Company or a highly leveraged transaction.
EVENTS OF DEFAULT
An Event of Default is defined under the Indenture with respect to Debt
Securities of each series as being: (a) default in payment of all or any part
of the principal of, or premium, if any, on any Debt Securities of such series
when due, either at maturity, upon any redemption, by declaration or
otherwise; (b) default for 30 days in payment of any interest on any Debt
Securities of such series; (c) default in payment of any sinking fund
installment when due by the terms of the Debt Securities of such series; (d)
default for 60 days after written notice as provided in the Indenture in the
observance or performance of any other covenant or agreement in the Debt
Securities of such series or in the Indenture, other than a covenant included
in the Indenture solely for the benefit of a series of Debt Securities other
than such series; or (e) certain events of bankruptcy, insolvency or
reorganization.
The Indenture provides that (a) if an Event of Default due to the default in
payment of principal, premium, if any, or interest on any series of Debt
Securities, or due to the default in the performance or breach of any other
covenant or agreement of the Company applicable to the Debt Securities of such
series but not applicable to all outstanding Debt Securities, shall have
occurred and be continuing, either the Trustee or the holders of not less than
25% in principal amount of the Debt Securities of such series may declare the
principal of all Debt
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Securities of such series and interest accrued thereon to be due and payable
immediately and (b) if an Event of Default due to a default in the performance
of any other of the covenants or agreements in the Indenture applicable to all
Debt Securities then outstanding or due to certain events of bankruptcy,
insolvency and reorganization of the Company shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in
principal amount of the Debt Securities then outstanding (treated as one
class) may declare the principal of all such Debt Securities and interest
accrued thereon to be due and payable immediately, but upon certain conditions
such declarations may be annulled and past defaults may be waived (except a
continuing default in payment of principal, premium, if any, or interest on
such Debt Securities) by the holders of a majority in principal amount of the
Debt Securities of such series (or of all series, as the case may be) then
outstanding.
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee to act with the required standard of care, to be
indemnified by the holders of Debt Securities requesting the Trustee to
exercise any right or power under the Indenture before proceeding to exercise
any such right or power at the request of such holders.
The Indenture provides that no holder of Debt Securities of any series may
institute any action against the Company under the Indenture (except actions
for payment of overdue principal, premium, if any, or interest) unless such
holder previously shall have given to the Trustee written notice of default
and continuance thereof and unless the holders of not less than 25% in
principal amount of the Debt Securities of such series then outstanding shall
have requested the Trustee to institute such action and shall have offered the
Trustee reasonable indemnity, the Trustee shall not have instituted such
action within 60 days of such request and the Trustee shall not have received
direction inconsistent with such written request by the holders of a majority
in principal amount of the Debt Securities of such series then outstanding.
The Indenture contains a covenant that the Company will file annually with
the Trustee a certificate of no default or a certificate specifying any
default that exists.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company can discharge or decrease its obligations under the Indenture as
set forth below.
Under terms satisfactory to the Trustee, the Company may discharge certain
obligations to holders of any series of Debt Securities which have not already
been delivered to the Trustee for cancellation and which 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 cash or U.S. Government Obligations (as defined in the Indenture), as
trust funds in an amount certified to be sufficient to pay when due, whether
at maturity, upon redemption or otherwise, the principal of, premium, if any,
and interest on such Debt Securities.
The Company may also discharge any and all of its obligations to holders of
any series of Debt Securities at any time ("defeasance"), but may not thereby
avoid its duty to register the transfer or exchange of such series of Debt
Securities, to replace any temporary, mutilated, destroyed, lost or stolen
series of Debt Securities or to maintain an office or agency in respect of
such series of Debt Securities. Under terms satisfactory to the Trustee, the
Company may instead be released with respect to any outstanding series of Debt
Securities from the obligations imposed by certain provisions of the Indenture
(which contain the covenants described above limiting liens, consolidations,
mergers, transfers and leases and certain dispositions) and omit to comply
with such sections 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, as trust funds in an amount certified to be
sufficient to pay at maturity (or upon redemption) the principal, premium, if
any, and interest on all outstanding Debt Securities of such series and (ii)
the Company delivers to the Trustee an opinion of counsel to the effect that
the holders of such series of Debt Securities will not recognize income, gain
or loss for United States Federal income tax purposes as a result of such
defeasance or covenant defeasance and that defeasance or covenant defeasance
will not otherwise alter such holders' United States Federal income tax
treatment of principal, premium and interest payments on such series
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of Debt Securities. In the case of a defeasance, such opinion must be based on
a ruling of the Internal Revenue Service or a change in United States Federal
income tax law occurring after the date of the Indenture, since such a result
would not occur under current tax law.
MODIFICATION OF THE INDENTURE
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt Securities
to: (a) secure any Debt Securities, (b) evidence the assumption by a successor
corporation of the obligations of the Company, (c) add covenants for the
protection of the holders of Debt Securities, (d) cure any ambiguity or
correct any inconsistency in the Indenture, provided that such cure or
correction does not adversely affect the holders of Debt Securities, (e)
establish the forms or terms of Debt Securities of any series and (f) evidence
the acceptance of appointment by a successor trustee.
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of Debt Securities of all series then outstanding
and affected (voting as one class), to add any provisions to, or change in any
manner or eliminate any of the provisions of, the Indenture or modify in any
manner the rights of the holders of the Debt Securities of each series so
affected; provided that the Company and the Trustee may not, without the
consent of the holder of each outstanding Debt Security affected thereby, (a)
extend the final maturity of any Debt Security, or reduce the principal amount
thereof or premium thereon, if any, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption
thereof or change the currency in which the principal thereof, premium, if
any, or interest thereon is payable or reduce the amount of the principal of
any Debt Security issued with original issue discount that is payable upon
acceleration or provable in bankruptcy or alter certain provisions of the
Indenture relating to the Debt Securities not denominated in U.S. dollars or
impair the right to institute suit for the enforcement of any payment on any
Debt Security when due or (b) reduce the aforesaid percentage in principal
amount of Debt Securities of any series, the consent of the holders of which
is required for any such modification.
CONCERNING THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture. All
payments of principal of, premium, if any, and interest on and all
registration, transfer, exchange, authentication and delivery (including
authentication and delivery on original issuance of the Notes) of, the Notes
will be effected by the Trustee at an office designated by the Trustee in New
York, New York.
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict or resign.
In case of any conflicting interest relating to the Trustee's duties with
respect to the Notes, the Trustee shall either eliminate such conflicting
interest or, except as otherwise provided in the TIA, resign.
The holders of a majority in principal amount of any series of Debt
Securities then outstanding will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee with respect to such series of Debt Securities, provided that such
direction would not conflict with any rule of law or with the Indenture, would
not be unduly prejudicial to the rights of another holder of the Debt
Securities, and would not involve the Trustee in personal liability. The
Indenture provides that in case an Event of Default shall occur and be known
to the Trustee (and not be cured), the Trustee will be required to use the
degree of care of a prudent man in the conduct of his own affairs in the
exercise of its power. 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 of any of the holders of the Debt Securities, unless they shall
have offered to the Trustee security and indemnity satisfactory to it.
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The Trustee is one of a number of banks with which the Company and its
subsidiaries maintain ordinary banking and trust relationships. With respect
to the sale of trust convertible preferred securities issued by a subsidiary
of the Company, the Trustee also serves as trustee under the indenture
pursuant to which convertible subordinated debt of the Company was issued, a
guarantee agreement of the Company issued with respect to such trust
convertible preferred securities and a declaration of trust related to the
issuance of such trust convertible preferred securities. With respect to the
sale of the Company's 6.60% Notes due 2000, 6 7/8% Notes due 2002 and 7.65%
Debentures due 2027, the Trustee also serves as trustee under the indenture
pursuant to which such debt was issued. In addition, the Trustee also serves
as trustee under an indenture pursuant to which 6.55% Senior Notes due 2002 of
a subsidiary were issued.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, STOCKHOLDERS OR INCORPORATORS
The Indenture provides that no past, present or future director, officer,
employee, stockholder or incorporator of the Company or any successor
corporation shall have any liability for any obligations of the Company under
the Notes or the Indenture or for any claim based on, in respect of, or by
reason of such obligations or their creation, by reason of such person's or
entity's status as such director, officer, stockholder or incorporator.
REGISTRATION RIGHTS
Holders of Exchange Notes are not entitled to any registration rights with
respect to the Exchange Notes. Pursuant to the Registration Rights Agreement,
holders of Private Notes are entitled to certain registration rights. Under
the Registration Rights Agreement, the Company has agreed, for the benefit of
the holders of Private Notes, that it will, at its expense (i) file a
registration statement with the Commission with respect to the Exchange Offers
and (ii) use its reasonable efforts to cause such registration statement to be
declared effective under the Securities Act by August 23, 1998. The
Registration Statement of which the Prospectus is a part constitutes the
registration statement for the Exchange Offers.
If, (i) because of any change in law or in currently prevailing
interpretations of the Staff the Company is not permitted to effect any of the
Exchange Offers, (ii) any of the Exchange Offers are not consummated by
October 7, 1998, or (iii) in the case of any holder that participates in the
Exchange Offers, such holder does not receive applicable Exchange Notes on the
date of the exchange that may be sold without restriction under state and
Federal securities laws (other than due solely to the status of such holder as
an affiliate of the Company within the meaning of the Securities Act or as a
broker-dealer), then in each case, the Company will (x) promptly deliver to
the applicable holders written notice thereof and (y) at the Company's sole
expense (a) as promptly as practicable, file a shelf registration covering
resales of the applicable Private Notes (the "Shelf Registration Statement"),
(b) use its reasonable efforts to cause the Shelf Registration Statement to be
declared effective under the Securities Act and (c) use its reasonable best
efforts to keep effective the Shelf Registration Statement until the earlier
of two years (or, if Rule 144(k) is amended to provide a shorter restrictive
period, such shorter period) after the Closing Date or such time as all of the
applicable Private Notes have been sold thereunder. The Company will, in the
event that a Shelf Registration Statement is filed, provide to each applicable
holder copies of the prospectus that is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for
the applicable Private Notes has become effective and take certain other
actions as are required to permit unrestricted resales of the applicable
Private Notes. A holder that sells Private Notes pursuant to the Shelf
Registration Statement will be required to be named as a selling security
holder in the related prospectus and to deliver a prospectus to purchasers,
will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement that are applicable to such a
holder (including certain indemnification rights and obligations).
The Registration Rights Agreement is governed by, and construed in
accordance with, the laws of the State of New York. The summary herein of
certain provisions of the Registration Rights Agreement does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Registration Rights Agreement, a copy of which is
attached as an exhibit to the Registration Statement of which this Prospectus
forms a part and is available upon request to the Company.
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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following is a general discussion of certain United States Federal income
tax consequences associated with the exchange of Private Notes for Exchange
Notes and the acquisition and disposition of the Exchange Notes by a holder who
holds the Exchange Notes as "capital assets" (generally, property held for
investment). This discussion is based upon the United States Federal income tax
laws, regulations, rulings and decisions now in effect, which are subject to
change, possibly retroactively. This discussion does not cover all aspects of
Federal income taxation that may be relevant to holders, in light of their
specific circumstances, particularly holders subject to special tax treatment
(such as insurance companies, financial institutions, tax exempt organizations
or foreign persons, except to the extent described below). Prospective
investors are urged to consult their tax advisors regarding the United States
Federal tax consequences of acquiring, holding, and disposing of the Exchange
Notes, as well as any tax consequences that may arise under the laws of any
foreign, state, local, or other taxing jurisdiction.
For purposes of this discussion, a "U.S. holder" means a holder that is a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized in the United States or under the laws of the
United States or of any political subdivision thereof, an estate whose income
is includible in gross income for United States Federal income tax purposes
regardless of its source, or a trust whose administration is subject to the
primary supervision of a United States court and which has one or more United
States fiduciaries who have the authority to control all substantial decisions
of the trust. A "Non-U.S. holder" means a beneficial owner of Exchange Notes
who is not a U.S. holder.
U.S. HOLDERS
Exchange of Notes. There will be no Federal income tax consequences to a
holder exchanging Private Notes for Exchange Notes pursuant to the Exchange
Offers, and such a holder will have the same adjusted tax basis and holding
period in the Exchange Notes as it had in the Private Notes immediately before
the exchange.
Disposition of Exchange Notes. In general, the holder of an Exchange Note
will recognize gain or loss upon the sale, redemption, retirement or other
disposition of the Exchange Note measured by the difference between the amount
of cash and the fair market value of property received (except to the extent
attributable to the payment of accrued interest), and the holder's adjusted tax
basis in the Exchange Note. Subject to the market discount rules discussed
below, the gain or loss on the sale or other disposition of an Exchange Note
should be long-term capital gain or loss, provided the holder has a holding
period for the Exchange Note (which would include the holding period of the
Private Note) of more than one year. In the case of a U.S. holder who is an
individual, any capital gain recognized on the sale or other disposition of an
Exchange Note generally will be subject to a maximum U.S. Federal income tax
rate of (i) 28 percent if such U.S. holder's holding period is more than one
year and not more than 18 months and (ii) 20 percent if such U.S. holder's
holding period exceeds 18 months.
Market Discount on Resale. Holders, other than original purchasers of Private
Notes in the original offering, should be aware that the resale of the Exchange
Notes may be affected by the market discount provisions of the Code. These
rules generally provide that if a subsequent holder of an Exchange Note
purchases it at a market discount in excess of statutorily defined de minimis
amount, and thereafter recognizes gain upon a disposition (including a partial
redemption) of the Exchange Note, the lesser of such gain or the portion of the
market discount that accrued while the Exchange Note was held by such holder
will be treated as ordinary interest income at the time of the disposition. The
rules also provide that a holder who acquires an Exchange Note at a market
discount may be required to defer a portion of any interest expense that may
otherwise be deductible on any indebtedness incurred or maintained to purchase
or carry such Exchange Note until the holder disposes of such Exchange Note in
a taxable transaction. If a holder of an Exchange Note elects to include market
discount in income currently, both of the foregoing rules would not apply.
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NON-U.S. HOLDERS
Under present United States Federal income and estate tax law, assuming
certain certification requirements are satisfied (which include identification
of the beneficial owner of the instrument), and subject to the discussion of
backup withholding below:
(a) payments of interest on the Exchange Notes to any Non-U.S. holder
will not be subject to United States Federal income or withholding tax,
provided that (1) the holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of McKesson
entitled to vote, (2) the holder is not (i) a bank receiving interest
pursuant to a loan agreement entered into in the ordinary course of its
trade or business, or (ii) a controlled foreign corporation that is related
to McKesson through stock ownership, and (3) such interest payments are not
effectively connected with the conduct of a United States trade or business
of the holder;
(b) a holder of an Exchange Note who is a Non-U.S. holder will not be
subject to the United States Federal income tax on gain realized on the
sale, exchange, or other disposition of an Exchange Note, unless (1) such
holder is an individual who is present in the United States for 183 days or
more during the taxable year and certain other requirements are met, or (2)
the gain is effectively connected with the conduct of a United States trade
or business of the holder; and
(c) if interest on the Exchange Notes is exempt from withholding of
United States Federal income tax under the rules described above, the
Exchange Notes will not be included in the estate of a deceased Non-U.S.
holder for United States Federal estate tax purposes.
The certification referred to above may be made on an Internal Revenue
Service Form W-8 or substantially similar substitute form.
INFORMATION REPORTING AND BACKUP WITHHOLDING
A U.S. holder may be subject to backup withholding at a rate of 31% with
respect to interest paid on or proceeds derived from the sale or other
disposition of an Exchange Note, unless the U.S. holder (i) is a corporation
or comes within certain other exempt categories or (ii) provides a taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules.
Under temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally
not apply to interest paid on the Exchange Notes to a Non-U.S. holder at an
address outside the United States. Payments by a United States office of a
broker of the proceeds of a sale of the Exchange Notes are subject to both
backup withholding at a rate of 31% and information reporting unless the
holder certifies its Non-U.S. holder status under penalties of perjury or
otherwise establishes an exemption. Information reporting requirements (but
not backup withholding) will also apply to payments of the proceeds of sales
of the Exchange Notes by foreign offices of United States brokers, or foreign
brokers with certain types of relationships to the United States, unless the
broker has documentary evidence in its records that the holder is a Non-U.S.
holder and certain other conditions are met, or the holder otherwise
establishes an exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the holder's
United States Federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
On October 6, 1997, the United States Treasury Department issued final
Treasury regulations governing information reporting and the certification
procedures regarding withholding and backup withholding on certain amounts
paid to Non-U.S. holders after December 31, 1999. The new Treasury regulations
would alter the procedures for claiming the benefits of an income tax treaty
and may change the certification procedures relating to the receipt by
intermediaries of payments on behalf of a beneficial owner of an Exchange
Note. Holders of the Exchange Notes should consult their tax advisors
concerning the effect, if any, of such new Treasury regulations on an
investment in the Exchange Notes.
35
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offers must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Private
Notes where such Private Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has
agreed that, starting on the applicable Expiration Date and ending on the
close of business on the 180th day following such Expiration Date, it will
make this Prospectus, as amended or supplemented, available to any broker-
dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offers may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were
received by it for its own account pursuant to the Exchange Offers and any
broker or dealer that participates in a distribution of such Exchange Notes
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit of any such resale of Exchange Notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. Each Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the applicable Letter of Transmittal. The Company has agreed to
pay all expenses incident to the Exchange Offers (including the expenses of
any Special Counsel for the holders of the Private Notes) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the Private Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
EXPERTS
The consolidated financial statements of McKesson and the related financial
statement schedule incorporated in this Registration Statement by reference
from McKesson's Annual Report on Form 10-K for the year ended March 31, 1997
and the consolidated financial statements of FoxMeyer for the year ended March
31, 1996 incorporated in this Registration Statement by reference from
McKesson's Current Report on Form 8-K/A filed with the Commission on April 28,
1997 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports incorporated herein by reference (which report dated
May 16, 1997 on McKesson's consolidated financial statements expresses an
unqualified opinion and which report on FoxMeyer's consolidated financial
statements dated June 28, 1996 (March 18, 1997 as to paragraph seven of Note
Q), expresses an unqualified opinion and includes an explanatory paragraph
relating to the sale of the principal assets of FoxMeyer and its Chapter 7
bankruptcy filing). Such consolidated financial statements and financial
statement schedule have been so incorporated in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
36
<PAGE>
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon for
McKesson by Skadden, Arps, Slate, Meagher & Flom LLP.
37
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION
WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE EXCHANGE NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE EXCHANGE NOTES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
Available Information...................................................... 3
Incorporation of Certain Documents by Reference............................ 3
Prospectus Summary......................................................... 5
Consequences of Failure to Exchange Private Notes.......................... 7
The Exchange Notes......................................................... 8
Special Note Regarding Forward-Looking Statements.......................... 9
Risk Factors............................................................... 10
The Company................................................................ 13
Use of Proceeds............................................................ 15
Ratio of Earnings to Fixed Charges......................................... 16
The Exchange Offers........................................................ 17
Description of Notes....................................................... 25
Certain United States Federal Tax Consequences............................. 34
Plan of Distribution....................................................... 36
Experts.................................................................... 36
Legal Matters.............................................................. 37
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
McKESSON CORPORATION
OFFERS TO EXCHANGE
$150,000,000 6.30% EXCHANGE NOTES
DUE MARCH 1, 2005 AND
$150,000,000 6.40% EXCHANGE NOTES
DUE MARCH 1, 2008
----------------
PROSPECTUS
----------------
APRIL 17, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VIII of the Restated By-Laws of the Company, in accordance with the
provisions of Section 145 of the General Corporation Law of Delaware (the
"Delaware Corporation Law"), provides that the Company shall indemnify any
person in connection with any threatened, pending or completed legal
proceeding (other than a legal proceeding by or in the right of the Company)
by reason of the fact that he is or was a director or officer of the Company
or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership or other enterprise
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred in connection with such
legal proceeding if he acted in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, if he had no reasonable
cause to believe that his conduct was unlawful. If the legal proceeding is by
or in the right of the Company, the director or officer may be indemnified by
the Company against expenses (including attorneys' fees) actually and
reasonably incurred in connection with the defense or settlement of such legal
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company, except that he may
not be indemnified in respect of any claim, issue or matter as to which he
shall have been adjudged to be liable to the Company unless a court determines
otherwise.
Article VIII of McKesson's Restated By-Laws allows the Company to maintain
director and officer liability insurance on behalf of any person who is or was
a director or officer of the Company or such person who serves or served as
director, officer, employee or agent of another corporation, partnership or
other enterprise at the request of the Company.
Article VI of McKesson's Restated Certificate of Incorporation, in
accordance with Section 102(b)(7) of the Delaware Corporation Law, provides
that no director of the Company shall be personally liable to the Company or
its stockholders for monetary damages for any breach of his fiduciary duty as
a director; provided, however, that such clause shall not apply to any
liability of a director (1) for any breach of his duty of loyalty to the
Registrant or its stockholders, (2) for acts or omissions that are not in good
faith or involve intentional misconduct or a knowing violation of the law, (3)
under Section 174 of the Delaware Corporation Law, or (4) for any transaction
from which the director derived an improper personal benefit.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A. EXHIBITS
The Exhibits listed in the following Exhibit Index are filed as part of the
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Indenture between the Company and The First National Bank of Chicago,
dated as of March 11, 1997 (Exhibit 4.1(1)).
4.2 Officer's Certificate relating to the Private Notes.*
4.3 Form of Officer's Certificate relating to the Exchange Notes.*
4.4 Form of 6.30% Notes due March 1, 2005 (included in Exhibit A to Annex
A to Exhibit 4.2 above).
4.5 Form of 6.40% Notes due March 1, 2008 (included in Exhibit A to Annex
B to Exhibit 4.2 above).
4.6 Form of 6.30% Exchange Notes due March 1, 2005 (included in Exhibit A
to Annex A to Exhibit 4.3 above).
4.7 Form of 6.40% Exchange Notes due March 1, 2008 (included in Exhibit A
to Annex B to Exhibit 4.3 above).
5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the legality
of the Exchange Notes being registered hereby.
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to certain tax
matters.*
10.1 Registration Rights Agreement, dated as of February 24, 1998, among
the Company and the Initial Purchasers.*
23.1 Independent Auditors' Consent.
23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in
Exhibit 5.1).
24.1 Power of Attorney.*
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as Trustee
under the Indenture.*
99.1 Form of Letter of Transmittal for 6.30% Notes due March 1, 2005.*
99.2 Form of Letter of Transmittal for 6.40% Notes due March 1, 2008.*
99.3 Form of Notice of Guaranteed Delivery.*
99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.*
99.5 Form of Letter to Clients.*
99.6 Form of Exchange Agent Agreement.*
99.7 Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
</TABLE>
- --------
(1) Incorporated by reference to designated exhibit to Amendment No. 1 to the
Company's Registration Statement on Form S-4 filed with Commission on July
22, 1997, File No. 333-30899.
* Previously filed.
ITEM 22. UNDERTAKINGS.
The undersigned hereby undertakes as follows:
(a) That for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is
II-2
<PAGE>
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the Securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(c) To respond to requests for information that is incorporated by reference
into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4, within
one business day of receipt of such request, and to send the incorporated
documents by first-class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the Registration Statement through the date of responding to the request.
(d) To supply by means of a post-effective amendment all information
concerning any transaction, and the company being acquired involved therein,
that was not the subject of and included in the Registration Statement when it
became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-4 AND HAS DULY CAUSED THIS AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAN FRANCISCO, STATE OF CALIFORNIA,
ON THE 17TH DAY OF APRIL, 1998.
McKESSON CORPORATION
/s/ Richard H. Hawkins
By: _________________________________
NAME:RICHARD H. HAWKINS
TITLE:VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
* President and Chief
- ------------------------------------- Executive Officer and
MARK A. PULIDO Director (principal
executive officer)
* Vice President and
- ------------------------------------- Chief Financial Officer
RICHARD H. HAWKINS (principal financial
officer)
* Controller (principal
- ------------------------------------- accounting officer)
HEIDI E. YODOWITZ
* Director
- -------------------------------------
MARY G.F. BITTERMAN
* Director
- -------------------------------------
TULLY M. FRIEDMAN
* Director
- -------------------------------------
JOHN M. PIETRUSKI
</TABLE>
II-4
<PAGE>
* Director
- -------------------------------------
DAVID S. POTTRUCK
* Director
- -------------------------------------
CARL E. REICHARDT
* Director; Chairman of
- ------------------------------------- the Board
ALAN SEELENFREUND
* Director
- -------------------------------------
JANE E. SHAW
* Director
- -------------------------------------
ROBERT H. WATERMAN, JR.
*By: /s/ Nancy A. Miller
----------------------------------
NANCY A. MILLER
ATTORNEY-IN-FACT
II-5
<PAGE>
Exhibit 5.1
[NYO LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP]
April 17, 1998
McKesson Corporation
McKesson Plaza
One Post Street
San Francisco, CA 94104
Ladies and Gentlemen:
We have acted as special counsel to McKesson Corporation, a Delaware
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-4 No. 333-49119 (such Registration Statement
being hereinafter referred to as the "Registration Statement") filed by the
Company with the Securities and Exchange Commission (the "Commission") with
respect to the registration under the Securities Act of 1933, as amended (the
"Act"), of the Company's offer to exchange an aggregate principal amount of up
to $300,000,000 of its 6.30% Exchange Notes due March 1, 2005 and 6.40% Exchange
Notes due March 1, 2008 (together, the "Exchange Notes") for a like principal
amount of its 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008
(together, the "Private Notes"), respectively. The Private Notes have been and
the Exchange Notes are to be issued pursuant to an Indenture dated as of March
11, 1997 (the "Indenture"), between the Company and The First National Bank of
Chicago, as trustee.
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
Statement; (ii) an executed copy of the Registration Rights Agreement, dated as
of February 24, 1998 (the "Registration Rights Agreement"), among the Company
and Salomon Brothers Inc,
<PAGE>
McKesson Corporation
April 17, 1998
Page 2
BancAmerica Robertson Stephens and J.P. Morgan Inc.; (iii) an executed copy of
the Indenture; (iv) the form of the Exchange Notes; and (v) certain resolutions
of the Board of Directors of the Company and the Finance Committee thereof
relating to the transactions contemplated by the Registration Rights Agreement
and related matters. We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such other documents, certificates
and records as we have deemed necessary or appropriate as a basis for the
opinions set forth herein. The documents referred to in clauses (ii) and (iii)
of this paragraph are hereinafter referred to as the "Operative Documents."
In our examinations, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals or such latter documents. In making our
examination of documents executed by parties other than the Company, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof on such
parties. We have also assumed that the execution and delivery by the Company of
the Indenture and the Exchange Notes and the performance of its obligations
thereunder do not and will not violate, conflict with or constitute a default
under (i) any agreement or instrument to which the Company or its properties is
subject (except that we do not make the assumption set forth in this clause (i)
with respect to the Restated Certificate of Incorporation or the Restated By-
Laws of the Company or the Operative Documents), (ii) any law, rule or
regulation to which the Company is subject (except that we do not make the
assumption set forth in this clause (ii) with respect to the Delaware General
Corporation Law (the "DGCL") or those laws, rules and regulations of the State
of New York and the United States of America (other than securities or other
anti-fraud laws) which, in our experience, are normally applicable to
transactions of the type contemplated by the Operative Documents, but without
our having made any special investigation concerning any other laws, rules or
regulations), (iii) any judicial or regulatory order or decree of any
governmental authority or (iv) any consent, approval, license, authorization or
validation of, or filing, recording or registration with any governmental
authority, As to any
<PAGE>
McKesson Corporation
April 17, 1998
Page 3
facts material to the opinions expressed herein which we did not independently
establish or verify, we have relied upon oral or written statements and
representations of officers and other representatives of the Company and others.
Members of our firm are admitted to the Bar of the State of New York,
and we do not express any opinion as to the laws of any jurisdiction other than
the laws of the State of New York and DGCL.
Based upon and subject to the foregoing, we are of the opinion that the
Exchange Notes have been duly authorized by the Company and, when executed and
authenticated in accordance with the terms of the Indenture and issued and
delivered in accordance with the terms and conditions of the Registration Rights
Agreement, will be valid, legal and binding obligations of the Company entitled
to the benefits of the Indenture and enforceable against the Company in
accordance with the terms, except (a) to the extent that enforcement thereof may
be limited to (i) bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally,
and (ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and (b) we express no opinion
regarding the enforceability or effect of Section 6.6 of the Indenture.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission. This opinion is expressed as of the
date hereof, and we disclaim any undertaking to advise you of any subsequent
changes in the facts stated or assumed herein or of any subsequent changes in
applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE>
Exhibit 23.1
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-49119 of McKesson Corporation ("McKesson") of our
reports dated May 16, 1997 on McKesson's consolidated financial statements and
consolidated supplementary financial schedule, incorporated by reference in and
appearing in the Annual Report on Form 10-K of McKesson Corporation for the year
ended March 31, 1997, and our report on FoxMeyer Corporation's consolidated
financial statements dated June 28, 1996 (March 18, 1997 as to paragraph seven
of Note Q), which report expresses an unqualified opinion and includes an
explanatory paragraph relating to the sale of the principal assets of FoxMeyer
Corporation and its Chapter 7 bankruptcy filing, appearing in the Current Report
on Form 8-K/A of McKesson Corporation filed with the Securities and Exchange
Commission on April 28, 1997.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ DELOITTE & TOUCHE LLP
San Francisco, California
Dallas, Texas
April 16, 1998
<PAGE>
EXHIBIT 99.7
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.-- Social Security numbers have nine digits separated by two hyphens,
e.g., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen, e.g., 00-0000000. The table below will help determine the
number to give the payer.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- --------------------------------------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of
the account or, if
combined funds, the
first individual on
the account(1)
3. Husband wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor (Uniform Gift to Minors The minor(2)
Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6. Account in the name of guardian or committee for a The ward, minor, or
designated ward, minor, or incompetent person incompetent person(3)
7. a. A revocable savings trust account (in which The grantor-trustee(1)
grantor is also trustee)
b. Any "trust" account that is not a legal or The actual owner(1)
valid trust under State law
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------------------------------
<S> <C>
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or pension trust The legal entity (do
not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account title)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of Agriculture in the The public entity
name of a public entity (such as a State or local
government, school district, or prison) that
receives agricultural program payments
</TABLE>
- -------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension
trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL
BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification
Number (for businesses and all other entities), for Form W-7 for International
Taxpayer Identification Number (for alien individuals required to file U.S.
tax returns), at an office of the Social Security Administration or the
Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification
number in Part I, sign and date the Form, and give it to the requester.
Generally, you will then have 60 days to obtain a taxpayer identification
number and furnish it to the requester. If the requester does not receive your
taxpayer identification number within 60 days, backup withholding, if
applicable, will begin and will continue until you furnish your taxpayer
identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING PENALTIES
Payees specifically exempted from backup withholding on ALL payments include
the following:*
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
. A foreign government or a political subdivision, agency or instrumentality
thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if (i) this interest is $600 or more, (ii) the
interest is paid in the course of the payer's trade or business and (iii)
you have not provided your correct taxpayer identification number to the
payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICES. Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to
file tax returns. Payers must generally withhold 31% of taxable interest,
dividends, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.-- If you
fail to furnish your taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.-- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- If you falsify
certifications or affirmations, you are subject to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
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* Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulation
promulgated thereunder.
