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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TELEDYNE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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[logo]
2049 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067-3101
(310) 551-4306 FAX (310) 551-4366
IT IS ADVISABLE TO KEEP THE INFORMATION SET FORTH IN THIS BROCHURE AS A
PERMANENT DOCUMENT FOR REFERENCE CONCERNING THE SERIES E CUMULATIVE PREFERRED
STOCK DISCUSSED BELOW.
March 8, 1995
Dear Shareholder,
We are pleased to announce that on January 25, 1995, Teledyne's Board of
Directors declared a quarterly dividend of $0.25 per share payable on March 8,
1995, to holders of record on February 15, 1995. The ex-distribution date for
the dividend was February 9, 1995. The dividend is being distributed in two
components on each share of Teledyne, Inc. Common Stock ("Common Stock") as
follows:
(1) $0.10 in cash, and
(2) $0.15 (.01 share) of a new $15.00 stated amount of Teledyne, Inc. Series
E Cumulative Preferred Stock ("Series E Preferred Stock"). On each 100
shares of Common Stock you own, you will receive 1 share of Series E
Preferred Stock.
Shareholders who own less than 100 shares of Common Stock will not
receive a Series E Preferred Stock certificate, but will receive a check
representing cash in lieu of the preferred stock fractional share
interest. All fractional share interests of the preferred stock will be
settled in cash using a $15.00 full share settlement price (I.E., 1 share
Common Stock = .01 fractional share of preferred stock X $15.00 = $0.15;
2 shares Common Stock = .02 fractional share of preferred stock X $15.00
= $0.30, etc.).
Teledyne Series E Preferred Stock (CUSIP 879335 60 2) will trade on the New York
Stock Exchange under the trading symbol "TDYPrE." Series E Preferred Stock will
pay a semi-annual dividend of $0.60 per share on March 1st and September 1st,
commencing September 1, 1995. The dividend and the redemption rights of the
Series E Preferred Stock are more fully described in Annex A, attached hereto.
We are including this brochure with each certificate and check forwarded to
record holders receiving the multiple components of the dividend distribution.
Shareholders who own their Common Stock beneficially through a brokerage house
or bank ("street name holder") will receive the dividend distribution through
such firm, and should direct any questions concerning the distribution to their
broker or bank.
The certificate or check enclosed with this letter is registered in the name(s)
recorded on the Common Stock records as of the record date, February 15, 1995.
Any changes in registration subsequent to the record date would not be reflected
on the enclosed certificate. If you sold shares of Common Stock prior
. . . continued
<PAGE>
March 8, 1995
Page 2
to the ex-distribution date (February 9, 1995), but such shares remained in your
name on the record date, the broker executing the sale will claim from you the
dividend payment due the buyer of your shares.
THE SERIES E PREFERRED STOCK ISSUED IN PAYMENT OF THIS DIVIDEND SHOULD NOT BE
CONFUSED WITH THE TELEDYNE, INC. SERIES D PREFERRED STOCK ("SERIES D PREFERRED
STOCK") SET ASIDE IN CONNECTION WITH THE STOCKHOLDER RIGHTS PLAN DESCRIBED IN
OUR JANUARY 31, 1995 LETTER TO ALL SHAREHOLDERS. THE SERIES D PREFERRED STOCK
HAS NOT BEEN ISSUED, AND TO OUR KNOWLEDGE, THERE HAS BEEN NO EVENT THAT WOULD
TRIGGER THESE RIGHTS. IF SUCH AN EVENT EVER OCCURS, SHAREHOLDERS WILL BE
NOTIFIED.
This brochure also contains:
<TABLE>
<S> <C>
Annex A: summary description of the new Series E Preferred Stock,
Annex B: summary description of the federal income tax consequences of the Series E
Preferred Stock dividend, and
Annex C: certain information furnished pursuant to the proxy rules issued by the U. S.
Securities and Exchange Commission.
</TABLE>
We hope you find the descriptive information helpful, and we appreciate your
interest in Teledyne.
Sincerely,
<TABLE>
<S> <C>
[SIG] [SIG]
William P. Rutledge Donald B. Rice
CHAIRMAN AND PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER
Enclosures
</TABLE>
<PAGE>
ANNEX A
DESCRIPTION OF THE TELEDYNE, INC.
SERIES E CUMULATIVE PREFERRED STOCK
THE FOLLOWING SUMMARY DESCRIPTION OF THE MATERIAL TERMS OF THE TELEDYNE,
INC. SERIES E CUMULATIVE PREFERRED STOCK IS DERIVED FROM THE SUMMARY DESCRIPTION
CONTAINED IN TELEDYNE'S FORM 8-A REGISTRATION STATEMENT DATED FEBRUARY 9, 1995
(THE "REGISTRATION STATEMENT"), FILED WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION IN WASHINGTON, D.C. THE COMPLETE "CERTIFICATE OF DESIGNATION"
REFERRED TO IN THE FOLLOWING SUMMARY DESCRIPTION HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AS AN EXHIBIT TO THE REGISTRATION STATEMENT,
WHICH IS A PUBLICLY AVAILABLE DOCUMENT.
On January 25, 1995, the Board of Directors of Teledyne, Inc. (the
"CORPORATION") declared a dividend that included as a component
one-one-hundredth (1/100th) of a share of Series E Cumulative Preferred Stock
(the "SERIES E CUMULATIVE PREFERRED STOCK") for each outstanding share of the
Corporation's Common Stock, par value $1.00 per share (the "COMMON STOCK"), such
shares of Series E Cumulative Preferred Stock to be issuable with a stated value
of $15.00 per share (with cash being paid in lieu of fractional shares such that
each holder of record of one hundred shares of Common Stock will receive one
share of Series E Cumulative Preferred Stock). The dividend is payable on March
8, 1995 to stockholders of record on February 15, 1995.
The following summary of terms of the Series E Cumulative Preferred Stock
does not purport to be complete and is subject to, and is qualified in its
entirety by, the provisions of the Corporation's Restated Certificate of
Incorporation, as amended (the "CERTIFICATE OF INCORPORATION"), including the
Certificate of Designation, Preferences and Rights of the Series E Cumulative
Preferred Stock (the "CERTIFICATE OF DESIGNATION"), copies of which are exhibits
to the Registration Statement and are hereby incorporated herein by reference.
The Certificate of Incorporation authorizes the issuance of 15,000,000
shares of preferred stock, par value $1.00 per share ("PREFERRED STOCK"). No
shares of preferred stock are currently outstanding, although 100,000 shares of
Teledyne, Inc. Series D Preferred Stock have been reserved for issuance pursuant
to the Preferred Share Purchase Rights of the Corporation currently outstanding.
The preferred stock may be issued from time to time in one or more series,
without stockholder approval, with such powers, preferences, and relative,
participating, optional or other special rights, and qualifications, limitations
and restrictions as shall be established by the Board of Directors. Thus,
without stockholder approval, the Corporation could authorize the issuance of
preferred stock with voting, conversion and other rights that could dilute the
voting power and affect the other rights of the holders of the Corporation's
Common Stock.
GENERAL
The Certificate of Designation establishes the series of Series E Cumulative
Preferred Stock and authorizes the issuance of up to 2,500,000 shares thereof.
When issued, the Series E Cumulative Preferred Stock will be validly issued,
fully paid and nonassessable. The holders of the Series E Cumulative Preferred
Stock will have no preemptive rights with respect to any shares of capital stock
of the Corporation or any other securities of the Corporation convertible into
or carrying rights or options to purchase any such shares. The Series E
Cumulative Preferred Stock will not be subject to any sinking fund or other
obligation of the Corporation to redeem or retire the Series E Cumulative
Preferred Stock. Unless redeemed by the Corporation, the Series E Cumulative
Preferred Stock will
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have a perpetual maturity. The New York Stock Exchange has approved the Series E
Cumulative Preferred Stock for listing under the symbol "TDYPrE." Any Series E
Cumulative Preferred Stock redeemed or otherwise acquired by the Corporation
will, upon cancellation of such shares, have the status of authorized but
unissued preferred stock without designation as to series.
RANKING
The Series E Cumulative Preferred Stock will rank junior to any shares of
preferred stock which by their terms are expressly made senior to the Series E
Cumulative Preferred Stock ("SENIOR SHARES") both as to dividends and as to the
distribution of assets on any voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation, and will rank on parity with any shares of
preferred stock which by their terms are expressly placed on parity with the
Series E Cumulative Preferred Stock ("PARITY SHARES") with respect to such
matters. The Series E Cumulative Preferred Stock will rank senior to the Common
Stock, any additional class of common stock and any series of preferred stock
expressly made junior to the Series E Cumulative Preferred Stock ("JUNIOR
SHARES") both as to dividends and as to the distribution of assets on any
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation. The Corporation has the right to create Senior Shares, Parity
Shares, Junior Shares and new series of Common Stock, increase the authorized
number of Senior Shares, Parity Shares, Junior Shares and shares of Common
Stock, and issue additional Senior Shares, Parity Shares, Junior Shares and
shares of Common Stock without the consent of any holder of shares of Series E
Cumulative Preferred Stock. See "Voting Rights" below.
DIVIDENDS
Subject to the limitations discussed below, holders of shares of Series E
Cumulative Preferred Stock are entitled to receive, when and as declared by the
Board of Directors out of funds legally available therefor, cumulative dividends
from the date of the initial issuance of any particular shares of Series E
Cumulative Preferred Stock at the rate of $1.20 per share of Series E Cumulative
Preferred Stock per annum. Such semi-annual dividends, whether or not declared
out of funds legally available therefor, will be "due," for all purposes of the
Certificate of Designation, semi-annually on March 1 and September 1 in each
year (a "DIVIDEND PAYMENT DATE"), commencing with the first such date that
occurs following the date of issuance of particular shares (and, in the case of
any due on unpaid dividends, at such additional times as determined by the Board
of Directors). Each such dividend will be due and payable to holders of record
as they appear on the stock records of the Corporation at the close of business
on such record dates, not exceeding 60 days preceding the payment dates thereof,
as may be fixed by the Board of Directors of the Corporation. Unpaid dividends
on shares of Series E Cumulative Preferred Stock will not bear interest. The
amount of dividends due for shares of Series E Cumulative Preferred Stock for
each dividend period (including the dividend period during which such shares
were issued) shall be $0.60 per share, without proration on the basis of the
length of time any particular shares of Series E Cumulative Preferred Stock have
been outstanding or otherwise. If at any time the Corporation has failed to pay
accrued dividends on any Senior Shares at the time such dividends are payable or
has failed to make any sinking fund or mandatory redemption payments on Senior
Shares, the Corporation may not pay any dividend on the Series E Cumulative
Preferred Stock.
If at any time the Corporation has failed to pay dividends on any shares of
Series E Cumulative Preferred Stock at the time such dividends are due, or if
the Corporation has defaulted in providing funds for the payment of the
redemption price of any shares of Series E Cumulative Preferred Stock called for
redemption or has defaulted in its obligations regarding the payment of
dividends with respect to shares of Series E Cumulative Preferred Stock called
for redemption, the Corporation shall
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not (i) authorize, create or issue any new shares of Series E Cumulative
Preferred Stock, other than to the extent that the Corporation has, prior to
such failure or default, irrevocably declared a dividend obligating the
Corporation to do so, (ii) declare, pay or set aside for payment any dividend on
the shares of Common Stock, on any Junior Shares or on any Parity Shares or make
any payment on account of, or set apart money for a sinking or other analogous
fund for, the purchase, redemption or other acquisition of, any shares of Common
Stock, any Junior Shares or any Parity Shares or make any distribution in
respect thereof, either directly or indirectly and whether in cash or property
or in obligations or shares of the Corporation (other than in shares of Common
Stock or Junior Shares), (iii) purchase any shares of Series E Cumulative
Preferred Stock or Parity Shares (except for consideration payable in shares of
Common Stock or Junior Shares), or redeem fewer than all of the shares of Series
E Cumulative Preferred Stock then outstanding, or (iv) permit any corporation or
other entity, a majority of the voting power, equity securities or equity
interest of which is owned directly or indirectly by the Corporation (a
"SUBSIDIARY"), to purchase any shares of Common Stock, Junior Shares, Parity
Shares or Series E Cumulative Preferred Stock, unless, in each case, (i) all due
but unpaid dividends on the Series E Cumulative Preferred Stock have been or
contemporaneously are declared and paid in full or declared and a sum sufficient
for payment of such dividends has been irrevocably set aside in trust and (ii)
all defaults with respect to the Company's obligations relating to any shares of
Series E Cumulative Preferred Stock called for redemption have been cured.
REDEMPTION
The shares of Series E Cumulative Preferred Stock will be redeemable at any
time at the option of the Corporation, in whole but not in part, out of funds
legally available for such purpose, at a redemption price per share of $15.00.
In addition, the Corporation will be required to redeem the shares of Series E
Cumulative Preferred Stock in whole upon the occurrence of a "Change of Control"
(as defined below), out of funds legally available for such purpose, at a
redemption price per share of $16.50. "CHANGE OF CONTROL" shall mean, in
general, either (a) the acquisition by any person, entity or group of beneficial
ownership of fifty percent (50%) or more of the combined voting power of the
Corporation's outstanding securities, or (b) any merger, consolidation or
reorganization to which the Corporation is a party, or any sale, assignment,
lease, conveyance or other disposition of all or substantially all of the
Corporation's assets, in one transaction or a series of related transactions, to
any person other than a Subsidiary, unless, immediately following the
consummation of such transaction or series of related transactions, the persons
who were the Corporation's stockholders immediately before such consummation are
the beneficial owners of at least fifty percent (50%) of the combined voting
power of the then outstanding securities of the surviving, resulting or
transferee corporation in substantially the same proportion as their ownership
of the combined voting power of the then outstanding securities of the
Corporation immediately prior to such consummation. However, an acquisition of
voting securities of the Corporation either (i) from the Corporation or (ii) by
(a) an employee benefit plan (or a trust forming a part thereof) maintained by
the Corporation or any Subsidiary, (b) the Corporation or (c) any Subsidiary.
Immediately prior to any redemption of shares of Series E Cumulative
Preferred Stock, the Corporation shall pay in cash, or irrevocably set aside in
trust for payment in cash, out of funds legally available for such purpose, the
aggregate of (i) any dividends due and unpaid in respect of any dividend period
that has ended prior to the redemption date specified in the notice described
below and (ii) the dividend that would be due pursuant to the Certificate in
respect of the dividend period during which the redemption date occurs. If such
redemption date falls after a dividend payment record date and prior to the
corresponding Dividend Payment Date, then each holder of record of shares of
Series E
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Cumulative Preferred Stock at the close of business on such dividend payment
record date shall be entitled to the dividend due on such shares on the
corresponding Dividend Payment Date notwithstanding the redemption of such
shares before such Dividend Payment Date. Unless the Corporation shall default
in providing funds for the payment of the redemption price of the shares of
Series E Cumulative Preferred Stock or shall default in its obligations
regarding the payment of dividends with respect to shares of Series E Cumulative
Preferred Stock called for redemption, the Corporation shall make no payment or
allowance for unpaid dividends on shares of Series E Cumulative Preferred Stock
called for redemption.
Notice of redemption will be given to the holders of the Series E Cumulative
Preferred Stock by first class mail, postage prepaid, not less than thirty (30)
days nor more than sixty (60) days prior to the redemption date, in the case of
an optional redemption, or not less than ten (10) days nor more than sixty (60)
days prior to the redemption date, in the case of a mandatory redemption. The
redemption date will be the date specified in the notice of redemption given to
the holders of Series E Cumulative Preferred Stock and, in the case of a
mandatory redemption, will be the thirtieth (30th) business day after the date
of the Change of Control. A summary of such notice will also be provided by
publication in THE WALL STREET JOURNAL or THE NEW YORK TIMES.
From and after the redemption date (unless the Corporation defaults in
providing funds for the payment of the redemption price of the shares called for
redemption at the time and place specified in the notice or defaults in its
obligations regarding the payment of dividends with respect to shares of Series
E Cumulative Preferred Stock called for redemption), (i) such shares will no
longer be deemed to be outstanding, and (ii) all rights of the holders thereof
as holders of shares of Series E Cumulative Preferred Stock will cease (except
the rights to receive the cash payable upon such redemption, without interest
from the date of such redemption, upon surrender and endorsement of their
certificates if so required and to receive dividends in accordance to the extent
described in the preceding paragraph).
LIQUIDATION PREFERENCE
In the event of the voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, holders of any shares of Series E Cumulative
Preferred Stock are entitled to receive the liquidation preference of $15.00 per
share of Series E Cumulative Preferred Stock, plus an amount equal to the
aggregate of (i) all dividends due and unpaid thereon in respect of any dividend
periods that have ended prior to the date of final distribution to holders of
Series E Cumulative Preferred Stock (whether or not declared), and (ii) the
dividend that would be due in respect of the dividend period during which the
final distribution to such holders occurs, such amount to be received before any
distribution is made to the holders of Junior Shares or shares of Common Stock,
but the holders of shares of Series E Cumulative Preferred Stock will not be
entitled to receive the liquidation preference of such shares until the
liquidation preference of any Senior Shares at the time outstanding have been
paid in full. The holders of shares of Series E Cumulative Preferred Stock and
all Parity Shares (if any) are entitled to share ratably, in accordance with the
respective amounts payable thereon, in any such distribution which is not
sufficient to pay in full the aggregate of the amounts payable thereon. After
payment in full of the liquidation preference of the Series E Cumulative
Preferred Stock, the holders of such shares are not entitled to any further
participation in any distribution of assets by the Corporation. Neither a
consolidation or merger to which the Corporation is a party, nor the sale or
transfer of all or part of the Corporation's assets, will be considered a
voluntary or involuntary liquidation, dissolution or winding-up of the
Corporation.
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VOTING RIGHTS
Holders of shares of Series E Cumulative Preferred Stock will not have any
voting rights except as described below or as required by applicable law.
If at any time dividends on any shares of Series E Cumulative Preferred
Stock, whether or not declared, have not been paid in an aggregate amount equal
to or greater than three semi-annual dividends on such shares (whether or not
consecutive), the number of directors constituting the whole Board of Directors
of the Corporation will automatically be increased by two and the holders of the
shares of Series E Cumulative Preferred Stock, voting noncumulatively as a
single class, will be entitled to elect such additional two directors to the
Corporation's Board of Directors until all due and unpaid dividends have been
paid in full or declared and irrevocably set aside in trust for payment.
The affirmative vote of at least two-thirds of the shares of Series E
Cumulative Preferred Stock, voting as a separate class, is required to approve
an amendment of any provision of the Certificate of Incorporation or the
Certificate of Designation to alter or change the powers, preferences or special
rights (including voting powers and rights) of shares of Series E Cumulative
Preferred Stock so as to affect them adversely. The same affirmative vote is
required to approve any merger, consolidation or reorganization pursuant to the
terms of which the Series E Cumulative Preferred Stock would not remain
outstanding in accordance with the terms of the Certificate of Designation,
unless the terms of such transaction provide that the holders of shares of
Series E Cumulative Preferred Stock would receive at least the same amount in
cash per share as they would receive in connection with a mandatory redemption
that were to occur at the time of the consummation of such merger, consolidation
or reorganization. The affirmative vote of at least three-fourths of the shares
of Series E Cumulative Preferred Stock, voting as a single class, is required
for the authorization or creation of any shares of preferred stock that are not
Senior Shares, Parity Shares or Junior Shares. However, without limiting such
other actions as would not be deemed to alter or change the powers, preferences
or special rights (including voting powers and rights) of holders of shares of
Series E Cumulative Preferred Stock so as to affect them adversely, neither (i)
the creation, authorization or issuance of any Senior Shares, Parity Shares,
Junior Shares or shares of Common Stock, nor (ii) subject to the provisions of
clause (i) in the second paragraph under the caption "Dividends", above, any
increase in the authorized number of shares of Series E Cumulative Preferred
Stock set forth in the Certificate of Designation will require the consent of
the holders of Series E Cumulative Preferred Stock or be deemed to alter or
change the powers, preferences or special rights (including voting powers and
rights) of holders of shares of Series E Cumulative Preferred Stock so as to
affect them adversely. In addition, the above-described voting requirements do
not apply if notice of redemption of the shares of Series E Cumulative Preferred
Stock has been given and funds have been irrevocably deposited in trust for such
redemption.
Except as required by law, the holders of shares of Series E Cumulative
Preferred Stock will not be entitled to vote on any merger or consolidation
involving the Corporation or a sale of all or substantially all of the assets of
the Corporation.
Because the shares of Series E Cumulative Preferred Stock must be redeemed
following a Change of Control, it is possible that, depending on various
factors, including the number of shares of Series E Cumulative Preferred Stock
outstanding, the Series E Cumulative Preferred Stock may have an effect on
whether a Change of Control occurs or the terms of any transaction pursuant to
which a Change of Control would occur.
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ANNEX B
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
THIS ANNEX IS A SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS THAT
MAY BE RELEVANT TO SHAREHOLDERS RECEIVING THE TELEDYNE, INC. SERIES E CUMULATIVE
PREFERRED STOCK (THE "PREFERRED STOCK"). THE DISCUSSION IS BASED UPON THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), TREASURY REGULATIONS,
INTERNAL REVENUE SERVICE ("IRS") RULINGS AND JUDICIAL DECISIONS NOW IN EFFECT,
ALL OF WHICH ARE SUBJECT TO CHANGE AT ANY TIME BY LEGISLATIVE, JUDICIAL OR
ADMINISTRATIVE ACTION. ANY SUCH CHANGES COULD BE RETROACTIVELY APPLIED IN A
MANNER THAT COULD ADVERSELY AFFECT A HOLDER OF THE PREFERRED STOCK. NO
INFORMATION OR DISCUSSION IS PROVIDED HEREIN WITH RESPECT TO FOREIGN, STATE OR
LOCAL TAX LAWS, ESTATE AND GIFT TAX CONSIDERATIONS, OR OTHER TAX ISSUES. THIS
INFORMATION APPLIES TO SHAREHOLDERS WHO HOLD TELEDYNE, INC. COMMON STOCK
("COMMON STOCK") AND WILL HOLD THE PREFERRED STOCK AS A "CAPITAL ASSET" WITHIN
THE MEANING OF SECTION 1221 OF THE CODE. IN ADDITION, THE TAX CONSEQUENCES TO A
PARTICULAR TYPE OF HOLDER (INCLUDING LIFE INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS, BANKS, DEALERS IN SECURITIES AND FOREIGN PERSONS) MAY BE AFFECTED
BY MATTERS NOT DISCUSSED HEREIN.
ACCORDINGLY, SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING
THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE RECEIPT, OWNERSHIP
AND DISPOSITION OF THE PREFERRED STOCK.
RECEIPT OF PREFERRED STOCK
The Company believes that the receipt of Preferred Stock by holders of
Common Stock should not be currently taxable to such holders. However, the
Preferred Stock should constitute "Section 306 Stock," to the extent of current
or accumulated earnings and profits of the Company determined at the end of 1995
allocable to the value of such Preferred Stock, which will have certain ordinary
income consequences upon sale, exchange or redemption. See "Sale, Exchange or
Redemption" below. Receipt of cash in lieu of fractional shares of Preferred
Stock should constitute a dividend to the recipients, to the extent of current
and accumulated earnings and profits of the Company determined at the end of
1995 allocable to such distributions.
A holder of Common Stock receiving a distribution of Preferred Stock will be
required to allocate the tax basis in the shares of Common Stock with respect to
which a share of Preferred Stock is received between such Common Stock and
Preferred Stock in proportion to the relative fair market values of such Common
Stock and Preferred Stock. Such holder's holding period in the Preferred Stock
will include the period the respective Common Stock was held.
DIVIDEND DISTRIBUTIONS ON PREFERRED STOCK
Cash dividend distributions paid on the Preferred Stock will be taxable as
ordinary income to a holder to the extent of the Company's current or
accumulated earnings and profits as determined for federal income tax purposes
at the end of the Company's respective taxable year. To the extent a dividend
distribution exceeds the Company's current and accumulated earnings and profits,
such distribution will be treated first as a return of capital, reducing the
holders' adjusted tax basis in the Preferred Stock, and then as a capital gain.
Although the Company currently expects that it will have sufficient current or
accumulated earnings and profits to cover the payment of dividends on the
Preferred Stock, the availability of current and accumulated earnings and
profits will depend upon the future operations and profitability of the Company.
Under Code Section 243, dividends received by a corporation may be eligible
for the 70% dividends-received deduction, to the extent they are made out of
current or accumulated earnings and
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profits. However, the applicability of the dividends-received deduction is
subject to certain holding period limitations set forth in Code Section 246.
Moreover, if the purchase of the Preferred Stock is "debt-financed" within the
meaning of Section 246A of the Code, the dividends-received deduction may be
reduced or eliminated. Corporate holders of Preferred Stock also should consider
the application of the "extraordinary dividend" rules of Code Section 1059 as
well as the possible reduction or elimination of the benefit of the
dividends-received deduction due to the corporate alternative minimum tax
provisions of the Code. Regular dividends paid to a corporate holder of the
Preferred Stock should not constitute extraordinary dividends under Section 1059
of the Code.
DISPOSITIONS OF PREFERRED STOCK
In general, a taxable disposition of Section 306 Stock will result in
ordinary income to the holder. If such disposition is a redemption, all of the
proceeds will be dividend income to the extent of current and accumulated
earnings and profits determined at the end of the year of redemption.
Dispositions other than redemptions will result in the receipt of ordinary
income to the extent of the lesser of the value of consideration received on
disposition and the amount that would have been treated as a dividend if cash
equal to the fair market value of the Section 306 Stock had been distributed
instead of the Section 306 Stock. Any excess of the amount realized on a
disposition other than a redemption over the amount treated as ordinary income
plus the adjusted basis of the Section 306 Stock will be treated as gain from
the sale of such stock. No loss will be recognized on such disposition, but the
basis of the Section 306 Stock represented by such disallowed loss will be
transferred to the Common Stock held by the holder of the Section 306 stock. If
the full amount of proceeds on disposition are taxable as ordinary income, the
full basis in the Section 306 Stock will be transferred to the Common Stock held
by the holder of the Section 306 stock. In addition, special rules limit the
deductibility of charitable contributions of Section 306 Stock.
There are several exceptions to the above general rules, including the
following: dispositions resulting in the complete termination of any stock
interest of the holder in the Company; dispositions resulting from complete
liquidation of the Company; dispositions which qualify for non-recognition of
gain or loss under the Code; and dispositions not in pursuance of a plan having
as one of its principal purposes the avoidance of Federal income tax. BECAUSE
CERTAIN OF THE EXCEPTIONS TO THE SECTION 306 STOCK DISPOSITION RULES ARE BASED
ON THE SPECIFIC FACTS AND CIRCUMSTANCES OF EACH HOLDER OF PREFERRED STOCK,
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS TO DETERMINE THE TAX CONSEQUENCES OF
ANY PLANNED DISPOSITION OF THE PREFERRED STOCK.
If an exception to the Section 306 Stock disposition rules applies, upon the
sale or exchange of shares of Preferred Stock, the holder will recognize gain or
loss equal to the difference between the amount realized and the holder's
adjusted tax basis in the Preferred Stock. The resulting gain or loss will be a
capital gain or loss and will be a long-term capital gain or loss if the holding
period of the Preferred Stock is more than one year.
A redemption of shares of the Preferred Stock which is excepted from the
Section 306 Stock disposition rules will be taxable as a sale or exchange if the
redemption (a) results in a "complete termination" of the shareholder's stock
interest in the Company under Section 302(b)(3) of the Code, (b) is
"substantially disproportionate" with respect to the shareholder under Section
302(b)(2) of the Code, (c) is "not essentially equivalent to a dividend" with
respect to the shareholder under Section 302(b)(1) of the Code, or (d) is from a
noncorporate shareholder in partial liquidation of the Company under Section
302(b)-(4) of the Code. In determining whether any of these tests has been met,
shares considered to be owned by the shareholder by reason of the constructive
ownership rules
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<PAGE>
set forth in Section 318 of the Code (pursuant to which a shareholder will be
deemed to own shares owned by certain related individuals and entities or shares
subject to an option), as well as the shares actually owned, would generally be
taken into account. If the redemption of shares of Preferred Stock for cash
satisfies any of the above Section 302 tests with respect to a holder, such
holder will recognize capital gain or loss measured by the difference between
the amount of cash received and the holder's adjusted tax basis in the redeemed
shares. If the redemption does not satisfy any of the Section 302 tests, the
gross proceeds will be treated as a distribution taxable as a dividend to the
extent of the Company's current or accumulated earnings and profits during the
year of redemption and any excess will be treated first as a return of capital
and then as a capital gain.
A holder whose proceeds from a redemption is taxed as a dividend would
transfer the tax basis in the Preferred Stock redeemed (reduced for any amounts
treated as the non-taxed portion of extraordinary dividends under Section 1059
or as a return of capital) to any retained stock interest in the Company.
GENERAL BACK-UP WITHHOLDING
Under Section 3406 of the Code and the applicable Treasury regulations, a
holder of Common Stock or Preferred Stock may be subject to back-up withholding
tax at the rate of 31% with respect to dividend distributions and the proceeds
of a sale, exchange or redemption of the Preferred Stock. Unless the holder is
exempt from back-up withholding, the Company or a broker will be required to
deduct and withhold the tax if (i) the holder fails to furnish a taxpayer
identification number ("TIN"), (ii) the IRS notifies the Company or the broker
that the TIN furnished by the holder is incorrect, (iii) there has been a
notified holder under-reporting with respect to interest, dividends or original
issue discount described in Section 3406(c) of the Code, or (iv) there has been
a failure of the holder to certify under the penalty of perjury that the holder
is not subject to withholding under Section 3406(a)(1)(D) of the Code. As a
result, if any one of the events discussed above occurs, the Company or the
broker generally will be required to withhold a tax equal to 31% from any
taxable payment made with respect to the Common Stock or Preferred Stock.
Holders should consult their tax advisors regarding their qualification for
exemption from back-up withholding and the procedure for obtaining any
applicable exemption.
FOREIGN WITHHOLDING
Dividends paid to foreign holders of Common Stock or Preferred Stock may be
subject to a 30% withholding tax. However, a foreign holder will be taxed at
ordinary federal income tax rates (on a net income basis) on dividends that are
effectively connected with the conduct of a trade or business of such foreign
holder within the United States and therefore will not be subject to the 30%
withholding tax described above. The withholding tax may be decreased if the
holder qualifies for a reduced withholding rate on dividends under an applicable
U.S. tax treaty. Foreign holders must comply with certain certification and
disclosure requirements to claim treaty benefits or an exemption from
withholding tax under the foregoing rules.
REPORTING REQUIREMENTS
Reports will be made annually or otherwise as may be required to the IRS and
to the holders of record that are not excepted from such reporting requirements
with respect to distributions on the Common Stock and Preferred Stock.
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ANNEX C
CERTAIN ADDITIONAL INFORMATION
TELEDYNE, INC. (THE "COMPANY") IS ENGAGED IN AN "ELECTION CONTEST" FOR
PURPOSES OF RULE 14A-11 PROMULGATED PURSUANT TO THE SECURITIES EXCHANGE ACT OF
1934 ACT, AS AMENDED (THE "1934 ACT"), BY REASON OF THE NOMINATION BY WHX
CORPORATION OF A SLATE OF INDIVIDUALS FOR ELECTION TO THE BOARD OF DIRECTORS OF
THE COMPANY AT THE 1995 ANNUAL MEETING OF SHAREHOLDERS OF THE COMPANY. RULE
14A-11 REQUIRES CERTAIN INFORMATION TO BE PROVIDED IN ANY "SOLICITATION" MADE
PRIOR TO FURNISHING SECURITY HOLDERS A WRITTEN PROXY STATEMENT CONTAINING
CERTAIN SPECIFIED INFORMATION. THE COMPANY DOES NOT CONSIDER THAT THE FOREGOING
LETTER CONSTITUTES A "SOLICITATION" FOR THE PURPOSES OF THE PROXY RULES
PROMULGATED PURSUANT TO THE EXCHANGE ACT, INCLUDING RULE 14A-11. HOWEVER, THE
FOLLOWING INFORMATION IS FURNISHED PURSUANT TO RULE 14A-11 IN THE EVENT THAT THE
FOREGOING LETTER MAY BE DEEMED TO CONSTITUTE A "SOLICITATION" FOR SUCH PURPOSES.
The following individuals, all of whom are directors of Teledyne, may be
deemed participants in the solicitation of proxies on behalf of Teledyne's Board
of Directors: Frank V. Cahouet (Chairman of the Board, Chief Executive Officer
and President of Mellon Bank Corporation); Diane C. Creel (Chairwoman, Chief
Executive Officer and President of The Earth Technology Corporation); George
Kozmetsky (Executive Associate for Economic Affairs, University of Texas System,
and Director of IC(2) Institute); Donald B. Rice (President and Chief Operating
Officer of Teledyne); George A. Roberts (private investor); William P. Rutledge
(Chairman of the Board and Chief Executive Officer of Teledyne); Fayez Sarofim
(Chairman of the Board and President of Fayez Sarofim & Co.); and Henry E.
Singleton (rancher and private investor). Each of Mr. Cahouet and Ms. Creel is
the direct beneficial owner of 100 shares of Teledyne's Common Stock ("Common
Stock"). Dr. Kozmetsky, either directly, through his spouse or RGK Foundation,
Inc. (a charitable foundation of which he is a trustee), may be deemed to be the
beneficial owner of 2,903,230 shares of Common Stock. Dr. Rice is the direct
beneficial owner of 106,000 shares of Common Stock (including 70,000 shares
subject to stock options exercisable within 60 days of February 17, 1995). Dr.
Roberts, directly and through his spouse, may be deemed to be the beneficial
owner of 428,415 shares of Common Stock. Mr. Rutledge is the direct beneficial
owner of 219,000 shares of Common Stock (including 210,000 shares subject to
stock options exercisable within 60 days of February 17, 1995). Mr. Sarofim,
individually and through Fayez Sarofim & Co. (of which Mr. Sarofim is the
majority shareholder) and the Pension and Profit Sharing Trusts of Fayez Sarofim
& Co. (of which Mr. Sarofim is trustee), may be deemed to be the beneficial
owner of 1,366,250 shares of Common Stock. Dr. Singleton is the direct
beneficial owner of 7,272,260 shares of Common Stock. Dr. Kozmetsky disclaims
beneficial ownership of the 794,509 shares of Common Stock held in the name of
RGK Foundation, Inc. and the 79,000 shares of Common Stock held in his spouse's
name. Dr. Roberts disclaims beneficial ownership of the 8,593 shares of Common
Stock held in his spouse's name. The foregoing share ownership numbers are as of
February 17, 1995. Drs. Roberts and Singleton are also beneficial owners of
$852,000 and $28,000 principal amount, respectively, of Teledyne debt
securities.
Each of Messrs. Roberts, Sarofim and Singleton is a Director of both
Argonaut Group, Inc. ("Argonaut") and Unitrin, Inc. ("Unitrin"), which are
former subsidiaries of Teledyne. Teledyne was during 1994, and continues to be,
a party to certain contracts and transactions with Argonaut, Unitrin and their
respective subsidiaries. As of January 31, 1995, Teledyne's directors and
executive officers beneficially owned, in the aggregate, in excess of 20% and
25% of the outstanding common stock of
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Argonaut and Unitrin, respectively. During 1994, Teledyne paid approximately
$393,000 to Mellon Bank, N.A., a subsidiary of Mellon Bank Corporation ("MBC"),
for banking services and anticipates using such banking services in the future.
As of January 31, 1995, MBC or its subsidiaries may be deemed to have
beneficially owned 396,000 shares of Common Stock and may have owned certain
debt securities of Teledyne (including shares of Common Stock and debt
securities held by MBC and its subsidiaries for their respective accounts and by
trusts and other accounts over which MBC or its subsidiaries exercise investment
discretion). In addition, as of February 21, 1995, Fayez Sarofim & Co., through
numerous investment advisory accounts over which it may exercise investment
discretion, may be deemed to have beneficially owned approximately $2.55 million
principal amount of Teledyne debt securities.
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<PAGE>
[LOGO]
2049 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067-3101
(310) 551-4306 FAX (310) 551-4366
March 8, 1995
Dear Teledyne Street Name Shareholder:
Enclosed is a copy of a booklet being sent to registered shareholders of
Teledyne, Inc. Common Stock regarding our recently announced quarterly dividend
payment. We encourage you to read it carefully.
To summarize, Teledyne's Board of Directors declared a dividend of $.25 per
share of Common Stock on January 25, payable $.10 in cash and $.15 in a new
Series E Cumulative Preferred Stock on March 8 to holders of record on February
15. The enclosed booklet contains information about the terms of the Series E
Preferred Stock and certain federal income tax consequences of its issuance.
As a street name holder, your dividend payment will be reflected in your next
brokerage statement through cash and/or preferred stock credits to your account.
Any questions you may have about these credits should be directed to your
broker. Please be aware that only shareholders who purchased Teledyne shares on
or before February 8, 1995 qualify for this dividend payment.
Sincerely,
[SIG] [SIG]
William P. Rutledge Donald B. Rice
CHAIRMAN AND PRESIDENT AND
CHIEF EXECUTIVE OFFICER CHIEF OPERATING OFFICER
