As filed with the Securities and Exchange Commission on February 25, 2005
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DOW JONES & COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 2711 13-5034940
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)
200 LIBERTY STREET
NEW YORK, NEW YORK 10281
(212) 416-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JOSEPH A. STERN, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
DOW JONES & COMPANY, INC.
200 LIBERTY STREET
NEW YORK, NEW YORK 10281
(212) 416-2000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
LOIS HERZECA, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP
ONE NEW YORK PLAZA
NEW YORK, NEW YORK 10004
(212) 859-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED EXCHANGE OFFER: As soon
as practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. |_|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
CALCULATION OF REGISTRATION FEE
===============================================================================
PROPOSED PROPOSED
TITLE OF EACH AMOUNT TO BE MAXIMUM MAXIMUM AMOUNT OF
CLASS OF REGISTERED OFFERING AGGREGATE REGISTRATION FEE
SECURITIES TO BE PRICE OFFERING
REGISTERED PER NOTE(1) PRICE
- -------------------------------------------------------------------------------
3.875% Senior
Notes due
2008............. $225,000,000 100% $225,000,000 $26,483
- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act.
-----------------------------
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
SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES OR CONSUMMATE THE EXCHANGE OFFER UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR EXCHANGE THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO ACQUIRE OR EXCHANGE THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER, SALE OR EXCHANGE IS NOT
PERMITTED.
Subject to Completion, dated February 25, 2005
PROSPECTUS
DOW JONES & COMPANY, INC.
EXCHANGE OFFER FOR
$225,000,000
3.875% SENIOR NOTES DUE 2008
We are offering to exchange up to $225,000,000 of our new 3.875%
Senior Notes due 2008 ("exchange notes"), which will be registered under
the Securities Act of 1933, as amended (the "Securities Act"), for up to
$225,000,000 of our outstanding 3.875% Senior Notes due 2008 (the
"outstanding notes"). We are offering to exchange the exchange notes for
the outstanding notes to satisfy our obligations contained in the
registration rights agreement that we entered into when the outstanding
notes were sold pursuant to Rule 144A and Regulation S under the Securities
Act. The outstanding notes surrendered in exchange for the exchange notes
will be retired and canceled and will not be reissued. Accordingly,
issuance of the exchange notes will not result in any increase in our
outstanding indebtedness.
The terms of the exchange notes are identical to the terms of the
outstanding notes, except that the transfer restrictions, registration
rights and additional interest provisions relating to the outstanding notes
do not apply to the exchange notes.
There is no existing public market for the outstanding notes or the
exchange notes. We do not intend to list the exchange notes on any
securities exchange or seek approval for quotation through any automated
trading system.
The principal features of the exchange offer are as follows:
o The exchange offer will expire at 5:00 p.m., New York City time
on , 2005, unless we extend it.
o We will exchange all outstanding notes that are validly tendered
and not validly withdrawn prior to the expiration of the exchange
offer.
o You may withdraw tendered outstanding notes at any time prior to
the expiration of the exchange offer.
o The exchange of outstanding notes for exchange notes pursuant to
the exchange offer will be a tax free event for United States
federal tax purposes.
Broker-dealers receiving exchange notes in exchange for outstanding notes
acquired for their own account through market-making or other trading
activities must deliver this prospectus in any resale of the exchange notes.
---------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon
the adequacy or accuracy of the prospectus. Any representation to the
contrary is a criminal offense.
The date of this prospectus is , 2005
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANY OTHER PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH
DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. YOU
SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS PROSPECTUS IS ACCURATE
ONLY AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS.
TABLE OF CONTENTS
PAGE
----
Where You Can Find More Information........................................i
Incorporation by Reference................................................ii
Forward-Looking Statements...............................................iii
Prospectus Summary.........................................................1
No Cash Proceeds to the Company............................................8
Capitalization.............................................................8
Ratio of Earnings to Fixed Charges.........................................9
Selected Historial Consolidated Financial Information.....................10
The Exchange Offer........................................................12
Description of the Exchange Notes.........................................20
United States Federal Tax Considerations..................................34
Plan of Distribution......................................................41
Legal Matters.............................................................41
Experts...................................................................42
In this prospectus, unless the context otherwise requires, "Dow Jones,"
"the Company," "we," "us" and "our" and all similar references are to Dow
Jones & Company, Inc., unless otherwise stated or the context otherwise
requires; "outstanding notes" refers to the 3.875% Senior Notes due 2008
that were issued in a transaction exempt from registration under the
Securities Act on February 17, 2005 and "exchange notes" refers to the
3.875% Senior Notes due 2008 offered pursuant to this prospectus; and
"initial purchasers" refers to J.P. Morgan Securities Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated and certain other initial
purchasers pursuant to a purchase agreement between us and those entities,
dated February 14, 2005, relating to the sale of the outstanding notes. We
sometimes refer to the outstanding notes and the exchange notes
collectively as the "notes."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and other
documents with the Securities and Exchange Commission ("SEC") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
public may read and copy any materials filed with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet
web site that contains reports, proxy and information statements, and other
information regarding issuers, including us, that file electronically with
the SEC. The public can obtain any documents that we file with the SEC at
http://www.sec.gov.
This prospectus incorporates business and financial information about the
company that is not included in or delivered with the prospectus. See
"Incorporated by Reference" below. We make available free of charge on or
through our Internet web site (http://www.dowjones.com) our Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,
and, if applicable, amendments to those reports filed or furnished pursuant
to Section 13(a) of the Exchange Act as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC.
In addition, you may request copies of these filings at no cost by writing
us at Dow Jones & Company, Inc., 200 Liberty Street, New York, New York,
10281, Attention: Investor Relations.
IN ORDER TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST THE INFORMATION NO
LATER THAN , 2005, WHICH IS FIVE DAYS BEFORE THE EXPIRATION OF THE
EXCHANGE OFFER.
i
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information by
referring you to those documents that are considered part of this
prospectus. Any statement contained in this prospectus or in a document
incorporated by reference in this prospectus will be deemed to be modified
or superseded for purposes of this prospectus to the extent that a
statement contained herein or therein, or in any other subsequently filed
document that also is deemed to be incorporated herein or therein by
reference, modifies or supersedes such statement. A statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus. We incorporate by reference into this
prospectus the documents set forth below that have been previously filed
with the SEC, provided, however, that we are not incorporating any
information furnished rather than filed on any Current Report on Form 8-K:
o our Annual Report on Form 10-K for the year ended December 31,
2003;
o our Quarterly Reports on Form 10-Q for the quarters ended March
31, 2004, June 30, 2004 and September 30, 2004;
o our Current Reports on Form 8-K filed on September 20, 2004,
November 15, 2004, December 22, 2004, December 23, 2004, January
20, 2005, February 14, 2005 and February 18, 2005 and our Current
Report on Form 8-K/A filed on February 14, 2005; and
o any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act until the termination of
the offering to which this prospectus relates.
To obtain copies of these filings, please see "Where You Can Find More
Information" above.
We have filed with the SEC under the Securities Act and the rules and
regulations thereunder a registration statement on Form S-4 with respect to
the exchange notes. This prospectus is a part of that registration
statement. As allowed by SEC rules, this prospectus does not contain all the
information you can find in the registration statement or the exhibits to the
registration statement. The exhibits to the registration statement and our
Current Report on Form 8-K filed on February 18, 2005 contain the full text
of certain agreements and other important documents we have summarized in
this prospectus. Because these summaries may not contain all of the
information that you may find important in deciding whether to exchange the
outstanding notes for exchange notes, you should review the full text of
these documents.
ii
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements made by or on behalf of us. We and our
representatives may, from time to time, make written or verbal
forward-looking statements, including statements contained in this
prospectus (including information incorporated by reference herein).
Generally, the inclusion of the words "believe," "expect," "intend,"
"estimate," "anticipate," "will," and similar expressions, herein
(including information incorporated herein by reference), in future filings
with the SEC, in our press releases and in oral statements made by our
representatives, identify statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act and that are intended to come within the
safe harbor protection provided by those sections. The forward-looking
statements are and will be based upon management's then-current views and
assumptions regarding future events and operating performance, and are
applicable only as of the dates of such statements. We undertake no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.
By their nature, forward-looking statements involve risk and uncertainties
that could cause actual results to differ materially from anticipated
results. Such risks and uncertainties include, but are not limited to:
RISKS RELATING TO OUR BUSINESS
ADVERTISING REVENUES
We derive a majority of our revenue from advertising, primarily in
connection with our print publications and our online network of web sites.
Our overall performance in print publishing is largely dependent on the
operating performance of the global Wall Street Journal (including its
extended online and television brand and content), which, to a significant
extent, is dependent upon business-to-business ("B2B") advertising
generated by the distinctive demographic profile of The Wall Street
Journal's audience.
Our advertising revenues are negatively impacted by economic downturns in
any of our advertising markets, but particularly by downturns in our core
market, B2B advertising. We have recently experienced depressed levels of
advertising in the B2B market, and B2B advertising buyers continue to make
spending decisions increasingly closer to publication dates, generally on a
month-to-month basis. Our B2B advertising levels, particularly in
technology and finance, which have typically represented approximately 40%
of The Wall Street Journal's advertising linage, may or may not return to
historical levels. We have experienced decreases in technology advertising,
particularly computer software and communications advertising, which we
believe may be a result of reduced corporate information technology
spending and generally reduced levels of technology company profits and
share prices. We have also experienced decreases in financial advertising,
including weakness in retail financial advertising, which we believe may be
due to retail financial institutions focusing on reaching more mass
consumer audiences through advertisements in media that target these
audiences, and a decline in tombstone ads, which we believe may be a result
of reduced deal activity and changing advertising practices.
Although we have taken initiatives (including the 2002 introduction of our
Personal Journal section of The Wall Street Journal and our new Weekend
Edition, which will be a weekend publication of The Wall Street Journal
beginning in September 2005) to attract more consumer advertising and other
diversified advertising, we may or may not be able to further penetrate
these new consumer advertising segments. In particular, The Wall Street
Journal's broad national circulation limits our ability to provide certain
local advertising to consumers, which advertising is featured in the
regional publications of some of our competitors. Furthermore, our new
Weekend Edition may fail to generate anticipated advertising revenues,
resulting in greater losses than are currently expected in its first two
years of operation. In addition, the new Weekend Edition may draw
advertising away from our other consumer advertising
iii
sections, such as the Weekend Journal section of The Wall Street Journal
(introduced in 1998) and Personal Journal, for consumer advertising
revenues.
Our community newspapers rely on advertising revenue from local
advertisers. These revenues may be negatively impacted by the condition of
the economy in the areas where our community newspapers are circulated and
by the advertising habits of large regional advertisers who may change
their spending patterns or go out of business.
CIRCULATION REVENUES
Circulation revenues from our publications, in particular The Wall Street
Journal, are another significant source of revenue for us. Our circulation
revenue may be impacted by competition from other publications and other
forms of media. In addition, the nature of The Wall Street Journal's
circulation base, especially its distinctive demographics (in particular,
its influential and affluent audience that makes significant B2B spending
decisions and spends heavily on personal consumption items), is an
important factor in generating circulation and advertising revenues. If we
are unable to maintain our core demographic audience, our overall
profitability could decline.
Our circulation revenues at The Wall Street Journal and community
newspapers may be negatively impacted by the preferences of many younger
consumers for news in new media formats and from untraditional sources
rather than from newspapers. If these younger consumers maintain these
preferences as they age, this development could, in turn, adversely affect
the willingness of advertisers to place ads with us and/or the rates they
are willing to pay.
Although we seek to cost-effectively maintain our circulation base and its
distinctive demographics (including by implementing content, organization
and design changes to The Wall Street Journal), we may not be successful in
doing so. In addition, we may incur additional costs to do so and we cannot
assure you that we will be able to recover these costs through increased
circulation and advertising revenues.
SUBSCRIPTIONS
Certain of our electronic publishing businesses, including Dow Jones
Newswires, are subscriber-based and are vulnerable to losses in the number
of subscribers. For example, Dow Jones Newswires could lose subscriptions,
measured by the number of terminals carrying Dow Jones Newswires, as a
result of business consolidations and layoffs in the financial services
industry. Similarly, WSJ.com, which currently is the largest paid
subscription news site on the Internet, may not be able to continue to
increase revenues through growing the number of subscribers. Unlike
WSJ.com, our competitors do not, for the most part, utilize a full online
paid subscription model, and most remain free web sites.
SEASONALITY
Our results of operations are subject to seasonal fluctuations, which
typically cause revenues in the third quarter (which includes the months of
July and August) to be lower than revenues in the remainder of the year.
COST STRUCTURE
We have engaged in cost-cutting over the last several years, but we may not
be able to continue limiting our expense growth. Factors that may impact
our ability to control expense growth in the future include our prior cost
cutting, the tightening of the labor market and the resulting risk of loss
of key employees, and our planned growth initiatives, such as our
acquisition of MarketWatch, Inc. ("MarketWatch") and our
iv
new Weekend Edition. If we are unable to continue to control expense growth
in the future, there may be an adverse effect on our overall profitability.
COMPETITION
All of our products and services face intense competition from other
newspapers, national business magazines, television, trade publications,
newsletters, research reports and services, free and paid Internet sites,
and other new media. We compete for advertising revenues, subscriptions and
consumers, which include readers, online users and television viewers.
Metropolitan general interest newspapers and many small city or suburban
papers carry business and financial content, as do many Internet-based
services as well as television and radio. In addition, specialized
magazines in the business and financial field, as well as general news
magazines, publish substantial amounts of business-related material. The
Wall Street Journal also competes for advertising with non-business
publications offering audiences of high demographic quality, such as
technology and lifestyle magazines. Circulation revenues at our community
newspapers may be negatively impacted by local competition, including free
publications. Nearly all of these other publications and services seek
audiences and seek to sell advertising, making them competitive with our
publications and services.
Our efforts to expand in Europe have been limited by substantial
competition from local language publications, other international
publications, and local and international television networks, as well as
the limited nature of the foreign language market which we serve. In Asia,
our presence with our Pan-Asia publications may be threatened by
developments within the region such that readers may prefer local language
or local market publications. As the economies of the various individual
Asian nations develop over time, we may encounter further difficulties in
continuing to appeal to a broader Pan-Asian audience.
Our Dow Jones Newswires business and financial news products are
distributed through a limited number of vendors, which distribute our news
over their platforms into financial services companies, that receive our
content by way of subscriptions with these vendors. Newswires has entered
into a bundling arrangement to deliver a selection of our news on all
Moneyline Telerate terminals worldwide; this arrangement is important to
Newswires' international revenues and may be adversely affected by the
impending acquisition by Reuters of the Moneyline Telerate business.
Moreover, sales of our Dow Jones Newswire products may continue to be
negatively impacted by technological changes and changes in the brokerage
industry, which have resulted in a diminishing reliance on real time news
as business and financial news has become increasingly available via
Internet-based publications and services. In addition, as we strive to
increase our international revenues from the Dow Jones Newswires business,
we may not succeed given the competition from and subscribers' desire for,
local language news services.
There can be no assurance that we will be able to increase or to maintain
the advertising, readership, circulation or subscriptions market share that
we currently enjoy. In addition, changes in the regulatory and
technological environment are bringing about a global consolidation of
media and telecommunications companies and convergence among various forms
of media. As a result, our operations could face increased competition from
larger media entities.
INTELLECTUAL PROPERTY
We rely on a combination of trademarks, trade names, copyrights, and other
proprietary rights, as well as contractual arrangements, including
licenses, to establish and protect our intellectual property and brand
names. We believe our proprietary trademarks and other intellectual
property rights are important to our continued success and our competitive
position.
Dow Jones Indexes licenses, sometimes exclusively, our proprietary indexes
and trademarks to exchanges and financial institutions for use as the basis
of financial products. For example, Dow Jones has licensed the Dow Jones
Industrial Average index and related trademarks to the American Stock
v
Exchange as the basis of the DIAMONDS exchange-traded fund. Two lawsuits
relevant to the index licensing industry are pending in the U.S. District
Court for the Southern District of New York. Each of these suits is testing
an index provider's ability to enforce its intellectual property rights
with respect to certain licensing activities. Although we are not a party
to either lawsuit, if the index provider's intellectual property rights are
successfully challenged, our ability to license our own index-related
property for certain uses may be impaired and our revenues related to such
licensing activities could be negatively impacted.
ACQUISITIONS
From time to time, we seek out strategic and financially attractive
acquisition opportunities. Such acquisitions may affect our costs,
revenues, profitability and financial position. Acquisitions, including our
recent acquisition of MarketWatch, involve risks and uncertainties,
including difficulties in integrating acquired operations, diversions of
management resources and loss of key employees, challenges with respect to
operating new businesses, debt incurred in financing such acquisitions
(including the related possible reduction in our credit ratings and
increase in our cost of borrowing) and unanticipated problems and
liabilities.
NEW BUSINESS OPPORTUNITIES AND STRATEGIC ALLIANCES
There are substantial uncertainties associated with our efforts to leverage
our brands to develop new business opportunities and to generate
advertising and other revenues from these products. Initial timetables for
the introduction and development of new products or services may not be
achieved and price and profitability targets may not prove feasible. For
example, we may be unable to successfully control expenses relating to the
launch of our new Weekend Edition and may not achieve the gains from
advertising revenues that we hope to achieve. We also face challenges in
our attempts to achieve new strategic alliances and to improve the growth
and profitability of existing strategic alliances. For example, we
occasionally make non-controlling minority investments in public and
private entities. We may have limited voting rights and, therefore, an
inability to influence the direction of such entities. Therefore, the
success of these ventures may be dependent upon the efforts of our
partners, fellow investors and licensees. In addition, external factors,
such as the development of competitive alternatives and market response,
may negatively impact the success of these new opportunities and alliances.
MDC/CANTOR FITZGERALD LEGAL PROCEEDING
We are currently party to a legal proceeding with Market Data Corp. ("MDC")
and Cantor Fitzgerald Securities with respect to our obligations, if any,
under a guarantee issued to MDC and Cantor Fitzgerald Securities. The
guarantee relates to certain annual "minimum payments" owed through October
2006 by Telerate under certain conditions for data acquired by Telerate
from Cantor Fitzgerald Securities and MDC under contracts entered into by
Telerate when Telerate was a subsidiary of ours. We have established a
reserve ($259.2 million as of September 30, 2004) to cover payments we may
need to make if we are required to perform under the guarantee to Cantor
Fitzgerald Securities and MDC. However, if we are required to make payments
under this guarantee, whether pursuant to a judgment in the litigation or a
settlement agreement, those payments would negatively impact our cash flow.
LABOR RELATIONS
Approximately 28% of our full-time employees is unionized. As a result, we
are required to negotiate the wages, salaries, benefits, staffing levels
and other terms with many of our employees collectively. Our results could
be adversely affected if labor negotiations caused work interruptions or if
we are unable to negotiate agreements on reasonable terms. In addition, in
light of our efforts to manage expenses, we may face difficulties in
attracting and retaining qualified personnel, particularly as the labor
market tightens and more opportunities are available elsewhere with higher
wages.
vi
NEWSPRINT PRICES
Newsprint is our single most important raw material and represented
approximately 7.5% of our total operating expenses in each of 2003 and
2004. The price of newsprint has historically been volatile. Consolidation
in the North American newsprint industry has reduced the number of
suppliers. This has led to paper mill closures and conversions to other
grades of paper, which, in turn, have decreased overall newsprint capacity
and increased the likelihood of price increases in the future. Our
operating results could be adversely affected if newsprint prices increase
significantly.
WORLD EVENTS
Our results of operations may be affected in various ways by events beyond
our control, such as wars, political unrest, natural disasters and acts of
terrorism. The September 11th terrorist attacks in the United States and
the war in Iraq each contributed to a downturn in the U.S. domestic economy
that, in turn, resulted in a temporary decline in advertising. Similar
events may occur in the future and could have a material adverse effect on
our operating results.
RISKS RELATING TO MARKETWATCH
In addition to the acquisition-related risks described under "--Risks
Relating to Our Business - Acquisitions" above, in connection with our
acquisition of MarketWatch, we face the risk that the market for online
advertising will not grow as rapidly as we expect or that we will
ultimately be unable to capitalize on any such growth. Like our other
online products and services, the MarketWatch business is vulnerable to the
following risks and uncertainties, among others: competition for readers
and advertising revenues; changes in demand for its products and services,
including its licensing business; fluctuations in traffic levels on its web
sites; and potential increased regulation, including with respect to
privacy laws.
RISKS RELATING TO THE NOTES
RATINGS OF THE EXCHANGE NOTES
The exchange notes have been rated "A2" by Moody's Investors Service, "A-"
by Standard and Poor's Ratings Services and "A" by Fitch Ratings, all of
which are "investment grade" ratings of senior debt securities. A rating is
not a recommendation to purchase, hold or sell notes, since a rating does
not predict the market price of a particular security or its suitability
for a particular investor. Rating organizations may lower their respective
ratings of the notes or decide not to continue to rate the notes in their
sole discretion. Each rating should be evaluated independently of any other
rating. The reduction, suspension or withdrawal of the ratings of the
exchange notes will not, in and of itself, constitute an event of default
under the indenture. However, any reduction, suspension or withdrawal of
these ratings may adversely affect the market price or legality of the
exchange notes.
NO ASSURANCE OF A TRADING MARKET IN THE EXCHANGE NOTES
The initial purchasers have advised us that they presently intend to make a
market in the exchange notes as permitted by applicable law. No initial
purchaser is obligated, however, to make a market in the exchange notes and
any market-making may be discontinued at any time in the sole discretion of
the initial purchasers. No assurance can be given as to the liquidity of
any trading market for the exchange notes, or the ability of the holders of
the exchange notes to sell their exchange notes or the price at which such
holders may be able to sell their exchange notes. An active market for the
exchange notes may not develop or be sustained. If an active market does
not develop or continue, the market price and liquidity of the exchange
notes may be adversely affected.
vii
YOU MAY HAVE DIFFICULTY SELLING THE OUTSTANDING NOTES WHICH YOU DO NOT
EXCHANGE
If you do not exchange your outstanding notes for the exchange notes
offered in this exchange offer, you will continue to be subject to the
restrictions on the transfer of your outstanding notes. Those transfer
restrictions are described in the indenture relating to the notes and in
the legend contained on the outstanding notes, and arose because we
originally issued the outstanding notes under exemptions from, and in
transactions not subject to, the registration requirements of the
Securities Act.
In general, you may offer or sell your outstanding notes only if they are
registered under the Securities Act and applicable state securities laws,
or if they are offered and sold under an exemption from those requirements.
We do not intend to register the outstanding notes under the Securities
Act.
If a large number of outstanding notes are exchanged for notes issued in
the exchange offer, it may be more difficult for you to sell your
unexchanged outstanding notes because there may not be an active trading
market for your unexchanged outstanding notes. In addition, if you do not
exchange your outstanding notes in the exchange offer, you will no longer
be entitled to have those outstanding notes registered under the Securities
Act.
See "The Exchange Offer--Consequences of Failure to Exchange Your
Outstanding Notes" for a discussion of the possible consequences of failing
to exchange your outstanding notes.
----------
The foregoing discussion of risks and uncertainties is not exhaustive, and
we have disclosed other risks and uncertainties in our reports filed with
the SEC that are incorporated by reference in this prospectus. See
"Incorporation by Reference." Additional risks and uncertainties not
presently known to us or that we currently believe to be immaterial also
may adversely affect us. If any of these risks and uncertainties develops
into actual events, these developments could have material adverse effects
on our business, properties, results of operations or financial position.
For these reasons, we caution you not to place undue reliance on our
forward-looking statements.
viii
PROSPECTUS SUMMARY
This summary highlights information about Dow Jones, the exchange offer and
the notes contained or incorporated by reference in this prospectus. It
does not contain all the information that may be important to you. You
should read carefully this entire prospectus and the documents incorporated
by reference in this prospectus.
DOW JONES & COMPANY, INC.
We are a provider of global business and financial news and information
through newspapers, newswires, magazines, the Internet, indexes, television
and radio. In addition to The Wall Street Journal and our international and
online editions, we publish Barron's, Dow Jones Newswires and Dow Jones
Indexes. We also provide news and information of general interest to local
communities through our Ottaway group of community newspapers throughout
the U.S. We are co-owner with Reuters Group of Factiva, with Hearst of
SmartMoney and with NBC Universal of the CNBC television operations
throughout Asia and Europe. We also provide news content to CNBC and radio
stations in the U.S.
The Wall Street Journal Online network of web sites includes the Online
Journal at WSJ.com, the world's largest subscription news site, with
712,000 subscribers, Barron's Online, CareerJournal.com,
CollegeJournal.com, RealEstateJournal.com, StartUpJournal.com and
OpinionJournal.com. In addition, with our recent acquisition of
MarketWatch, discussed below under "-- Recent developments," our online
network now also includes MarketWatch.com and BigCharts.com.
RECENT DEVELOPMENTS
The MarketWatch Acquisition
On January 21, 2005, we completed the acquisition of MarketWatch for a
purchase price of approximately $533 million, excluding transaction costs,
financed in part by $438.7 million of commercial paper borrowings, a
portion of which will be refinanced with the proceeds of this offering.
MarketWatch is a leading provider of business news, financial information
and analytical tools and operates two award-winning web sites:
MarketWatch.com and BigCharts.com. These free, advertising-supported web
sites serve approximately seven million unique visitors per month with
timely market news and information. MarketWatch also operates the
MarketWatch Information Services group, which is a leading licensor of
market news, data, investment analysis tools and other online applications
to financial services firms, media companies, and corporations. For the
nine months ended September 30, 2004, MarketWatch had total net revenues of
approximately $57.8 million and net income of approximately $1.7 million.
We believe that the MarketWatch acquisition will complement The Wall Street
Journal Online network, which provides premium business news to about three
million unique visitors per month. By combining the traffic of the Wall
Street Journal network of web sites and MarketWatch, our web sites are
expected to have close to nine million unduplicated unique visitors per
month. We also expect that the licensing businesses of MarketWatch will
provide additional assets, such as online charting and other tools, which
will extend the reach of our business-to-business licensing operations. We
intend to integrate MarketWatch into our Consumer Electronic Publishing
business, which comprises The Wall Street Journal Online at WSJ.com, other
free advertising-supported vertical web sites, licensing of content to web
sites, and The Wall Street Journal Radio Network.
Results for Fourth Quarter of 2004 and Full Year 2004
On January 27, 2005, we announced our results of operations for the fourth
quarter of 2004 and full year 2004. These results are preliminary and have
not been audited and, consequently, are subject to change or adjustment.
1
Revenues for the fourth quarter of 2004 totaled $437.2 million, up 3.9%
over the fourth quarter of 2003, while operating income was $51.7 million,
a decrease of 6.5% from the fourth quarter of 2003. Net income for the
fourth quarter of 2004 was $35.6 million, as compared with $44.3 million
for the fourth quarter of 2003.
For full year 2004, revenues were $1.67 billion, up 8% as compared to $1.55
billion in 2003, while operating income was $162.2 million, as compared to
$142.9 million in 2003. Net income for full year 2004 was $99.5 million, as
compared with $170.6 million for full year 2003.
For full year 2004, revenues and operating income increased from 2003
levels in each of our operating segments. For the fourth quarter of 2004:
o Print publishing revenue for the fourth quarter of 2004 of $247.9
million declined 2.1% from the same period in 2003, while
operating income of $26.2 million increased 40.1% from the same
period in 2003 primarily due to tight cost controls;
o Electronic publishing revenue for the fourth quarter of 2004 of
$101 million increased 20.9% from the same period in 2003, while
operating income of $15.9 million fell 11.1% from the same period
in 2003 mainly due to reduced profits at Dow Jones Newswires; and
o Ottaway Community Newspapers revenue for the fourth quarter of
2004 of $88.3 million increased 5.0% from the same period in
2003, while operating income of $23.5 million fell 6.6% from the
same period in 2003 mainly due to higher newsprint prices and
investments in a new internet initiative and content management
system.
----------
Dow Jones is a Delaware corporation. Our principal executive offices are
located at 200 Liberty Street, New York, New York 10281, and our telephone
number is (212) 416-2000.
2
SUMMARY OF THE EXCHANGE OFFER
On February 17, 2005, we sold $225,000,000 aggregate principal amount of
our 3.875% Senior Notes due 2008 in a transaction exempt from registration
under the Securities Act. We are conducting this exchange offer to satisfy
our obligations contained in the registration rights agreement that we
entered into in connection with that sale. You should read the discussion
under the headings "The Exchange Offer" and "Description of the Exchange
Notes" for further information regarding the exchange notes to be issued in
the exchange offer.
SECURITIES OFFERED Up to $225,000,000 aggregate principal amount of
3.875% Senior Notes due 2008, registered under the
Securities Act. The terms of the exchange notes
offered in the exchange offer are identical to
those of the outstanding notes, except that the
transfer restrictions, registration rights and
additional interest provisions relating to the
outstanding notes do not apply to the exchange
notes.
THE EXCHANGE OFFER We are offering exchange notes in exchange for a
like principal amount of our outstanding notes.
You may tender your outstanding notes for exchange
notes by following the procedures described under
the heading "The Exchange Offer."
EXPIRATION
DATE; WITHDRAWAL The exchange offer will expire at 5:00 p.m., New
York City time, on , 2005, unless we
extend it. You may withdraw any outstanding notes
that you tender for exchange at any time prior to
the expiration of this exchange offer. See "The
Exchange Offer--Terms of the Exchange Offer" for a
more complete description of the tender and
withdrawal period.
CONDITIONS TO THE
EXCHANGE OFFER The exchange offer is not be subject to any
conditions, other than that the exchange offer does
not violate any applicable law or applicable
interpretations of the staff of the SEC. The
exchange offer is not conditioned upon any minimum
aggregate principal amount of outstanding notes
being tendered in the exchange.
PROCEDURES FOR
TENDERING OUTSTANDING
NOTES To participate in this exchange offer, you must
properly complete and duly execute a letter of
transmittal, which accompanies this prospectus, and
transmit it, along with all other documents
required by such letter of transmittal, to the
exchange agent on or before the expiration date at
the address provided on the cover page of the
letter of transmittal.
In the alternative, you can tender your outstanding
notes by book-entry delivery following the
procedures described in this prospectus, whereby
you will agree to be bound by the letter of
transmittal and we may enforce the letter of
transmittal against you.
If a holder of outstanding notes desires to tender
such notes and the holder's outstanding notes are
not immediately available, or time will not permit
the holder's outstanding notes or other required
documents to reach the exchange agent before the
expiration date, or the procedure for book-entry
transfer cannot be completed on a timely basis, a
tender may be effected pursuant to the guaranteed
delivery
3
procedures described in this prospectus.
See "The Exchange Offer--How to Tender Outstanding
Notes for Exchange."
UNITED STATES
FEDERAL TAX
CONSIDERATIONS Your exchange of outstanding notes for exchange
notes to be issued in the exchange offer will not
result in any gain or loss to you for United States
federal income tax purposes. See "United States
Federal Tax Considerations" for a summary of United
States federal income tax consequences associated
with the exchange of outstanding notes for the
exchange notes and the ownership and disposition of
those exchange notes.
USE OF PROCEEDS We will not receive any cash proceeds from the
exchange offer.
EXCHANGE AGENT The Bank of New York.
CONSEQUENCES OF
FAILURE TO
EXCHANGE YOUR
OUTSTANDING NOTES Outstanding notes not exchanged in the exchange
offer will continue to be subject to the
restrictions on transfer that are described in the
legend on the outstanding notes. In general, you
may offer or sell your outstanding notes only if
they are registered under, or offered or sold under
an exemption from, the Securities Act and
applicable state securities laws. We do not
currently intend to register the outstanding notes
under the Securities Act. If your outstanding
notes are not tendered and accepted in the exchange
offer, it may become more difficult for you to sell
or transfer your outstanding notes.
RESALES Based on interpretations of the staff of the SEC,
we believe that you may offer for sale, resell or
otherwise transfer the exchange notes that we issue
in the exchange offer without complying with the
registration and prospectus delivery requirements
of the Securities Act if:
o you acquire the exchange notes issued in the
exchange offer in the ordinary course of your
business;
o you are not participating, do not intend to
participate, and have no arrangement or
undertaking with anyone to participate, in
the distribution of the exchange notes issued
to you in the exchange offer; and
o you are not an "affiliate" of Dow Jones, as
described in Rule 405 of the Securities Act.
If any of these conditions are not satisfied and
you transfer any exchange notes issued to you in
the exchange offer without delivering a proper
prospectus or without qualifying for a registration
exemption, you may incur liability under the
Securities Act. We will not be
4
responsible for, or indemnify you against, any
liability you incur.
Any broker-dealer that acquires exchange notes in
the exchange offer for its own account in exchange
for outstanding notes which it acquired through
market-making or other trading activities must
acknowledge that it will deliver this prospectus
when it resells or transfers any exchange notes
issued in the exchange offer. See "Plan of
Distribution" for a description of the prospectus
delivery obligations of broker-dealers.
5
SUMMARY OF THE EXCHANGE NOTES
ISSUER Dow Jones & Company, Inc.
SECURITIES OFFERED $225,000,000 aggregate principal amount of 3.875%
Senior Notes due 2008.
MATURITY The exchange notes will mature on February 15, 2008.
INTEREST Interest on the exchange notes will accrue at the rate
of 3.875% per year, payable semi-annually in arrears
on February 15 and August 15 of each year, commencing
on August 15, 2005.
RANKING The exchange notes will be senior unsecured
obligations and will rank equally with the outstanding
notes and all of our other unsecured and
unsubordinated debt. Holders of the exchange notes
will generally have a position junior to the claims of
the creditors, including trade creditors, of our
subsidiaries.
OPTIONAL REDEMPTION We may redeem all or part of the exchange notes at our
option at a redemption price equal to the greater of:
o 100% of the principal amount of the
exchange notes being redeemed; and
o the Make-Whole Amount (as defined in
"Description of the Exchange
Notes--Optional Redemption");
plus, in each case, accrued interest to the redemption
date.
COVENANTS The terms of the exchange notes contain covenants for
your benefit. These covenants restrict our ability to:
o incur debt secured by liens; and
o engage in sale and lease-back transactions.
These covenants are, however, subject to significant
exceptions. See "Description of the Exchange
Notes--Covenants."
FURTHER ISSUES We may from time to time, without notice to or the
consent of the registered holders of the exchange
notes, create and issue additional debt securities
having the same terms as and ranking equally and
ratably with the exchange notes in all respects, as
described under "Description of the Exchange
Notes--Further Issues."
BOOK-ENTRY The exchange notes will be issued in book-entry form
and will be represented by permanent global
certificates deposited with, or on behalf of, DTC and
registered in the name of Cede & Co., DTC's nominee.
Beneficial interests in the exchange notes will be
shown on, and transfers will be effected only through,
records maintained by DTC or its nominee; and these
interests may not be exchanged for certificated
exchange notes, except in limited circumstances. See
"Description of the Exchange Notes--Book-Entry;
Delivery and Form; Global Notes."
6
NO LISTING We do not intend to list the exchange notes on any
securities exchange.
You should carefully consider all of the information in this prospectus. In
particular, you should evaluate the information set forth under
"Forward-Looking Statements."
For a more complete description of the terms of the exchange notes, see
"Description of the Exchange Notes."
7
NO CASH PROCEEDS TO THE COMPANY
This exchange offer is intended to satisfy certain of our obligations under
the registration rights agreement. We will not receive any cash proceeds
from the issuance of the exchange notes and have agreed to pay the expenses
of the exchange offer. In consideration for issuing the exchange notes as
contemplated in the registration statement, of which this prospectus is a
part, we will receive in exchange outstanding notes in like principal
amount. The form and terms of the exchange notes are identical to the form
and terms of the outstanding notes, except as otherwise described herein
under "The Exchange Offer--Terms of the Exchange Offer." The outstanding
notes surrendered in exchange for the exchange notes will be retired and
canceled and cannot be reissued. Accordingly, issuance of the exchange
notes will not result in any increase in our outstanding indebtedness.
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
September 30, 2004, on (1) a historical basis, (2) a pro forma basis to
reflect our acquisition of MarketWatch and our commercial paper borrowings
incurred in connection therewith, and (3) a pro forma basis as adjusted to
reflect the offering of the outstanding notes and the application of the
proceeds therefrom, and the initial purchasers' discount paid in connection
with that offering. The information in this table does not give effect to
any other events subsequent to September 30, 2004.
- ----------------------------------------------------------------------------
AS OF SEPTEMBER 30, 2004
----------------------------------
PRO FORMA,
AS
(DOLLARS IN THOUSANDS) ACTUAL PRO FORMA ADJUSTED
- ------------------------------------------------------------------------------
Cash and cash equivalents................. $21,006 $ 8,350 $ 7,338(3)
====================================
Debt (including current maturities):
Commercial paper....................... 196,553(1) 635,253(2) 410,354
Notes, net of issuance discount........ -- -- 224,899
------------------------------------
Total debt.......................... 196,553 635,253 635,253
Total stockholders' equity................ 121,854 143,733 143,733
------------------------------------
Total capitalization...................... $318,407 $778,986 $778,986
====================================
(1) Consists of commercial paper supported by our revolving credit
agreements, which aggregate to $440 million at September 30, 2004;
there are no borrowings outstanding under these credit agreements.
(2) Includes $438.7 million of commercial paper supported by our
revolving credit agreements described in note (1) above, as well as
our $260 million 60-day credit agreement entered into in connection
with our acquisition of MarketWatch; there are no borrowings
outstanding under this credit agreement.
(3) Reflects the payment of the initial purchasers' discount paid in
connection with the offering of the outstanding notes.
8
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical and pro forma ratio of our
earnings to our fixed charges for the periods indicated.
- -------------------------------------------------------------------------------
NINE MONTHS
ENDED
SEPTEMBER YEAR ENDED DECEMBER 31,
30, --------------------------
2004 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------
Ratio of earnings to fixed charges(1).... 8.02 13.41 13.99 4.92 4.18 15.94
Pro forma ratio of earnings to fixed
charges(2)............................... 5.63 8.90 -- -- -- --
Pro forma ratio of earnings to fixed
charges - supplemental(3)................ 4.73 7.34 -- -- -- --
- -------------------------------------------------------------------------------
(1) For purposes of calculating the ratio of earnings to fixed charges,
earnings represents earnings from continuing operations before income
taxes and before income (losses) from equity method investments plus
(a) fixed charges, excluding capitalized interest, (b) amortization of
capitalized interest and (c) cash distributions from equity method
investments. Fixed charges include (a) interest expense, whether
expensed or capitalized, (b) amortization of debt issuance costs and
(c) the portion of operating rental expense which management believes
is representative of the interest component of rent expense.
(2) Pro forma ratio of earnings to fixed charges reflects the pro forma
effects on earnings and fixed charges, as defined in note (1) above,
depicting the estimated impact of incremental interest expense
attributable to the outstanding notes.
(3) The pro forma ratio of earnings to fixed charges - supplemental
reflects the pro forma effects on earnings and fixed charges, as
defined in note (1) above, depicting the estimated impact of the
MarketWatch acquisition, including incremental interest expense
attributable to the outstanding notes and the remaining $213.8 million
of commercial paper borrowings (at an interest rate of 2.52% as of the
closing date of the MarketWatch acquisition) utilized to fund the
acquisition of MarketWatch.
9
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following tables present our selected historical consolidated financial
data as of the dates and for the periods indicated. The selected historical
consolidated balance sheet and income statement data at December 31, 2003,
2002, 2001, 2000 and 1999 and for each of the five years ended December 31,
2003 are derived from our audited consolidated financial statements, which
have been audited by PricewaterhouseCoopers LLP, independent registered
public accounting firm. You should read this information in conjunction
with our consolidated financial statements and notes and our "Management
Discussion and Analysis of Financial Condition and Results of Operations"
section that are contained in our Annual Report on Form 10-K for the year
ended December 31, 2003, and our Quarterly Report on Form 10-Q for the nine
months ended September 30, 2004, which are incorporated by reference into
this prospectus. See "Incorporation by Reference." The information for the
interim periods is unaudited, but includes all adjustments, consisting only
of normal recurring adjustments, which are, in management's opinion,
necessary for a fair statement of these periods. The interim results of
operations may not be indicative of the results for the full year.
- ------------------------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, SEPTEMBER 30,
(IN THOUSANDS, EXCEPT PER SHARE ------------------------------------------------------------- ----------------------
AMOUNTS) 2003 2002 2001 2000 1999 2004 2003
INCOME STATEMENT DATA: ---------- ---------- ---------- ---------- ---------- ---------- ----------
Revenues
Advertising................... $ 871,817 $ 877,681 $1,052,322 $1,467,244 $1,230,412 $ 694,683 $ 622,733
Information services.......... 286,863 281,220 289,321 281,366 315,110 242,251 214,194
Circulation and other......... 389,805 400,272 431,440 454,008 456,313 297,369 290,835
------------------------------------------------------------------------------------------
Total revenues................... 1,548,485 1,559,173 1,773,083 2,202,618 2,001,835 1,234,303 1,127,762
Operating expenses............... 1,405,572 1,484,090 1,662,884 1,704,392 1,612,294 1,123,826 1,040,143
------------------------------------------------------------------------------------------
Operating income................. 142,913 75,083 110,199 498,226 389,541 110,477 87,619
Other income (deductions)(1)..... 79,390(2) 190,164(3) (1,185) (420,231)(4) 28,389(5) (1,859) 61,569(2)
Income taxes..................... 51,704 63,741 10,794 196,957 145,501 44,694 22,841
------------------------------------------------------------------------------------------
Net income (loss)................ $ 170,599 $ 201,506 $ 98,220 $(118,962) $ 272,429 $ 63,924 $ 126,347
==========================================================================================
Earnings (loss) per share:
Basic $ 2.09 $ 2.41 $ 1.15 $ (1.35) $ 3.01 $ .78 $ 1.55
Diluted 2.08 2.40 1.14 (1.35) 2.99 .78 1.54
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents........ $ 23,514 $ 39,346 $ 21,026 $ 49,347 $ 86,388 $ 21,006 $ 22,177
Total assets..................... 1,304,154 1,207,659 1,298,340 1,362,056 1,512,713 1,379,559 1,300,387
Long-term debt................... 153,110 92,937 173,958 150,865 149,945 196,553 193,564
Stockholders' equity............. 129,661 30,571 41,777 158,768 553,490 121,854 87,398
Other Cash Flow and Operating Data:
Net cash provided by operating
activities....................... $ 219,900 $ 145,596 $ 341,733 $ 446,447 $ 297,027 $ 146,897 $ 144,639
Dividends per share.............. 1.00 1.00 1.00 1.00 .96 1.00 .75
Advertising volume
(year-over-year percentage
change):
The Wall Street Journal....... (1.3)% (17.6)% (37.6)% 14.1% 17.9% 1.3% (4.7)%
The Asian Wall Street Journal. 2.0 (24.0) (29.0) 25.2 9.6 (3.6) 8.7
The Wall Street Journal Europe 9.3 (22.6) (28.9) 14.9 26.1 0.5 16.2
Barron's...................... (16.0) (10.4) (33.4) 12.9 16.1 12.2 (16.7)
Community newspapers.......... (1.6) (1.8) (2.5) 3.6 0.4 4.9 (1.4)
Electronic publishing (at period
end):
Dow Jones Newswires terminals. 293,000 308,000 330,000 346,000 318,000 297,000 289,000
WSJ.com subscribers........... 689,000 679,000 626,000 535,000 375,000 701,000 686,000
- ------------------------------------------------------------------------------
<FN>
(1) Net of minority interests.
(2) Non-operating income in 2003 included a gain of $59.8 million related
to the resolution of a loss contingency related to the sale of our
former Telerate subsidiary (first quarter 2003), $6.7 million of
interest income related to an IRS tax refund (third quarter 2003) and
a gain of $18.7 million from a non-monetary exchange of interests with
the von Holtzbrinck Group in The Wall Street Journal Europe and the
von Holtzbrinck Group's business daily, Handelsblatt (fourth quarter).
Non-operating income in 2003 also included a charge of $9.5 million
related to the accretion of discount on a contract guarantee.
10
(3) Non-operating income in 2002 included a gain of $197.9 million from
the sale of businesses, net of an $11.9 million charge related to the
accretion of discount on a contract guarantee.
(4) Non-operating deductions in 2000 included investment write-downs
totaling $178.5 million and a loss reserve of $255 million on a
contract guarantee related to the sale of our former Telerate
subsidiary. These losses were partially offset by net gains on sales
of businesses and investments totaling $18.1 million.
(5) Non-operating income in 1999 included a net gain of $51.6 million on
the sale of certain businesses and investments.
</FN>
----------
See "Prospectus Summary--Recent Developments" for information regarding our
results of operations for the fourth quarter of 2004 and full year 2004.
11
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the outstanding notes on February 17, 2005,
we entered into a registration rights agreement with the initial purchasers
of the outstanding notes, which requires us to:
o use our commercially reasonable efforts to file with the SEC and
cause to become effective a registration statement relating to an
offer to exchange the outstanding notes for an issue of
registered exchange notes with terms identical to the outstanding
notes except that the exchange notes will not be subject to
restrictions on transfer or to any increase in annual interest
rate as described below;
o offer to the holders of the outstanding notes the opportunity to
exchange their outstanding notes for the exchange notes;
o keep the exchange offer open for not less than 20 business days,
or longer if required by applicable law, after the date on which
notice of the exchange offer is mailed to the holders of the
notes;
o use our commercially reasonable efforts to complete the exchange
offer on or before 210 days after the date of issuance of the
outstanding notes; and
o if obligated to file a shelf registration statement, use our
commercially reasonable efforts to cause to become effective a
shelf registration statement relating to resales of the
outstanding notes.
If the exchange offer is not completed on or before September 17, 2005 or
the shelf registration statement, if required, is not effective on or
before October 17, 2005, we will be obligated to pay additional interest to
each holder of outstanding notes, in an amount equal to 0.25% per year for
the first 90-day period (or portion thereof) after either of such events
occurs, which rate will be increased by 0.25% per year at the beginning of
the subsequent 90-day period and continue thereafter, provided that the
maximum aggregate increase in the interest rate shall in no event exceed
0.50% per year.
A copy of the registration rights agreement is attached as an exhibit to
our Current Report on Form 8-K filed on February 18, 2005, which is
incorporated by reference herein. See "Incorporation by Reference."
TERMS OF THE EXCHANGE OFFER
This prospectus and the accompanying letter of transmittal together
constitute the exchange offer. Upon the terms and subject to the conditions
set forth in this prospectus and in the letter of transmittal, we will
accept for exchange outstanding notes, which are properly tendered on or
before the expiration date and are not withdrawn as permitted below, for
exchange notes. The expiration date for this exchange offer is 5:00 p.m.,
New York City time, on , 2005, or such later date and time to which
we, in our sole discretion, extend the exchange offer.
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes, except that:
o the exchange notes will have been registered under the Securities
Act;
o the exchange notes will not bear the restrictive legends
restricting their transfer under the Securities Act; and
12
o the exchange notes will not contain the registration rights and
additional interest provisions contained in the outstanding
notes.
Notes tendered in the exchange offer must be in minimum denominations of
$5,000 and integral multiples of $1,000 in excess thereof.
We expressly reserve the right, in our sole discretion:
o to extend the expiration date;
o to delay accepting any outstanding notes;
o if any condition set forth below under "--Conditions to the
Exchange Offer" has not been satisfied, to terminate the exchange
offer and not accept any outstanding notes for exchange; or
o to amend the exchange offer in any manner.
We will give oral or written notice of any extension, delay,
non-acceptance, termination or amendment as promptly as practicable by a
public announcement, and in the case of an extension, no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled expiration date. Without limiting the manner in which we may
choose to make a public announcement of any extension, delay,
non-acceptance, termination or amendment, we shall have no obligation to
publish, advertise or otherwise communicate any such public announcement,
other than by making a timely release to an appropriate news agency, which
may be an agency controlled by us.
During an extension, all outstanding notes previously tendered will remain
subject to the exchange offer and may be accepted for exchange by us. Any
outstanding notes not accepted for exchange for any reason will be returned
without cost to the holder that tendered them as promptly as practicable
after the expiration or termination of the exchange offer.
HOW TO TENDER OUTSTANDING NOTES FOR EXCHANGE
When the holder of outstanding notes tenders, and we accept such notes for
exchange pursuant to that tender, a binding agreement between us and the
tendering holder is created, subject to the terms and conditions set forth
in this prospectus and the accompanying letter of transmittal. Except as
set forth below, a holder of outstanding notes who wishes to tender such
notes for exchange must, on or prior to the expiration date:
o transmit a properly completed and duly executed letter of
transmittal, including all other documents required by such
letter of transmittal, to The Bank of New York, which will act as
the exchange agent, at the address set forth below under the
heading "--The Exchange Agent"; or
o if outstanding notes are tendered pursuant to the book-entry
procedures set forth below, the tendering holder must transmit an
agent's message to the exchange agent at the address set forth
below under the heading "--The Exchange Agent."
In addition, either:
o the exchange agent must receive the certificates for the
outstanding notes and the letter of transmittal;
o the exchange agent must receive, prior to the expiration date, a
timely confirmation of the book-entry transfer of the outstanding
notes being tendered into the exchange agent's account at DTC,
along with the letter of transmittal or an agent's message; or
o the holder must comply with the guaranteed delivery procedures
described below.
13
The term "agent's message" means a message, transmitted to DTC and received
by the exchange agent and forming a part of a book-entry transfer, or
"book-entry confirmation," which states that DTC has received an express
acknowledgement that the tendering holder agrees to be bound by the letter
of transmittal and that we may enforce the letter of transmittal against
such holder.
The method of delivery of the outstanding notes, the letters of transmittal
and all other required documents is at the election and risk of the
holders. If such delivery is by mail, we recommend registered mail,
properly insured, with return receipt requested. In all cases, you should
allow sufficient time to assure timely delivery. No letters of transmittal
or outstanding notes should be sent directly to us.
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible institution unless the outstanding notes
surrendered for exchange are tendered:
o by a registered holder of the outstanding notes; or
o for the account of an eligible institution.
An "eligible institution" is a firm which is a member of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
If outstanding notes are registered in the name of a person other than the
signer of the letter of transmittal, the outstanding notes surrendered for
exchange must be endorsed by, or accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by
us in our sole discretion, duly executed by the registered holder with the
holder's signature guaranteed by an eligible institution.
We will determine all questions as to the validity, form, eligibility
(including time of receipt) and acceptance of outstanding notes tendered
for exchange in our sole discretion. Our determination will be final and
binding. We reserve the absolute right to:
o reject any and all tenders of any outstanding note improperly
tendered;
o refuse to accept any outstanding note if, in our judgment or the
judgment of our counsel, acceptance of the outstanding note may
be deemed unlawful; and
o waive any defects or irregularities or conditions of the exchange
offer as to any particular outstanding note either before or
after the expiration date, including the right to waive the
ineligibility of any holder who seeks to tender outstanding notes
in the exchange offer.
Our interpretation of the terms and conditions of the exchange offer as to
any particular outstanding notes either before or after the expiration
date, including the letter of transmittal and the instructions to it, will
be final and binding on all parties. Holders must cure any defects and
irregularities in connection with tenders of notes for exchange within such
reasonable period of time as we will determine, unless we waive such
defects or irregularities. Neither we, 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 outstanding notes for exchange,
nor shall any of us incur any liability for failure to give such
notification.
If a person or persons other than the registered holder or holders of the
outstanding notes tendered for exchange signs the letter of transmittal,
the tendered outstanding 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 outstanding
notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any outstanding notes or any
power of attorney, these persons should so indicate when signing, and you
must submit proper evidence satisfactory to us of those persons' authority
to so act unless we waive this requirement.
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By tendering, each holder will represent to us that the person acquiring
exchange notes in the exchange offer, whether or not that person is the
holder, is obtaining them in the ordinary course of its business, and
neither the holder nor that other person has any arrangement or
understanding with any person to participate in the distribution of the
exchange notes issued in the exchange offer. If any holder or any other
person is an "affiliate," as defined under Rule 405 of the Securities Act,
of us, or is engaged in or intends to engage in or has an arrangement or
understanding with any person to participate in a distribution of the notes
to be acquired in the exchange offer, the holder or any other person:
o may not rely on applicable interpretations of the staff of the
SEC; and
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
transaction.
Each broker-dealer who acquired its outstanding notes as a result of
market-making activities or other trading activities, and thereafter
receives exchange notes issued for its own account in the exchange offer,
must acknowledge that it will deliver this prospectus in connection with
any resale of such exchange notes issued in the exchange offer. The letter
of transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. See "Plan of
Distribution" for a discussion of the exchange and resale obligations of
broker-dealers.
ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
ISSUED IN THE EXCHANGE OFFER
Upon satisfaction or waiver of all the conditions to the exchange offer, we
will accept, promptly after the expiration date, all outstanding notes
properly tendered and will issue exchange notes registered under the
Securities Act in exchange for the tendered outstanding notes. For purposes
of the exchange offer, we shall be deemed to have accepted properly
tendered outstanding notes for exchange when, as and if we have given oral
or written notice to the exchange agent, with written confirmation of any
oral notice to be given promptly thereafter. See "-- Conditions to the
Exchange Offer" for a discussion of the conditions that must be satisfied
before we accept any outstanding notes for exchange.
For each outstanding note accepted for exchange, the holder will receive an
exchange note registered under the Securities Act having a principal amount
equal to that of the surrendered outstanding note. Registered holders of
exchange notes issued in the exchange offer on the relevant record date for
the first interest payment date following the consummation of the exchange
offer will receive interest accruing from the most recent date to which
interest has been paid. Outstanding notes that we accept for exchange will
cease to accrue interest from and after the date of consummation of the
exchange offer. Under the registration rights agreement, we may be required
to make payments of additional interest to the holders of the outstanding
notes under circumstances relating to the timing of the exchange offer.
In all cases, we will issue exchange notes for outstanding notes that are
accepted for exchange only after the exchange agent timely receives:
o certificates for such outstanding notes or a timely book-entry
confirmation of such outstanding notes into the exchange agent's
account at DTC;
o a properly completed and duly executed letter of transmittal or
an agent's message; and
o all other required documents.
If for any reason set forth in the terms and conditions of the exchange
offer we do not accept any tendered outstanding notes, or if a holder
submits outstanding notes for a greater principal amount than the holder
desires to exchange, we will return such unaccepted or nonexchanged notes
without cost to the tendering holder. In the case of outstanding notes
tendered by book-entry transfer into the exchange agent's account at DTC,
the nonexchanged notes will be credited to an account maintained with DTC.
We will return the outstanding notes or have them credited to the DTC
account as promptly as practicable after the expiration or termination of
the exchange offer.
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BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the outstanding notes at DTC for purposes of the exchange offer within
two business days after the commencement of the exchange offer. Any
financial institution that is a participant in DTC's system may make
book-entry delivery of outstanding notes by causing DTC to transfer such
outstanding notes into the exchange agent's account at DTC in accordance
with DTC's procedures for transfer. The participant should transmit its
acceptance to DTC on or prior to the expiration date or comply with the
guaranteed delivery procedures described below. DTC will verify the
acceptance, execute a book-entry transfer of the tendered outstanding notes
into the exchange agent's account at DTC and then send to the exchange
agent confirmation of the book-entry transfer. The confirmation of the
book-entry transfer will include an agent's message confirming that DTC has
received an express acknowledgment from the participant that the
participant has received and agrees to be bound by the letter of
transmittal and that we may enforce the letter of transmittal against such
participant. Delivery of exchange notes issued in the exchange offer may be
effected through book-entry transfer at DTC. However, the letter of
transmittal or facsimile thereof or an agent's message, with any required
signature guarantees and any other required documents, must:
o be transmitted to and received by the exchange agent at the
address set forth below under "-- The Exchange Agent" on or prior
to the expiration date; or
o comply with the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If a holder of outstanding notes desires to tender such notes and the
holder's outstanding notes are not immediately available, or time will not
permit the holder's outstanding notes or other required documents to reach
the exchange agent before the expiration date, or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if:
o the holder tenders the outstanding notes through an eligible
institution;
o prior to the expiration date, the exchange agent receives from
such eligible institution a properly completed and duly executed
notice of guaranteed delivery, acceptable to us, by telegram,
telex, facsimile transmission, mail or hand delivery, setting
forth the name and address of the holder of the outstanding notes
tendered and the amount of the outstanding notes being tendered.
The notice of guaranteed delivery shall state that the tender is
being made and guarantee that within three New York Stock
Exchange trading days after the date of execution of the notice
of guaranteed delivery, the certificates for all physically
tendered outstanding notes, in proper form for transfer, or a
book-entry confirmation, as the case may be, together with a
properly completed and duly executed letter of transmittal or
agent's message with any required signature guarantees and any
other documents required by the letter of transmittal will be
deposited by the eligible institution with the exchange agent;
and
o the exchange agent receives the certificates for all physically
tendered outstanding notes, in proper form for transfer, or a
book-entry confirmation, as the case may be, together with a
properly completed and duly executed letter of transmittal or
agent's message with any required signature guarantees and any
other documents required by the letter of transmittal, within
three New York Stock Exchange trading days after the date of
execution of the notice of guaranteed delivery.
WITHDRAWAL RIGHTS
You may withdraw tenders of your outstanding notes at any time prior to the
expiration of the offer.
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For a withdrawal to be effective, you must send a written notice of
withdrawal to the exchange agent at one of the addresses set forth below
under "-- The Exchange Agent." Any such notice of withdrawal must:
o specify the name of the person that has tendered the outstanding
notes to be withdrawn;
o identify the outstanding notes to be withdrawn, including the
principal amount of such outstanding notes; and
o where certificates for outstanding notes are transmitted, specify
the name in which outstanding notes are registered, if different
from that of the withdrawing holder.
If certificates for outstanding 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 serial 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 outstanding 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 notes and otherwise comply with the procedures
of such facility. We will determine all questions as to the validity, form
and eligibility (including time of receipt) of notices of withdrawal and
our determination will be final and binding on all parties. Any tendered
notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the exchange offer. Any outstanding 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. In the
case of outstanding notes tendered by book-entry transfer into the exchange
agent's account at DTC, the outstanding notes withdrawn will be credited to
an account maintained with DTC for the outstanding notes. The outstanding
notes will be returned or credited to the DTC account as soon as
practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn outstanding notes may be re-tendered by
following one of the procedures described under "--How to Tender
Outstanding Notes for Exchange" above at any time on or prior to 5:00 p.m.,
New York City time, on the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of this exchange offer, we are not
required to accept the outstanding notes in the exchange offer or to issue
the exchange notes, and we may terminate or amend the exchange offer, if at
any time before the acceptance of outstanding notes for exchange or the
exchange of the exchange notes for the outstanding notes, that acceptance
or issuance would violate any applicable law or any interpretations of the
staff of the SEC.
The preceding condition is for our sole benefit, and we may assert it
regardless of the circumstances giving rise to any such condition. We may
waive the preceding condition in whole or in part at any time and from time
to time in our sole discretion. Our failure at any time to exercise the
foregoing rights shall not be deemed a waiver of this right, and each right
shall be deemed an ongoing right which we may assert at any time and from
time to time.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of outstanding notes being tendered in the exchange.
THE EXCHANGE AGENT
The Bank of New York has been appointed as our exchange agent for the
exchange offer. All executed letters of transmittal should be directed to
our exchange agent at the address set forth below. Questions and requests
for assistance, requests for additional copies of this prospectus or of the
letter of transmittal and requests for notices of guaranteed delivery
should be directed to the exchange agent addressed as follows:
By mail, hand or overnight delivery:
Bank of New York, as Exchange Agent
Corporate Trust Operations
17
Reorganization Unit
101 Barclay Street, 7 East
New York, New York 10286
Attention:
By telecopier:
(212) 298-1915
Confirm by telephone:
(212) 815-
Originals of all documents sent by facsimile should be promptly sent to the
exchange agent by registered or certified mail, by hand, or by overnight
delivery service.
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE OTHER
THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER
OF TRANSMITTAL.
FEES AND EXPENSES
We will not make any payment to brokers, dealers or others soliciting
acceptance of the exchange offer except for reimbursement of mailing
expenses.
The cash expenses to be incurred in connection with the exchange offer will
be paid by us.
TRANSFER TAXES
Holders who tender their outstanding notes for exchange notes will not be
obligated to pay any transfer taxes in connection with the exchange. If,
however, exchange notes issued in the exchange offer are to be delivered
to, or are to be issued in the name of, any person other than the holder of
the outstanding notes tendered, or if a transfer tax is imposed for any
reason other than the exchange of outstanding notes in connection with the
exchange offer, then the holder must pay any applicable transfer taxes,
whether imposed on the registered holder or on any other person. If
satisfactory evidence of payment of, or exemption from, transfer taxes is
not submitted with the letter of transmittal, the amount of the transfer
taxes will be billed directly to the tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE OUTSTANDING NOTES
Holders who desire to tender their outstanding notes in exchange for
exchange notes registered under the Securities Act should allow sufficient
time to ensure timely delivery. Neither the exchange agent nor we are under
any duty to give notification of defects or irregularities with respect to
the tenders of outstanding notes for exchange.
Outstanding notes that are not tendered or are tendered but not accepted
will, following the consummation of the exchange offer, continue to accrue
interest and to be subject to the provisions in the indenture regarding the
transfer and exchange of the outstanding notes and the existing
restrictions on transfer set forth in the legend on the outstanding notes
and in the offering memorandum dated February 14, 2005, relating to the
outstanding notes. Except in limited circumstances with respect to specific
types of holders of outstanding notes, we will have no further obligation
to provide for the registration under the Securities Act of those
outstanding notes. In general, outstanding notes, unless registered under
the Securities Act, may not be offered or sold except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws.
Upon completion of the exchange offer, holders of any remaining outstanding
notes will not be entitled to any further registration rights under the
registration rights agreement, except under limited circumstances.
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EXCHANGING OUTSTANDING NOTES
Based on interpretations of the staff of the SEC, as set forth in no-action
letters to third parties, we believe that the notes issued in the exchange
offer may be offered for resale, resold or otherwise transferred by holders
of such notes, other than by any holder that is a broker-dealer who
acquired outstanding notes for its own account as a result of market-making
or other trading activities or by any holder which is an "affiliate" of us
within the meaning of Rule 405 under the Securities Act. The exchange notes
may be offered for resale, resold or otherwise transferred without
compliance with the registration and prospectus delivery provisions of the
Securities Act, if:
o the holder is not a broker-dealer tendering notes acquired
directly from us;
o the person acquiring the exchange notes in the exchange offer,
whether or not that person is a holder, is acquiring them in the
ordinary course of its business; and
o neither the holder nor that other person has any arrangement or
understanding with any person to participate in the distribution
of the exchange notes issued in the exchange offer.
However, the SEC has not considered the exchange offer in the context of a
no-action letter, and we cannot guarantee that the staff of the SEC would
make a similar determination with respect to the exchange offer as in these
other circumstances.
Each holder must furnish a written representation, at our request, that:
o it is not an affiliate of us;
o it is not a broker-dealer tendering notes acquired directly from
us;
o it is not engaged in, and does not intend to engage in, a
distribution of the notes issued in the exchange offer and has no
arrangement or understanding to participate in a distribution of
notes issued in the exchange offer; and
o it is acquiring the exchange notes in the ordinary course of its
business.
Each holder who cannot make such representations:
o will not be able to rely on the interpretations of the staff of
the SEC in the above-mentioned interpretive letters;
o will not be permitted or entitled to tender outstanding notes in
the exchange offer; and
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or
other transfer of outstanding notes, unless the sale is made
under an exemption from such requirements.
In addition, each broker-dealer that receives exchange notes for its own
account in exchange for outstanding notes must acknowledge that these
outstanding notes were acquired by that broker-dealer as a result of
market-making or other trading activities and that it will deliver this
prospectus in connection with any resale of such notes issued in the
exchange offer. See "Plan of Distribution" for a discussion of the exchange
and resale obligations of broker-dealers in connection with the exchange
offer.
In addition, to comply with state securities laws of certain jurisdictions,
the exchange notes may not be offered or sold in any state unless they have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with by the holders
selling the exchange notes. We have not agreed to register or qualify the
exchange notes for offer or sale under state securities laws.
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DESCRIPTION OF THE EXCHANGE NOTES
The outstanding notes have been issued, and the exchange notes will be
issued, under an indenture, dated February 17, 2005, between us and The
Bank of New York, as trustee. The following summary of provisions of the
indenture and the notes does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the
indenture, including definitions therein of certain terms. This summary may
not contain all information that you may find useful. You should read the
indenture and the notes, copies of which are available from us upon
request. In addition, a copy of the indenture is attached as an exhibit to
our Current Report on Form 8-K filed on February 18, 2005, which is
incorporated by reference herein. See "Incorporated by Reference."
Capitalized terms used and not defined in this summary have the meanings
specified in the indenture. For purposes of this section, (1) references to
"the Company" are only to Dow Jones & Company, Inc. and not to any of the
subsidiaries of the Company and (2) unless the context otherwise requires,
the term "notes" refers to the outstanding notes and the exchange notes.
The terms of the exchange notes are identical to the terms of the
outstanding notes, except that the transfer restrictions, registration
rights and additional interest provisions relating to the outstanding notes
do not apply to the exchange notes.
GENERAL
The notes will have the following basic terms:
o the notes will initially be limited to $225 million aggregate
principal amount (subject to the rights of the Company to issue
additional notes as described under "--Further Issues" below);
o the notes will accrue interest at a rate of 3.875% per year;
o interest will accrue on the notes from the most recent interest
payment date to or for which interest has been paid or duly provided
(or if no interest has been paid or duly provided for, from the issue
date of the notes), payable semiannually in arrears on February 15 and
August 15 of each year, beginning on August 15, 2005;
o the notes will mature on February 15, 2008, unless redeemed prior to
that date;
o we may redeem the notes in whole or in part at any time at our option
as described under "--Optional Redemption"; and
o the exchange notes will be our senior unsecured obligations and will
rank equally with the outstanding notes and all of our other existing
and future unsecured and unsubordinated debt.
Interest will be paid to the person in whose name a note is registered at
the close of business on the February 1 or August 1, as the case may be,
immediately preceding the relevant interest payment date. Interest on the
notes will be computed on the basis of a 360-day year comprised of twelve
30-day months.
If any interest or other payment date of a note falls on a day that is not
a business day, the required payment of principal, premium, if any, and
interest will be made on the next succeeding business day as if made on the
date that the payment was due, and no interest will accrue on that payment
for the period from and after that interest or other payment date, as the
case may be, to the date of that payment on the next succeeding business
day. The term "business day" means, with respect to any note, any day other
than a Saturday, a Sunday or a day on which banking institutions or trust
companies in New York City are authorized or required by law, regulation or
executive order to close.
The notes will be issued only in registered form without coupons in
denominations of $5,000 and integral multiples of $1,000 in excess of that
amount. The notes will be represented by one or more global notes
registered in the name of a nominee of DTC.
The notes will not be subject to any sinking fund.
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We may, subject to compliance with applicable law, at any time purchase
notes in the open market or otherwise.
Any outstanding notes that remain outstanding after completion of the
exchange offer, together with the exchange notes issued in the exchange
offer, will be treated as a single class of securities under the indenture,
including for purposes of amending the indenture.
PAYMENT AND TRANSFER OR EXCHANGE
Principal of and premium, if any, and interest on the notes will be
payable, and the notes may be exchanged or transferred, at the office or
agency maintained by the Company for such purpose (which initially will be
the corporate trust office of the trustee located at 101 Barclay Street,
New York, New York 10286). Payment of principal of and premium, if any, and
interest on a global note registered in the name of or held by DTC or its
nominee will be made in immediately available funds to DTC or its nominee,
as the case may be, as the registered holder of such global note. If any of
the notes is no longer represented by a global note, payment of interest on
certificated notes in definitive form may, at our option, be made by check
mailed directly to holders at their registered addresses. See
"--Book-Entry; Delivery and Form; Global Notes" below.
A holder may transfer or exchange any certificated notes in definitive form
at the same location given in the preceding paragraph. No service charge
will be made for any registration of transfer or exchange of notes, but the
Company may require payment of a sum sufficient to cover any transfer tax
or other similar governmental charge payable in connection therewith. The
Company is not required to transfer or exchange any note selected for
redemption for a period of 15 days before mailing of a notice of redemption
of notes to be redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
All amounts of principal of and premium, if any, or interest on the notes
paid by the Company that remain unclaimed two years after such payment was
due and payable will be repaid to the Company, and the holders of such
notes will thereafter look solely to the Company for payment.
RANKING
The exchange notes will be our senior unsecured obligations and will rank
equally with the outstanding notes and all of our other current and future
unsecured and unsubordinated debt.
Because our operations are partially conducted through our subsidiaries,
the cash flow and the consequent ability to service our indebtedness,
including the notes, will be partially dependent upon the earnings of our
subsidiaries and the distribution of those earnings or upon the payments of
funds by those subsidiaries to us. Our subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to
pay any amounts due pursuant to the notes or to make funds available to us,
whether by dividends, loans or other payments. In addition, the payment of
dividends and the making of loans and advances to us by our subsidiaries
may be subject to contractual or statutory restrictions, depend upon the
earnings of those subsidiaries and are subject to various business
considerations.
Any right that we may have to receive assets of any of our subsidiaries
upon their liquidation or reorganization (and the consequent right of the
holders of the notes to participate in those assets) will be effectively
subordinated to the claims of such subsidiary's creditors, including trade
creditors. In addition, the notes will effectively rank junior in right of
payment to any secured indebtedness which we may incur in the future to the
extent of the assets securing such indebtedness.
OPTIONAL REDEMPTION
We may redeem any of the notes in whole or in part, at our option, at any
time prior to their maturity, at a redemption price equal to the greater of
(1) 100% of the principal amount of the notes being redeemed and (2) the
sum of the present values of the remaining scheduled payments of principal
and interest thereon (exclusive of interest accrued to the date of
redemption) discounted to the redemption date on a
21
semiannual basis (assuming a 360-day year comprised of twelve 30-day
months) at the Treasury Rate plus 10 basis points (the "Make-Whole
Amount"), plus accrued interest thereon to the redemption date.
"Comparable Treasury Issue" means the United States Treasury security or
securities selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the notes to be redeemed 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 a comparable maturity to the remaining term of such notes.
"Comparable Treasury Price" means, with respect to any redemption date for
the notes, (1) the average of the Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotation or (2) if the Company obtains fewer than four
such Reference Treasury Dealer Quotations, the average of all such
Reference Treasury Dealer Quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Company.
"Reference Treasury Dealer" means each of J.P. Morgan Securities Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated or their respective
affiliates which are primary U.S. government securities dealers, and their
respective successors, and two other firms which are primary U.S.
government securities dealers that the Company selects; provided, however,
that if any of the foregoing shall cease to be a primary U.S. government
securities dealer in New York City, the Company will substitute therefor
another such primary U.S. government securities dealer.
"Reference Treasury Dealer Quotation" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer as of 3:30 p.m.,
New York time, on the third business day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date for the notes,
the rate per annum equal to the semiannual equivalent yield to maturity or
interpolated (on a day-count basis) of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price
for such redemption date.
We will mail notice of any redemption at least 30 days, but not more than
60 days, before the redemption date to each holder of notes to be redeemed.
If less than all the notes are to be redeemed at any time, the trustee will
select notes to be redeemed on a pro rata basis or by another method that
the trustee deems fair and appropriate.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the notes or portion
thereof called for redemption.
COVENANTS
The indenture does not, among other things:
o limit the amount of indebtedness or lease obligations that may be
incurred by us and our subsidiaries;
o restrict us from paying dividends or making distributions on our
capital stock or purchasing or redeeming our capital stock; or
o contain provisions which would give holders of the notes the
right to require us to repurchase their notes in the event of a
decline in the credit rating of our debt securities resulting
from a change in control, recapitalization or similar
restructuring or from any other event.
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Limitation on Liens
The indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, issue, assume or guarantee any Debt secured by
any Lien on any Principal Property or upon any shares of capital stock or
Debt of any Restricted Subsidiary, unless the Company secures or causes
that Restricted Subsidiary to secure the notes (together with, if the
Company so determines, any other Debt of the Company or any Restricted
Subsidiary, then existing or thereafter created, which is not subordinate
to the notes) equally and ratably with such secured Debt, unless the
aggregate amount of all such secured Debt, together with all Attributable
Debt outstanding pursuant to the first paragraph of the "--Limitation on
Sale and Lease-Back Transactions" covenant described below, would not
exceed 10% of Consolidated Total Assets.
The foregoing restrictions will not apply to the following:
o Liens on any Principal Property, shares of capital stock or Debt
existing at the date of the indenture;
o Liens on Principal Property, shares of capital stock or Debt of
any corporation or other Person existing at the time such
corporation or other Person becomes a Restricted Subsidiary;
o Liens on any Principal Property, shares of capital stock or Debt
existing at the time of acquisition thereof by the Company or a
Restricted Subsidiary;
o Liens securing Debt of (x) a Restricted Subsidiary to the Company
or to another Restricted Subsidiary or (y) the Company to a
Restricted Subsidiary;
o Liens on Principal Property to secure the payment of all or any
part of the purchase price of such Principal Property upon the
acquisition of such Principal Property by the Company or a
Restricted Subsidiary or to secure any Debt incurred prior to, at
the time of, or within 180 days after, the later of the date of
acquisition of such Principal Property and the date such
Principal Property is placed in service, for the purpose of
financing all or any part of the purchase price thereof, or Liens
to secure any Debt incurred for the purpose of financing the cost
to the Company or a Restricted Subsidiary of construction,
alteration or improvement to such acquired Principal Property;
o Liens on Principal Property of a corporation or other Person
existing at the time such corporation or other Person is merged
or consolidated with the Company or a Restricted Subsidiary or at
the time of a sale, lease or other disposition of the Principal
Property of a corporation or other Person as an entirety or
substantially as an entirety to the Company or a Restricted
Subsidiary; provided, that such Lien as a result of such merger,
consolidation, sale, lease or other disposition is not extended
to Principal Property owned by the Company or such Restricted
Subsidiary immediately prior thereto;
o mechanics' liens, tax liens, liens in favor of any governmental
body to secure progress, advance or other payments or the
acquisition of Principal Property from any governmental body
pursuant to contract or provision of statute;
o Liens associated with a sale or discount of accounts receivable;
o Liens in favor of the trustee in respect of expenses incurred or
services rendered pursuant to the indenture;
o Liens to secure bonds posted in order to obtain stays of
judgments, attachments or orders in legal proceedings being
contested in good faith, including, without limitation, such
Liens, if any, in connection with legal proceedings as disclosed
in the Company's reports and filings under the Exchange Act;
23
o Liens securing industrial revenue bonds, pollution control bonds
or other similar tax-exempt bonds;
o any other liens, charges and encumbrances incidental to
construction, conduct of business or ownership of Principal
Property of the Company or any Restricted Subsidiary which were
not incurred in connection with borrowing money or obtaining
advances or credits or the acquisition of Principal Property and
in the aggregate do not materially impair use of any Principal
Property or which are being contested in good faith by the
Company or such Restricted Subsidiary; or
o any extension, renewal or replacement (including successive
extensions, renewals or replacements), as a whole or in part, of
any of the above-enumerated Liens; provided, however, that (1)
such extension, renewal or replacement Liens are limited to all
or part of the same Principal Property, shares of capital stock
or Debt that secured the Liens extended, renewed, or replaced
(plus improvements on such Principal Property) and (2) the
principal amount of Debt secured by such Liens at such time is
not increased.
Limitation on Sale and Lease-Back Transactions
The indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction
with respect to any Principal Property unless the aggregate amount of all
Attributable Debt with respect to such transactions, together with all Debt
outstanding pursuant to the first paragraph of the "--Limitation on Liens"
covenant described above, would not exceed 10% of Consolidated Total
Assets.
The foregoing restrictions will not apply to any Sale and Lease-Back
Transaction if:
o the lease is for a period, including renewals, of not more than
three years;
o the transaction is between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries;
o the purchaser's commitment is obtained within 180 days before or
after the acquisition, construction or placing in service of the
Principal Property;
o the Company or such Restricted Subsidiary would be entitled under
the "--Limitation on Liens" covenant described above to incur
Debt secured by a Lien on such Principal Property to be leased
back in an amount equal to the Attributable Debt with respect to
such Sale and Lease-Back Transaction without equally and ratably
securing the notes; or
o the Company or such Restricted Subsidiary, within 180 days after
the effective date of the transaction, applies (1) to the
retirement of notes or other Debt of the Company or any
Restricted Subsidiary or (2) to the purchase of or investment in
property, securities or other assets which will be used (or, in
the case of any securities, are capital stock issued by a company
engaged) in the Company's business or that of its Restricted
Subsidiaries as then being conducted, in each case, an amount
equal to the net proceeds of the sale or transfer of the
Principal Property so sold and leased back pursuant to such
arrangement.
Consolidation, Merger and Sale of Assets
The Company may consolidate or merge with or into any other Person, and may
sell or transfer all or substantially all of its assets to another Person,
provided that the following conditions are satisfied:
o the Company is the continuing entity, or the resulting, surviving
or transferee Person (the "Successor") is a Person organized and
existing under the laws of the United States of America, any
state thereof or the District of Columbia and the Successor (if
not the Company) shall expressly assume, by supplemental
indenture all the obligations of the Company under the notes and
the Indenture;
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o immediately after giving effect to such transaction, no Default
or Event of Default under the indenture has occurred and is
continuing; and
o the trustee receives from the Company, if requested, an officer's
certificate and an opinion of counsel that the merger,
consolidation or transfer and such supplemental indenture, as the
case may be, complies with the applicable provisions of the
indenture.
If the Company consolidates or merges with or into any other entity or
sells all or substantially all of its assets in accordance with the
indenture, the Successor will be substituted for the Company in the
indenture, with the same effect as if it had been an original party to the
indenture. As a result, the Successor may exercise the Company's rights and
powers under the indenture, and the Company will be released from all its
liabilities and obligations under the indenture and under the notes.
Any substitution of the Successor for the Company might be deemed for
federal income tax purposes to be an exchange of the notes for "new" notes,
resulting in recognition of gain or loss for such purposes and possibly
certain other adverse tax consequences to beneficial owners of the notes.
You should consult your own tax advisor regarding the tax consequences of
any such substitution.
DEFINITIONS
"Attributable Debt" means, when used in respect of any Sale and Lease-Back
Transaction, as of the time of the determination, the lesser of (1) the
sale price of the Principal Property so leased multiplied by a fraction the
numerator of which is the remaining portion of the base term of the lease
included in such transaction and the denominator of which is the base term
of such lease, and (2) the total obligation (discounted to present value at
the implicit interest factor, determined in accordance with generally
accepted financial practice, included in the rental payments) of the lessee
for rental payments (other than amounts required to be paid on account of
property taxes as well as maintenance, repairs, insurance, water rates and
other items which do not constitute payments for property rights and
excluding the rental obligations, calculated on the same basis, that any
sublessee has for all or part of the same property) during the remaining
portion of the base term of the lease included in such transaction.
"Consolidated Total Assets" means the aggregate amount of assets of the
Company and its Restricted Subsidiaries on a consolidated basis, as set
forth on the most recent balance sheet of the Company and its Subsidiaries
and computed in accordance with GAAP.
"Debt" means, with respect to any Person, notes, bonds, debentures or other
evidences of indebtedness for money borrowed, lease obligations of a lessee
which are capitalized in accordance with GAAP, Debt of others secured by a
lien on any Principal Property of such Person, and guarantees of such
Person, in each case which appear on the consolidated balance sheet of such
Person as a liability in accordance with GAAP.
"GAAP" means generally accepted accounting principles in the United States
as in effect on the date of the indenture.
"Lien" means any mortgage, lien, security interest, pledge, charge or other
encumbrance; provided that in no event will an operating lease or any
Uniform Commercial Code financing statement filed in respect thereof be
deemed to constitute a Lien.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof or any other entity.
"Principal Property" means real property owned or leased under a capital
lease and used by the Company or any Restricted Subsidiary, located in the
United States and having an acquisition cost plus capitalized improvements
in excess of 1% of Consolidated Total Assets as of the date of
determination; provided, however, that the term "Principal Property" does
not include any such real property financed through the issuance of tax
exempt governmental obligations, or any such real property that has been
determined in good faith by the Company's board of directors not to be
material to the businesses
25
conducted by, or financial condition of, the Company and its Subsidiaries
taken as a whole, effective as of the date the board action is adopted.
"Restricted Subsidiary" means any Subsidiary other than a Subsidiary
substantially all the real properties of which are located, or
substantially all the operations of which are conducted, outside the United
States.
"Sale and Lease-Back Transaction" means, with respect to any Person, any
arrangement whereby (1) property has been or is to be sold or transferred
by such Person to any other Person with the intention on the part of such
Person of taking back a lease of such property pursuant to which the rental
payments are calculated to amortize the purchase price of such property
substantially over the useful life of such property and (2) such property
is in fact so leased by such Person.
"Subsidiary" means any corporation or other Person of which at least a
majority of all outstanding stock or equivalent interests having ordinary
voting power in the election of directors or members of any equivalent
management body of such corporation or other Person is at the time,
directly or indirectly, owned by the Company or by one or more Subsidiaries
of the Company or by the Company and one or more Subsidiaries.
EVENTS OF DEFAULT
Each of the following events are defined in the indenture as an "Event of
Default" (whatever the reason for such Event of Default and whether or not
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body) with respect to
the notes:
(1) default in the payment of any installment of interest on the
notes for 30 days after becoming due;
(2) default in the payment of principal on or premium, if any, on the
notes when it becomes due and payable at maturity, upon optional
redemption, upon declaration or otherwise;
(3) default in the performance, or breach, of any covenant or
agreement of the Company in the indenture with respect to the
notes (other than as referred to in clause (1) or (2) above),
which continues for a period of 90 days after written notice to
the Company by the trustee or to the Company and the trustee by
the holders of at least 25% in principal amount of the
outstanding notes;
(4) default under or in respect of Debt of the Company or any
Significant Subsidiary with an aggregate principal amount then
outstanding in excess of $25 million, which default results in
the acceleration of maturity of such Debt, unless such Debt or
acceleration is discharged or annulled within 30 days after
written notice to the Company by the trustee or to the Company
and the trustee by the holders of at least 25% in principal
amount of the notes outstanding;
(5) the Company or any of its Significant Subsidiaries pursuant to or
within the meaning of the Bankruptcy Law:
o commences a voluntary case or proceeding;
o consents to the entry of an order for relief against it in
an involuntary case or proceeding;
o consents to the appointment of a Custodian of it or for all
or substantially all of its property;
o makes a general assignment for the benefit of its creditors;
o files a petition in bankruptcy or answer or consent seeking
reorganization or relief;
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o consents to the filing of such petition or the appointment
of or taking possession by a Custodian; or
o takes any comparable action under any foreign laws relating
to insolvency; or
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
o is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case, or adjudicates the
Company or any of its Significant Subsidiaries insolvent or
bankrupt;
o appoints a Custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of
the property of the Company or any of its Significant
Subsidiaries; or
o orders the winding-up or liquidation of the Company or any
of its Significant Subsidiaries (or any similar relief is
granted under any foreign laws)
and the order or decree remains unstayed and in effect for 60
days.
"Bankruptcy Law" means Title 11, United States Code or any similar federal
or state or foreign law for the relief of debtors.
"Custodian" means any custodian, receiver, trustee, assignee, liquidator or
other similar official under any Bankruptcy Law.
"Significant Subsidiary" means any Subsidiary of the Company that, as of
the date of determination, is a "significant subsidiary" as defined in
Regulation S-X promulgated by the SEC.
If an Event of Default (other than an Event of Default relating to certain
events of bankruptcy, insolvency, or reorganization of us) occurs and is
continuing, the trustee by notice to us, or the holders of at least 25% in
principal amount of the notes outstanding by notice to us and the trustee,
may, and the trustee at the request of these holders shall, declare the
principal of, and premium, if any, and accrued and unpaid interest, if any,
on all the notes to be due and payable. Upon such a declaration, such
principal, premium and accrued and unpaid interest will be due and payable
immediately. If an Event of Default relating to certain events of
bankruptcy, insolvency, or reorganization of us occurs and is continuing,
the principal of, premium, if any, and accrued and unpaid interest on all
the notes will become and be immediately due and payable without any
declaration or other act on the part of the trustee or any holders.
The holders of not less than a majority in aggregate principal amount of
the notes outstanding may rescind a declaration of acceleration and its
consequences, if all events of default with respect to the notes, other
than the non-payment of the principal and other amounts which has become
due solely by such acceleration, have been cured or waived, as provided in
the indenture.
The indenture provides that the trustee will, within 90 days after
knowledge of the occurrence of default with respect to the notes, give the
holders of the notes notice of such default known to it; provided that,
except in the case of default in the payment of principal of or premium, if
any, or interest, if any, on any of the notes, the trustee will be
protected in withholding such notice if it in good faith determines the
withholding of such notice is in the interest of the holders of the notes.
We are required to furnish the trustee annually a statement by certain of
our officers to the effect that, to the best of their knowledge, we are not
in default in the fulfillment of any of our obligations under the indenture
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default. We are also required to deliver to the
trustee, within thirty days after knowledge of the occurrence thereof,
written notice of any Event of Default or any event which after notice or
lapse of time or both would constitute an Event of Default.
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No holder of any note will have any right to institute any judicial or
other proceeding with respect to the indenture, or for the appointment of a
receiver or trustee, or for any other remedy unless:
(1) an Event of Default shall have occurred and be continuing and
such holder shall have given the trustee prior written notice of
such continuing Event of Default;
(2) the holders of not less than 25% of the outstanding principal
amount of notes shall have requested the trustee to institute
proceedings in respect of such Event of Default;
(3) the trustee shall have been offered indemnity satisfactory to it
against its costs, expenses and liabilities in complying with
such request;
(4) the trustee shall have failed to institute proceedings 60 days
after the receipt of such notice, request and offer of indemnity;
and
(5) no direction inconsistent with such written request shall have
been given for 60 days by the holders of a majority in principal
amount of the outstanding notes.
The holders of a majority in principal amount of notes outstanding will
have the right, subject to certain limitations, to direct the time, method
and place of conducting any proceeding for any remedy available to the
trustee with respect to the notes or exercising any trust or power
conferred to the trustee, and to waive certain defaults. The indenture
provides that in case an Event of Default shall occur and be continuing,
the trustee will exercise such of its rights and powers under the
indenture, and use the same degree of care and skill in their exercise, as
a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs. Subject to such provisions, the
trustee will be under no obligation to exercise any of its rights or powers
under the indenture at the request of any of the holders of the notes
unless they shall have offered to the trustee security or indemnity
satisfactory to the trustee against the costs, expenses and liabilities
which might be incurred by it in compliance with such request.
MODIFICATION AND WAIVERS
Modification and amendments of the indenture and the notes may be made by
us and the trustee with the consent of the holders of not less than a
majority in aggregate principal amount of the notes outstanding affected
thereby; provided, however, that no such modification or amendment may,
without the consent of the holder of each outstanding note affected
thereby:
o change the stated maturity of the principal of, or installment of
interest on, any note;
o reduce the principal amount of, or the rate of interest on, any
notes;
o reduce any premium payable on the redemption of any note or
change the date on which any note may or must be redeemed;
o change the coin or currency in which the principal of or interest
on any note is payable;
o impair the right of any holder to institute suit for the
enforcement of any payment on or after the stated maturity of any
note;
o reduce the percentage in principal amount of the outstanding
notes, the consent of whose holders is required in order to take
certain actions;
o reduce the requirements for quorum or voting by holders of notes
in the indenture or the notes;
o modify any of the provisions in the indenture regarding the
waiver of past defaults and the waiver of certain covenants by
the holders of notes except to increase any percentage vote
required or
28
to provide that certain other provisions of the indenture cannot
be modified or waived without the consent of the holder of each
note affected thereby; or
o modify any of the above provisions.
We and the trustee may, without the consent of any holders, modify or amend
the terms of the indenture and the notes with respect to the following:
o to cure any ambiguity, omission, defect or inconsistency;
o to comply with the covenant described above under "Covenants --
Consolidation, Merger and Sale of Assets;"
o to add any additional events of default;
o to add to our covenants for the benefit of holders of the notes
or to surrender any right or power conferred upon us;
o to add one or more guarantees for the benefit of holders of the
notes;
o to secure the notes pursuant to the covenants of the indenture;
o to add or appoint a successor or separate trustee or other agent;
o to provide for the issuance of the exchange notes, which will
have terms substantially identical in all material respects to
the notes (except that the transfer restrictions contained in the
notes will be modified or eliminated, as appropriate, and there
will be no registration rights), and which will be treated,
together with any outstanding notes, as a single issue of
securities;
o to provide for the issuance of any additional notes;
o to comply with any requirement in connection with the
qualification of the indenture under the Trust Indenture Act of
1939, as amended;
o to comply with the rules of any applicable securities depository;
o to provide for uncertificated notes in addition to or in place of
certificated notes; and
o to change any other provision if the change does not adversely
affect the interests of any holder of notes.
The holders of at least a majority in aggregate principal amount of the
notes outstanding may, on behalf of the holders of all notes, waive
compliance by the Company with certain restrictive provisions of the
indenture. The holders of not less than a majority in aggregate principal
amount of the notes outstanding may, on behalf of the holders of all notes,
waive any past default and its consequences under the indenture with
respect to the notes, except a default (1) in the payment of principal or
premium, if any, or interest on notes or (2) in respect of a covenant or
provision of the indenture that cannot be modified or amended without the
consent of the holder of each note. Upon any such waiver, such default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of the indenture; but no such
waiver shall extend to any subsequent or other default or Event of Default
or impair any rights consequent thereon.
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We may discharge certain obligations to holders of the notes that have not
already been delivered to the trustee for cancellation and that either have
become due and payable or will become due and payable within one year (or
scheduled for redemption within one year) by depositing with the trustee,
in trust, funds in U.S. dollars in an amount sufficient to pay the entire
indebtedness including the principal and premium, if any, and interest to
the date of such deposit (if the notes have become due and payable) or to
the maturity thereof or the date of redemption of the notes, as the case
may be.
The indenture provides that we may elect either (1) to defease and be
discharged from any and all obligations with respect to the notes (except
for, among other things, other obligations to register the transfer or
exchange of the notes, to replace temporary or mutilated, destroyed, lost
or stolen notes, to maintain an office or agency with respect to the notes
and to hold moneys for payment in trust) ("legal defeasance") or (2) to be
released from our obligations to comply with the restrictive covenants
under the indenture, and any omission to comply with such obligations will
not constitute a default or an Event of Default with respect to the notes
and clauses (3) and (4) under "--Events of Default" will no longer be
applied ("covenant defeasance"). Legal defeasance or covenant defeasance,
as the case may be, will be conditioned upon, among other things, the
irrevocable deposit by us with the trustee, in trust, of an amount in U.S.
dollars, or U.S. Government obligations, or both, applicable to the notes
which through the scheduled payment of principal and interest in accordance
with their terms will provide money in an amount sufficient to pay the
principal or premium, if any, and interest on the notes on the scheduled
due dates therefor.
If we effect covenant defeasance with respect to the notes and the notes
are declared due and payable because of the occurrence of any Event of
Default other than under clauses (4) and (5) of "--Events of Default," the
amount in U.S. dollars, or U.S. Government obligations, or both, on deposit
with the trustee will be sufficient, in the opinion of a nationally
recognized firm of independent accountants, to pay amounts due on the notes
at the time of the stated maturity but may not be sufficient to pay amounts
due on the notes at the time of the acceleration resulting from such Event
of Default. However, we would remain liable to make payment of such amounts
due at the time of acceleration.
We will be required to deliver to the trustee an opinion of counsel that
the deposit and related defeasance will not cause the holders and
beneficial owners of the notes to recognize income, gain or loss for
federal income tax purposes. If we elect legal defeasance, that opinion of
counsel must be based upon a ruling from the U.S. Internal Revenue Service
or a change in law to that effect.
We may exercise our legal defeasance option notwithstanding our prior
exercise of our covenant defeasance option.
FURTHER ISSUES
We may from time to time, without notice to or the consent of the holders
of the notes, create and issue additional notes having the same terms as,
and ranking equally and ratably with, the notes in all respects (or in all
respects except for the payment of interest accruing prior to the issue
date of such additional notes, or except for the first payment of interest
following the issue date of such additional notes). Such additional notes
may be consolidated and form a single series with, and will have the same
terms as to ranking, redemption, waivers, amendments or otherwise as, the
notes, and will vote together as one class on all matters with respect to
the notes.
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SAME-DAY SETTLEMENT AND PAYMENT
The notes will trade in the same-day funds settlement system of DTC until
maturity or until we issue the notes in certificated form. DTC will
therefore require secondary market trading activity in the notes to settle
in immediately available funds. We can give no assurance as to the effect,
if any, of settlement in immediately available funds on trading activity in
the notes.
BOOK-ENTRY; DELIVERY AND FORM; GLOBAL NOTES
The exchange notes will be represented by one or more global notes in
definitive, fully registered form without interest coupons. Each global
note will be deposited with the trustee as custodian for DTC and registered
in the name of a nominee of DTC in New York, New York for the accounts of
participants in DTC.
Investors may hold their interests in a global note directly through DTC if
they are DTC participants, or indirectly through organizations that are DTC
participants. Except in the limited circumstances described below, holders
of notes represented by interests in a global note will not be entitled to
receive their notes in fully registered certificated form.
DTC has advised us as follows: DTC is a limited-purpose trust company
organized under New York Banking Law, 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 of institutions that have accounts with DTC ("participants") and
to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes
in accounts of the participants, thereby eliminating the need for physical
movement of securities certificates. DTC's participants include securities
brokers and dealers (which may include the initial purchasers), banks,
trust companies, clearing corporations and certain other organizations.
Access to DTC's book-entry system is also available to others such as
banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, whether directly or
indirectly.
Ownership of Beneficial Interests
Upon the issuance of each global note, DTC will credit, on its book-entry
registration and transfer system, the respective principal amount of the
individual beneficial interests represented by the global note to the
accounts of participants. Ownership of beneficial interests in each global
note will be limited to participants or persons that may hold interests
through participants. Ownership of beneficial interests in each global note
will be shown on, and the transfer of those ownership interests will be
effected only through, records maintained by DTC (with respect to
participants' interests) and such participants (with respect to the owners
of beneficial interests in the global note other than participants).
So long as DTC or its nominee is the registered holder and owner of a
global note, DTC or such nominee, as the case may be, will be considered
the sole legal owner of the notes represented by the global note for all
purposes under the indenture, the notes and applicable law. Except as set
forth below, owners of beneficial interests in a global note will not be
entitled to receive certificated notes and will not be considered to be the
owners or holders of any notes under the global note. We understand that
under existing industry practice, in the event an owner of a beneficial
interest in a global note desires to take any actions that DTC, as the
holder of the global note, is entitled to take, DTC would authorize the
participants to take such action, and that participants would authorize
beneficial owners owning through such participants to take such action or
would otherwise act upon the instructions of beneficial owners owning
through them. No beneficial owner of an interest in a global note will be
able to transfer the interest except in accordance with DTC's applicable
procedures, in addition to those provided for under the indenture. Because
DTC can only act on behalf of participants, who in turn act on behalf of
others, the ability of a person having a beneficial interest in a global
note to pledge that interest to persons that do not participate in the DTC
system, or otherwise to take actions in respect of that interest, may be
impaired by the lack of physical certificate of that interest.
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All payments on the notes represented by a global note registered in the
name of and held by DTC or its nominee will be made to DTC or its nominee,
as the case may be, as the registered owner and holder of the global note.
We expect that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest in respect of a global note, will
credit participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the global
note as shown on the records of DTC or its nominee. We also expect that
payments by participants to owners of beneficial interests in the global
note held through such participants will be governed by standing
instructions and customary practices as is now the case with securities
held for accounts for customers registered in the names of nominees for
such customers. These payments, however, will be the responsibility of such
participants and indirect participants, and neither we, the trustee nor any
paying agent will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial
ownership interests in any global note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or
for any other aspect of the relationship between DTC and its participants
or the relationship between such participants and the owners of beneficial
interests in the global note.
Unless and until it is exchanged in whole or in part for certificated
notes, each global note may not be transferred except as a whole by DTC to
a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
We expect that DTC will take any action permitted to be taken by a holder
of notes (including the presentation of notes for exchange as described
below) only at the direction of one or more participants to whose account
the DTC interests in a global note are credited and only in respect of such
portion of the aggregate principal amount of the notes as to which such
participant or participants has or have given such direction. However, if
there is an Event of Default under the notes, DTC will exchange each global
note for certificated notes, which it will distribute to its participants.
Although we expect that DTC will agree to the foregoing procedures in order
to facilitate transfers of interests in each global note among participants
of DTC, DTC is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither
we, the initial purchasers nor the trustee will have any responsibility for
the performance or nonperformance by DTC or their participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
The indenture provides that, if (1) DTC notifies us that it is unwilling or
unable to continue as depository or if DTC ceases to be eligible under the
indenture and we do not appoint a successor depository within 90 days, (2)
we determine that the notes shall no longer be represented by global notes
and execute and deliver to the trustee a company order to such effect or
(3) an event of default with respect to the notes shall have occurred and
be continuing, the global notes will be exchanged for notes in certificated
form of like tenor and of an equal principal amount, in authorized
denominations. These certificated notes will be registered in such name or
names as DTC shall instruct the trustee. It is expected that such
instructions may be based upon directions received by DTC from participants
with respect to ownership of beneficial interests in global securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we do
not take responsibility for its accuracy.
Euroclear and Clearstream, Luxembourg
If the depositary for a global security is DTC, you may hold interests in
the global security through Clearstream Banking, societe anonyme, which we
refer to as "Clearstream, Luxembourg," or Euroclear Bank S.A./ NV, as
operator of the Euroclear System, which we refer to as "Euroclear," in each
case, as a participant in DTC. Euroclear and Clearstream, Luxembourg will
hold interests, in each case, on behalf of their participants through
customers' securities accounts in the names of Euroclear and Clearstream,
Luxembourg on the books of their respective depositaries, which in turn
will hold such interests in customers' securities in the depositaries'
names on DTC's books.
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Payments, deliveries, transfers, exchanges, notices and other matters
relating to the notes made through Euroclear or Clearstream, Luxembourg
must comply with the rules and procedures of those systems. Those systems
could change their rules and procedures at any time. We have no control
over those systems or their participants, and we take no responsibility for
their activities. Transactions between participants in Euroclear or
Clearstream, Luxembourg, on one hand, and other participants in DTC, on the
other hand, would also be subject to DTC's rules and procedures.
Investors will be able to make and receive through Euroclear and
Clearstream, Luxembourg payments, deliveries, transfers, exchanges, notices
and other transactions involving any securities held through those systems
only on days when those systems are open for business. Those systems may
not be open for business on days when banks, brokers and other institutions
are open for business in the United States.
In addition, because of time-zone differences, U.S. investors who hold
their interests in the notes through these systems and wish on a particular
day, to transfer their interests, or to receive or make a payment or
delivery or exercise any other right with respect to their interests, may
find that the transaction will not be effected until the next business day
in Luxembourg or Brussels, as applicable. Thus, investors who wish to
exercise rights that expire on a particular day may need to act before the
expiration date. In addition, investors who hold their interests through
both DTC and Euroclear or Clearstream, Luxembourg may need to make special
arrangements to finance any purchase or sales of their interests between
the U.S. and European clearing systems, and those transactions may settle
later than transactions within one clearing system.
GOVERNING LAW
The indenture and the notes are governed by, and construed in accordance
with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Bank of New York is the trustee under the indenture and has also been
appointed by the Company to act as registrar, transfer agent, paying agent
and exchange agent for the notes.
The Bank of New York has provided a loan commitment to us under our
five-year revolving credit agreement and from time to time has provided us
with foreign exchange services, as well as services in connection with our
share repurchase program. In addition, from time to time The Bank of New
York acts as an escrow agent for us. The Bank of New York has received, and
will continue to receive, customary consideration in connection with these
transactions. In the ordinary course of business, affiliates of The Bank of
New York are customers of our various products and services for which they
pay us customary fees. In addition, the trustee is permitted to engage in
other transactions with us and our subsidiaries from time to time, provided
that if the trustee acquires any conflicting interest it must eliminate
such conflict upon the occurrence of an Event of Default, or else resign.
33
UNITED STATES FEDERAL TAX CONSIDERATIONS
The following summary describes the material United States federal income
tax consequences and, in the case of a non-U.S. holder (as defined below),
the material United States federal estate tax consequences, of purchasing,
owning and disposing of the exchange notes and exchanging the outstanding
notes for the exchange notes.
This summary deals only with outstanding notes and exchange notes held as
capital assets (generally, investment property) and does not deal with
special tax situations such as:
o dealers in securities or currencies;
o traders in securities;
o United States holders (as defined below) whose functional
currency is not the United States dollar;
o persons holding outstanding notes or exchange notes as part of a
conversion, constructive sale, wash sale or other integrated
transaction or a hedge, straddle or synthetic security;
o persons subject to the alternative minimum tax;
o certain United States expatriates;
o financial institutions;
o insurance companies;
o controlled foreign corporations, foreign personal holding
companies, passive foreign investment companies and regulated
investment companies and shareholders of such corporations;
o entities that are tax-exempt for United States federal income tax
purposes and retirement plans, individual retirement accounts and
tax-deferred accounts; and
o pass-through entities, including partnerships and entities and
arrangements classified as partnerships for United States federal
tax purposes, and beneficial owners of pass-through entities.
If you are a partnership (or an entity or arrangement classified as a
partnership for United States federal tax purposes) holding outstanding
notes or exchange notes or a partner in such a partnership, the United
States federal income tax treatment of a partner in the partnership
generally will depend on the status of the partner and the activities of
the partnership, and you should consult your own tax advisor regarding the
United States federal income and estate tax consequences of purchasing,
owning and disposing of the exchange notes and exchanging the outstanding
notes for the exchange notes.
This summary does not discuss all of the aspects of United States federal
income and estate taxation that may be relevant to you in light of your
particular investment or other circumstances. In addition, this summary
does not discuss any United States state or local income or foreign income
or other tax consequences. This summary is based on United States federal
income and estate tax law, including the provisions of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code") Treasury
regulations, administrative rulings and judicial authority, all as in
effect or in existence as of the date of this prospectus. Subsequent
developments in United States federal income and estate tax law, including
changes in law or differing interpretations, which may be applied
retroactively, could have a material effect on the United States federal
income and estate tax consequences of purchasing, owning and disposing of
exchange notes and exchanging the outstanding notes for the exchange notes
as set forth in this summary. Before you purchase exchange notes or
exchange your outstanding notes for exchange
34
notes, you should consult your own tax advisor regarding the particular
United States federal, state and local and foreign income and other tax
consequences of acquiring, owning and disposing of exchange notes and
exchanging the outstanding notes for the exchange notes that may be
applicable to you.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of the outstanding notes for the exchange notes in the
exchange offer will not be a taxable exchange for United States federal
income tax purposes and, accordingly, for such purposes you will not
recognize any taxable gain or loss as a result of such exchange and you
will have the same tax basis and holding period in the exchange notes as
you had in your outstanding notes immediately before the exchange.
UNITED STATES HOLDERS
The following summary applies to you only if you are a United States
holder, as defined below.
Definition of a United States Holder
A "United States holder" is a beneficial owner of an outstanding note or an
exchange note that is for United States federal income tax purposes:
o an individual citizen or resident of the United States;
o a corporation (or other entity classified as a corporation for
these purposes) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
o an estate, the income of which is subject to United States
federal income taxation regardless of the source of that income;
or
o a trust, if (1) a United States court is able to exercise primary
supervision over the trust's administration and one or more
"United States persons" (within the meaning of the Code) has the
authority to control all of the trust's substantial decisions, or
(2) the trust has a valid election in effect under applicable
Treasury regulations to be treated as a "United States person."
Payments of Interest
Payments of interest on your exchange notes will be taxed as ordinary
interest income. In addition:
o if you use the cash method of accounting for United States
federal income tax purposes, you will have to include the
interest on your exchange notes in your gross income at the time
you receive the interest; and
o if you use the accrual method of accounting for United States
federal income tax purposes, you will have to include the
interest on your exchange notes in your gross income at the time
the interest accrues.
Market Discount and Bond Premium
If you purchase an exchange note (or purchased the outstanding note for
which the exchange note was exchanged, as the case may be) at a price that
is less than its principal amount, the excess of the principal amount over
your purchase price will be treated as "market discount." However, the
market discount will be considered to be zero if it is less than 1/4 of 1%
of the principal amount multiplied by the number of complete years to
maturity from the date you purchased the exchange note or outstanding note,
as the case may be.
35
Under the market discount rules of the Internal Revenue Code, you generally
will be required to treat any principal payment on, or any gain realized on
the sale, exchange, retirement or other disposition of, an exchange note as
ordinary income (generally treated as interest income) to the extent of the
market discount which accrued but was not previously included in income. In
addition, you may be required to defer, until the maturity of the exchange
note or its earlier disposition in a taxable transaction, the deduction of
all or a portion of your interest expense on any indebtedness incurred or
continued to purchase or carry the exchange note (or the outstanding note
for which the exchange note was exchanged, as the case may be). In general,
market discount will be considered to accrue ratably during the period from
the date of the purchase of the exchange note (or the outstanding note for
which the exchange note was exchanged, as the case may be) to the maturity
date of the exchange note, unless you make an irrevocable election (on an
instrument-by-instrument basis) to accrue market discount under a constant
yield method. You may elect to include market discount in income currently
as it accrues (under either a ratable or constant yield method), in which
case the rules described above regarding the treatment as ordinary income
of gain upon the disposition of the exchange note and upon the receipt of
certain payments and the deferral of interest deductions will not apply.
The election to include market discount in income currently, once made,
applies to all market discount obligations acquired on or after the first
day of the first taxable year to which the election applies, and may not be
revoked without the consent of the Internal Revenue Service.
If you purchase an exchange note (or purchased the outstanding note for
which the exchange note was exchanged, as the case may be) for an amount in
excess of the amount payable at maturity of the exchange note, you will be
considered to have purchased the exchange note (or outstanding note) with
"bond premium" equal to the excess of your purchase price over the amount
payable at maturity (or on an earlier call date if it results in a smaller
amortizable bond premium). It may be possible for you to elect to amortize
the premium using a constant yield method over the remaining term of the
exchange note (or until an earlier call date, as applicable). The amortized
amount of the premium for a taxable year generally will be treated first as
a reduction of interest on the exchange note included in such taxable year
to the extent thereof, then as a deduction allowed in that taxable year to
the extent of your prior interest inclusions on the exchange note, and
finally as a carryforward allowable against your future interest inclusions
on the exchange note. The election, once made, is irrevocable without the
consent of the Internal Revenue Service and applies to all taxable bonds
held during the taxable year for which the election is made or subsequently
acquired. You should consult your own tax advisor concerning the
computation and amortization of any bond premium on your exchange note.
Constant Yield Election
As an alternative to the above-described rules for including interest
payments and any market discount in income and amortizing any bond premium,
you may elect to include in gross income all interest that accrues on an
exchange note, including stated interest, any market discount (including
any de minimis market discount) and adjustments for any bond premium, on
the constant yield method. If such an election were made, you would be
deemed to have made an election to amortize bond premium, which as
discussed above applies to all debt instruments held or subsequently
acquired by you. Particularly for United States holders who are on the cash
method of accounting, a constant yield election may have the effect of
causing you to include interest in income earlier than would be the case if
no such election were made, and the election may not be revoked without the
consent of the Internal Revenue Service. You should consult your own tax
advisor before making this election.
Sale or Other Disposition of the Exchange Notes
Upon the sale, redemption or other taxable disposition of an exchange note,
you generally will recognize taxable gain or loss in an amount equal to the
difference, if any, between the amount realized on the disposition (less
any amount attributable to accrued interest, which will be taxable in the
manner described above under "--Payments of Interest") and your adjusted
tax basis in the exchange note. Your adjusted tax basis in an exchange note
will generally equal the cost of the exchange note (or, in the case of an
exchange note acquired in exchange for an outstanding note in the exchange
offer, the tax basis of the outstanding note, as discussed above under
"--United States Federal Income Tax Consequences of
36
the Exchange Offer"), increased by the amount of any market discount with
respect to your exchange note previously included in your gross income, and
reduced by the amount of any amortizable bond premium applied to reduce, or
allowed as a deduction against, interest with respect to your exchange
note.
Your gain or loss generally will be capital gain or loss (except with
respect to accrued market discount that has not previously been included in
income, as discussed above under "--Market Discount and Bond Premium").
Such capital gain or loss will be long-term capital gain or loss if the
exchange note has been held for more than one year at the time of the
disposition (taking into account for this purpose, in the case of an
exchange note received in exchange for an outstanding note in the exchange
offer, the period of time that the outstanding note was held).
Subject to limited exceptions, your capital losses cannot be used to offset
your ordinary income. If you are a non-corporate United States holder, your
long-term capital gain generally will be subject to a maximum tax rate of
15%.
Backup Withholding
In general, "backup withholding" at a rate of 28% may apply:
o to any payments made to you of principal of and interest on your
exchange note, and
o to payment of the proceeds of a sale or other disposition of your
exchange note,
if you are a non-corporate United States holder and fail to provide a
correct taxpayer identification number or otherwise comply with applicable
requirements of the backup withholding rules.
The backup withholding tax is not an additional tax and may be credited
against your United States federal income tax liability, provided that
correct information is provided to the Internal Revenue Service.
NON-UNITED STATES HOLDERS
The following summary applies to you if you are a beneficial owner of an
exchange note that is not a United States holder (as defined above) and
also is not a partnership (or an entity or arrangement classified as a
partnership for United States federal tax purposes) (a "non-U.S. holder").
An individual may, subject to exceptions, be deemed to be a resident alien,
as opposed to a non-resident alien, by among other ways being present in
the United States:
o on at least 31 days in the calendar year, and
o for an aggregate of at least 183 days during a three-year period
ending in the current calendar year, counting for such purposes
all of the days present in the current year, one-third of the
days present in the immediately preceding year, and one-sixth of
the days present in the second preceding year.
Resident aliens are subject to United States federal income tax as if they
were United States citizens.
United States Federal Withholding Tax
Under current United States federal income tax laws, and subject to the
discussion below, United States federal withholding tax will not apply to
payments by us or our paying agent (in its capacity as such) of principal
of and interest on your exchange notes under the "portfolio interest"
exception of the Internal Revenue Code, provided that in the case of
interest:
o you do not, directly or indirectly, actually or constructively,
own ten percent or more of the total combined voting power of all
classes of our stock entitled to vote within the meaning of
section 871(h)(3) of the Internal Revenue Code and the Treasury
regulations thereunder;
37
o you are not a controlled foreign corporation for United States
federal income tax purposes that is related, directly or
indirectly, to us through sufficient stock ownership (as provided
in the Internal Revenue Code);
o you are not a bank receiving interest described in section
881(c)(3)(A) of the Internal Revenue Code;
o such interest is not effectively connected with your conduct of a
United States trade or business; and
o you provide a signed written statement, on an Internal Revenue
Service Form W-8BEN (or other applicable form) which can reliably
be related to you, certifying under penalties of perjury that you
are not a United States person within the meaning of the Internal
Revenue Code and providing your name and address to:
(A) us or our paying agent; or
(B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary
course of its trade or business and holds your exchange
notes on your behalf and that certifies to us or our paying
agent under penalties of perjury that it, or the bank or
financial institution between it and you, has received from
you your signed, written statement and provides us or our
paying agent with a copy of this statement.
The applicable Treasury regulations provide alternative methods for
satisfying the certification requirement described in this section. In
addition, under these Treasury regulations, special rules apply to
pass-through entities and this certification requirement may also apply to
beneficial owners of pass-through entities.
If you cannot satisfy the requirements of the "portfolio interest"
exception described above, payments of interest made to you will be subject
to 30% United States federal withholding tax unless you provide us or our
paying agent with a properly executed (1) Internal Revenue Service Form
W-8ECI (or other applicable form) stating that interest paid on an exchange
note is not subject to withholding tax because it is effectively connected
with your conduct of a trade or business in the United States, or (2)
Internal Revenue Service Form W-8BEN (or other applicable form) claiming an
exemption from or reduction in this withholding tax under an applicable
income tax treaty.
United States Federal Income Tax
Except for the possible application of United States federal withholding
tax discussed under "--United States Federal Withholding Tax" above and
backup withholding tax discussed under "--Backup Withholding and
Information Reporting" below, you generally will not have to pay United
States federal income tax on payments of principal of and interest on your
exchange notes, or on any gain or accrued interest realized from the sale,
redemption, retirement at maturity or other disposition of your exchange
notes unless:
o in the case of interest payments or disposition proceeds
representing accrued interest, you cannot satisfy the
requirements of the "portfolio interest" exception described
above or claim an exemption under an applicable income tax
treaty;
o in the case of gain, you are an individual who is present in the
United States for 183 days or more during the taxable year of the
sale or other disposition of your exchange notes, and specific
other conditions are met (in which case, except as otherwise
provided by an applicable income tax treaty, the gain, which may
be offset by United States source capital losses, generally will
be subject to a flat 30% United States federal income tax, even
though you are not considered a resident alien under the Code);
or
38
o the interest or gain is effectively connected with your conduct
of a United States trade or business, and, if required by an
applicable income tax treaty, is attributable to a United States
"permanent establishment" maintained by you.
If you are engaged in a trade or business in the United States and interest
or gain in respect of your exchange notes is effectively connected with the
conduct of your trade or business (and, if required by an applicable income
tax treaty, is attributable to a United States "permanent establishment"
maintained by you), the interest or gain generally will be subject to
United States federal income tax on a net basis at the regular graduated
rates and in the manner applicable to a United States holder (although the
interest will be exempt from the withholding tax discussed in the preceding
paragraphs if you provide a properly executed Internal Revenue Service
W-8ECI (or other applicable form) on or before any payment date to claim
the exemption). In addition, if you are a foreign corporation, you may be
subject to a branch profits tax equal to 30% of your effectively connected
earnings and profits for the taxable year, as adjusted for certain items,
unless a lower rate applies to you under a United States income tax treaty
with your country of residence.
United States Federal Estate Tax
If you are an individual and are not a United States citizen or a resident
of the United States (as specially defined for United States federal estate
tax purposes) at the time of your death, your exchange notes generally will
not be subject to the United States federal estate tax, unless, at the time
of your death:
o you directly or indirectly, actually or constructively, own ten
percent or more of the total combined voting power of all classes
of our stock entitled to vote within the meaning of section
871(h)(3) of the Code and the Treasury regulations thereunder; or
o your interest on the exchange notes is effectively connected with
your conduct of a United States trade or business.
Backup Withholding and Information Reporting
Under current Treasury regulations, backup withholding and information
reporting will not apply to payments made by us or our paying agent (in its
capacity as such) to you if you have provided the required certification
that you are a non-United States holder as described in "--Non-United
States Holders--United States Federal Withholding Tax" above, and provided
that neither we nor our paying agent has actual knowledge that you are a
United States holder as described in "--United States Holders" above.
However, we or our paying agent may be required to report to the IRS and
you payments of interest on the exchange notes and the amount of tax, if
any, withheld with respect to those payments. Copies of the information
returns reporting such interest payments and any withholding may also be
made available to the tax authorities in the country in which you reside
under the provisions of a treaty or agreement.
The gross proceeds from the disposition of your exchange notes may be
subject to information reporting and backup withholding tax at a rate of up
to 28%. If you sell your exchange notes outside the United States through a
non-United States office of a broker and the sales proceeds are paid to you
outside the United States, then the U.S. backup withholding and information
reporting requirements generally will not apply to that payment. However,
U.S. information reporting, but not backup withholding, will apply to a
payment of sales proceeds, even if that payment is made outside the United
States, if you sell your exchange notes through a non-U.S. office of a
broker that:
o is a United States person as defined in the Internal Revenue
Code;
o derives 50% or more of its gross income in specific periods from
the conduct of a trade or business in the United States;
o is a "controlled foreign corporation" for U.S. federal income tax
purposes; or
39
o is a foreign partnership, if at any time during its tax year:
(i) one or more of its partners are U.S. persons who in the
aggregate hold more than 50% of the income or capital
interests in the partnership; or
(ii) the foreign partnership is engaged in a U.S. trade or
business,
unless the broker has documentary evidence in its files that you are a
non-U.S. person and certain other conditions are met or you otherwise
establish an exemption. If you receive payments of the proceeds of a sale
of your exchange notes to or through a U.S. office of a broker, the payment
is subject to both U.S. backup withholding and information reporting unless
you provide a Form W-8BEN certifying that you are a non-U.S. person or you
otherwise establish an exemption.
You should consult your own tax advisor regarding application of backup
withholding in your particular circumstance and the availability of and
procedure for obtaining an exemption from backup withholding under current
Treasury regulations. Any amounts withheld under the backup withholding
rules from a payment to you will be allowed as a refund or credit against
your United States federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
40
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC set forth in no-action
letters issued to third parties, we believe that the exchange notes issued
pursuant to the exchange offer in exchange for the outstanding notes may be
offered for resale, resold and otherwise transferred by holders thereof,
other than any holder which is (A) an "affiliate" of our company within the
meaning of Rule 405 under the Securities Act, (B) a broker-dealer who
acquired notes directly from our company or (C) broker-dealers who acquired
notes as a result of market-making or other trading activities, without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such exchange notes are acquired in the
ordinary course of such holders' business, and such holders are not engaged
in, and do not intend to engage in, and have no arrangement or
understanding with any person to participate in, a distribution of such
exchange notes. However, broker-dealers receiving the exchange notes in the
exchange offer will be subject to a prospectus delivery requirement with
respect to resales of such exchange notes. To date, the staff of the SEC
has taken the position that these broker-dealers may fulfill their
prospectus delivery requirements with respect to transactions involving an
exchange of securities such as the exchange pursuant to the exchange offer,
other than a resale of an unsold allotment from the sale of the outstanding
notes to the initial purchasers thereof, with the prospectus contained in
the exchange offer registration statement. Pursuant to the registration
rights agreement, we have agreed to permit these broker-dealers to use this
prospectus in connection with the resale of such exchange notes. We have
agreed that, for a period of 120 days after the exchange offer has been
completed, we will make this prospectus, and any amendment or supplement to
this prospectus, available to any broker-dealer that requests such
documents in the letter of transmittal.
Each holder of the outstanding notes who wishes to exchange its outstanding
notes for exchange notes in the exchange offer will be required to make
certain representations to us as set forth in "The Exchange Offer."
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer 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 outstanding notes where such outstanding notes
were acquired as a result of market-making activities or other trading
activities.
We 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 offer 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
negotiated prices. Any such resale may be 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 or the purchasers of
any such exchange notes. Any broker-dealer that resells exchange notes that
were received by it for its own account in the exchange offer 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 on 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. The letter of
transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay the expenses incident to the exchange offer and will
indemnify the holders of the exchange notes, including any broker-dealers,
against certain liabilities, including liabilities under the Securities
Act, as set forth in the registration rights agreement.
LEGAL MATTERS
The validity of the exchange notes offered hereby will be passed on for us
by Fried, Frank, Harris, Shriver & Jacobson LLP, New York, New York.
41
EXPERTS
The consolidated financial statements of Dow Jones & Company, Inc.
incorporated in this Prospectus by reference to the Annual Report on Form
10-K of Dow Jones & Company, Inc. for the year ended December 31, 2003 have
been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on the
authority of such firm as experts in auditing and accounting.
The consolidated financial statements of MarketWatch, Inc. incorporated in
this Prospectus by reference to our Current Report on Form 8-K/A filed on
February 14, 2005 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, an independent registered public accounting
firm, given on the authority of such firm as experts in auditing and
accounting.
42
$225,000,000
EXCHANGE OFFER
[DOW JONES LOGO]
3.875% SENIOR NOTES DUE 2008
__________
PROSPECTUS
__________
, 2005
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits
indemnification of officers, directors, employees and agents prosecuted in
a criminal action or sued in a civil action or proceeding, including, under
certain circumstances, suits by or in the right of Dow Jones, for any
expenses, including attorneys' fees, or any liabilities which may be
incurred as a consequence of such action or proceeding, under the
conditions stated in that section.
Section 32 of Dow Jones' bylaws provides for indemnification of
officers and directors to the full extent permitted by the Delaware General
Corporation Law.
Dow Jones maintains directors' and officers' liability and corporation
reimbursement insurance for the benefit of Dow Jones and its directors and
officers. The policy provides coverage for certain amounts paid as
indemnification pursuant to the provisions of Delaware Law and Dow Jones'
bylaws.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
EXHIBIT DESCRIPTION
NUMBER
- -------- ------------------------------------------------------------------
1.1 Purchase Agreement, dated February 14, 2005, among Dow Jones &
Company, Inc., J.P. Morgan Securities, Inc., Merrill Lynch & Co.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
representatives of the several initial purchasers listed in
Schedule 1 thereto, which is hereby incorporated by reference to
Exhibit 1.1 to the registrant's Current Report on Form 8-K, filed
on February 18, 2005.
4.1 The Indenture, dated February 17, 2005, between Dow Jones &
Company, Inc. and The Bank of New York, as trustee, which is
incorporated by reference to Exhibit 4.1 to the registrant's
Current Report on Form 8-K on February 18, 2005.
4.2 Form of Initial Note and Form of Exchange Note (included within
the Indenture filed as Exhibit 4.1), which is hereby incorporated
by reference to Exhibit 4.2 to the registrant's Current Report on
Form 8-K, filed on February 18, 2005.
4.3 The Registration Rights Agreement, dated February 17, 2005, among
Dow Jones & Company, Inc., J.P. Morgan Securities, Inc., Merrill
Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representatives of the several initial
purchasers listed in Schedule 1 to the Purchase Agreement, which
is hereby incorporated by reference to Exhibit 4.3 to the
registrant's Current Report on Form 8-K, filed on February 18,
2005.
5.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson LLP.
12.1 Computation of Ratio of Earnings to Fixed Charges.
II-1
23.1 Consent of Fried, Frank, Harris, Shriver & Jacobson LLP (included
in the opinion filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (included on the signature page to the
Registration Statement).
25.1 Statement of Eligibility under the Trust Indenture Act of 1939 on
Form T-1 of The Bank of New York, as trustee.
99.1 Form of Letter of Transmittal, with respect to outstanding notes
and exchange notes.
99.2 Form of Notice of Guaranteed Delivery, with respect to
outstanding notes and exchange notes.
99.3 Form of Instructions to Registered Holder and/or Book-Entry
Transfer Facility Participant from Beneficial Owners.
99.4 Form of Letter to Clients.
(b) Financial Statement Schedules
Not applicable.
(c) Item 4(b) Information
Not applicable.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in effective registration
statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
II-2
provided, however, that paragraphs (1)(i) and (1)(ii) above do not
apply if information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Securities and Exchange Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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;
(3) to remove from registration means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
(4) 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;
(5) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or 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;
(6) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
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 informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 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 Act and
will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on the 25th day of February, 2005.
DOW JONES & COMPANY, INC.
By: /s/ Christopher W. Vieth
----------------------------------
Christopher W. Vieth
Vice President and Chief Financial
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Peter R. Kann and Joseph A. Stern, and
each of them, his or her true and lawful attorneys-in-fact and agents with
full powers of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any or all
amendments to this registration statement, including post-effective
amendments, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, and hereby
ratifies and confirms all his or her said attorneys-in-fact and agents, or
any of them, or his or her substitute or substitutes may lawfully do or cause
to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------------------------- ----------------------- ----------------------
/s/ Peter R. Kann Chief Executive Officer February 25, 2005
- --------------------------- and Director (principal
Peter R. Kann executive officer)
/s/ Richard F. Zannino Executive Vice President February 25, 2005
- --------------------------- and
Richard F. Zannino Chief Operating Officer
(principal executive
officer)
/s/ Christopher W. Vieth Vice President and Chief February 25, 2005
- --------------------------- Financial Officer
Christopher W. Vieth (principal financial
officer)
/s/ Robert E. Perrine Controller and Chief February 25, 2005
- --------------------------- Accounting Officer
Robert E. Perrine (principal accounting
officer)
Director
- ---------------------------
Christopher Bancroft
II-4
/s/ Lewis B. Campbell Director February 25, 2005
- ---------------------------
Lewis B. Campbell
/s/ Harvey Golub Director February 25, 2005
- ---------------------------
Harvey Golub
/s/ Roy A. Hammer Director February 25, 2005
- ---------------------------
Roy A. Hammer
/s/ Leslie Hill Director February 25, 2005
- ---------------------------
Leslie Hill
Director
- ---------------------------
Irvine O. Hockaday, Jr.
/s/ Dieter von Holtzbrinck Director February 25, 2005
- ---------------------------
Dieter von Holtzbrinck
/s/ Vernon E. Jordan, Jr. Director February 25, 2005
- ---------------------------
Vernon E. Jordan, Jr.
/s/ David K. P. Li Director February 25, 2005
- ---------------------------
David K. P. Li
/s/ M. Peter McPherson Director February 25, 2005
- ---------------------------
M. Peter McPherson
/s/ Frank N. Newman Director February 25, 2005
- ---------------------------
Frank N. Newman
/s/ James H. Ottaway, Jr. Director February 25, 2005
- ---------------------------
James H. Ottaway, Jr.
/s/ Elizabeth Steele Director February 25, 2005
- ---------------------------
Elizabeth Steele
/s/ William C. Steere, Jr. Director February 25, 2005
- ---------------------------
William C. Steere, Jr.
II-5
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1.1 Purchase Agreement, dated February 14, 2005, among Dow Jones &
Company, Inc., J.P. Morgan Securities, Inc., Merrill Lynch & Co.
and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
representatives of the several initial purchasers listed in
Schedule 1 thereto, which is hereby incorporated by reference to
Exhibit 1.1 to the registrant's Current Report on Form 8-K, filed
on February 18, 2005.
4.1 The Indenture, dated February 17, 2005, between Dow Jones &
Company, Inc. and The Bank of New York, as trustee, which is
incorporated by reference to Exhibit 4.1 to the registrant's
Current Report on Form 8-K on February 18, 2005.
4.2 Form of Initial Note and Form of Exchange Note (included within
the Indenture filed as Exhibit 4.1), which is hereby incorporated
by reference to Exhibit 4.2 to the registrant's Current Report on
Form 8-K, filed on February 18, 2005.
4.3 The Registration Rights Agreement, dated February 17, 2005, among
Dow Jones & Company, Inc., J.P. Morgan Securities, Inc., Merrill
Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representatives of the several initial
purchasers listed in Schedule 1 to the Purchase Agreement, which
is hereby incorporated by reference to Exhibit 4.3 to the
registrant's Current Report on Form 8-K, filed on February 18,
2005.
5.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson LLP.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Fried, Frank, Harris, Shriver & Jacobson LLP (included
in the opinion filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (included on the signature page to the
Registration Statement).
25.1 Statement of Eligibility under the Trust Indenture Act of 1939 on
Form T-1 of The Bank of New York, as trustee.
99.1 Form of Letter of Transmittal, with respect to outstanding notes
and exchange notes.
99.2 Form of Notice of Guaranteed Delivery, with respect to
outstanding notes and exchange notes.
99.3 Form of Instructions to Registered Holder and/or Book-Entry
Transfer Facility Participant from Beneficial Owners.
99.4 Form of Letter to Clients.