FILED PURSUANT TO RULE 424(b)(2)
FILE NO. 333-08369
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 26, 1999)
$55,045,000
[United Parcel Service of America, Inc. Logo Appears Here]
- --------------------------------------------------------------------------------
UNITED PARCEL SERVICE OF AMERICA, INC.
Floating Rate Senior Notes Due 2049
----------------
We will pay interest on the Notes on January 26, April 26, July 26 and
October 26 of each year. The first interest payment date is January 26, 2000.
Interest on each Note will be reset on the 26th of every month, of each year,
beginning on October 26, 1999, based on the 1 Month LIBOR Rate less 0.45% (or
45 basis points). We will issue the Notes only in denominations of $1,000 and
integral multiples of $1,000.
We have the option to redeem all or a portion of the Notes beginning on
October 26, 2029 at the redemption prices listed in this prospectus supplement,
plus accrued interest on the Notes to the date we redeem the Notes.
The holders of the Notes may require us to repurchase all or a portion of
the Notes on October 26 of every third year, beginning on October 26, 2009 at
the redemption prices listed in this prospectus supplement, plus accrued
interest on the Notes to the date we repurchase the Notes.
If there is a "tax event," we have the right to shorten the maturity of the
Notes to the extent needed so that the interest we pay on the Notes will be
deductible for United States Federal income tax purposes. On the new maturity
date, we will pay 100% of the principal amount of the Notes, plus accrued
interest on the Notes to the new maturity date.
The Notes will be listed for trading on the New York Stock Exchange under
the symbol "UPS-49."
----------------
Per Note Total
-------- -----------
Public Offering Price..................................... 100.00% $55,045,000
Underwriting Discount..................................... 1.00% $ 550,450
Proceeds (before expenses to the Company)................. 99.00% $54,494,550
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Notes will accrue from October 26, 1999 and
must be paid by the purchaser if the Notes are delivered after October 26,
1999.
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus supplement. Any representation to the contrary is a
criminal offense.
We expect the Notes will be ready for delivery in book-entry form only
through The Depository Trust Company on or about October 26, 1999.
----------------
PaineWebber Incorporated
----------------
The date of this Prospectus Supplement is October 21, 1999.
TABLE OF CONTENTS
Prospectus Supplement
Page
----
The Company................................................................ S-3
Summary Consolidated Financial Information................................. S-4
Ratio of Earnings to Fixed Charges......................................... S-4
Description of the Notes................................................... S-5
Book Entry System.......................................................... S-9
Same-Day Settlement and Payment............................................ S-12
Underwriting............................................................... S-12
Validity of the Notes...................................................... S-12
Where You Can Find More Information........................................ S-13
Prospectus
Page
----
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 4
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 4
Description of Debt Securities............................................. 5
Plan of Distribution....................................................... 18
Validity of Offered Debt Securities........................................ 19
Experts.................................................................... 19
S-2
THE COMPANY
In this prospectus supplement and the accompanying prospectus, unless we
otherwise specify or the context otherwise requires, references to:
. ""United Parcel Service of America, Inc.," "UPS," "we," "us" and "our"
are to United Parcel Service of America, Inc., a Delaware corporation,
and its subsidiaries; and
. ""dollars," "$," and "U.S.$" are to United States dollars.
UPS provides specialized transportation and logistics services, primarily
through the pickup and delivery of packages and documents. Service is offered
throughout the United States and over 200 other countries and territories
around the globe. We are the world's largest express carrier, the largest
package delivery company and a leading global provider of specialized
transportation and logistics services. We deliver over 12 million packages each
business day for more than 1.6 million shipping customers to six million
consignees. In 1998, our 330,000 employees delivered more than three billion
packages and documents worldwide, generating revenues of $24.8 billion and net
income of $1.7 billion.
With minor exceptions, UPS common stock, $.10 par value per share, is
currently owned by or held for the benefit of our active employees and their
families, former employees and their estates or heirs, charitable foundations
established by our founders and their family members or by other charitable
organizations that acquired their stock by donations from shareowners. UPS
common stock is not currently listed on a national securities exchange or
traded in the organized over-the-counter markets.
However, as of the date of this prospectus supplement, UPS is contemplating
an initial public offering of its common stock, equal to approximately 10% of
its outstanding common stock, which if completed will thereafter be listed on
the New York Stock Exchange. There can be no assurances that UPS will
consummate such a public offering and listing. In connection with the proposed
public offering, UPS will become a wholly-owned, direct subsidiary of United
Parcel Service, Inc., a newly-created holding company that will be the
publicly-traded company. UPS will remain the obligor on its current debt
obligations, including the Notes issued in this offering as well as its other
outstanding debt instruments.
The address and telephone number of our principal executive offices are 55
Glenlake Parkway, N.E., Atlanta, Georgia 30328, (404) 828-6000.
S-3
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial information for the years
ended December 31, 1998, December 31, 1997, December 31, 1996, December 31,
1995 and December 31, 1994 has been derived from our consolidated financial
statements contained in our Annual Report on Form 10-K for the fiscal years
then ended. The following summary consolidated financial information for the
nine months ended September 30, 1998 and 1999 has been derived from our
unaudited consolidated financial statements contained in our Quarterly Report
on Form 10-Q for the periods then ended.
Years Ended December 31, Nine Months Ended
--------------------------------------- September 30,
1994 1995 1996 1997(1) 1998 1998 1999(2)
------- ------- ------- ------- ------- -------- ----------
(Unaudited)
(Financial data in millions, except per share amounts)
Statement of Income
Data:
Revenue................. $19,576 $21,045 $22,368 $22,458 $24,788 $ 18,124 $ 19,606
Operating expenses...... 18,020 19,251 20,339 20,760 21,698 15,902 16,748
Operating profit........ 1,556 1,794 2,029 1,698 3,090 2,222 2,858
Tax assessment.......... -- -- -- -- -- -- 1,786
Income before income
taxes.................. 1,575 1,708 1,910 1,553 2,902 2,106 987
Income taxes............ 632 665 764 644 1,161 847 765
Net income.............. 943 1,043 1,146 909 1,741 1,259 222
Basic earnings per
share.................. 1.68 1.87 2.06 1.65 3.18 2.31 0.40
Diluted earnings per
share.................. 1.66 1.84 2.03 1.63 3.14 2.28 0.39
Balance Sheet Data (at
period end):
Working capital......... $ 120 $ 261 $ 1,097 $ 1,079 $ 1,708 2,065 $ 821
Long-term debt.......... 1,127 1,729 2,573 2,583 2,191 2,371 1,817
Total assets............ 11,182 12,645 14,954 15,912 17,067 17,040 18,717
Shareowners' equity..... 4,647 5,151 5,901 6,087 7,173 7,052 6,831
- --------
(1) The financial information as of and for the year ended December 31, 1997
reflects the impact of the Teamsters strike. The strike resulted in a net
loss of $211 million and an operating loss of $349 million for the month
of August 1997, as compared to net income of $113 million and operating
profit of $187 million for August 1996.
(2) The financial information for the nine months ended September 30, 1999
reflects a tax assessment charge relating to a Tax Court decision.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to fixed
charges for the periods indicated:
Nine Months Ended
Year Ended December 31, September 30,
------------------------ -----------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- -------- --------
Ratio of Earnings to Fixed
Charges(1)........................ 9.1 7.6 8.2 4.9 8.9 8.7 4.7
- --------
(1) For purposes of calculating the ratio of earnings to fixed charges,
earnings is defined as income before income taxes, accounting changes and
fixed charges (excluding capitalized interest). Fixed charges include
interest (whether capitalized or expensed), amortization of debt expense
and any discount or premium relating to any indebtedness (whether
capitalized or expensed) and the portion of rent expense considered to
represent interest.
S-4
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes (referred to
in the accompanying Prospectus as the "Offered Debt Securities") supplements
the more general description of the debt securities continued in the
accompanying prospectus. If there are any inconsistencies between the
information in this section and the information in the prospectus, the
information in this section controls.
General
The Notes:
. will be limited to $55,045,000 aggregate principal amount and will be
issued under the indenture;
. will mature on October 26, 2049;
. will not be entitled to any sinking fund;
. will be subject to defeasance and covenant defeasance;
. will be issued only in registered, book-entry form, in denominations of
$1,000 and any integral multiple thereof;
. will be repayable at the option of the holders and redeemable at the
option of the Company prior to maturity.
The indenture and the Notes do not limit the amount of indebtedness that we
(or our subsidiaries) may incur or issue, and does not contain any financial or
similar restriction on us, except as described in the prospectus under the
caption "Description of Debt Securities--Certain Covenants of the Company."
Interest
The Notes will bear interest at the "1 Month LIBOR Rate" (as defined below)
less 0.45% (45 basis points). Interest will accrue from October 26, 1999 and is
payable quarterly in arrears on January 26, April 26, July 26 and October 26 of
each year starting January 26, 2000 (these dates are called "interest payment
dates"). The 1 Month LIBOR Rate will be reset monthly on the 26th of every
month, commencing on October 26, 1999 (each of these is called an "interest
reset date"). Interest is payable from the date of issue of the Notes or from
the most recent date to which interest on such Note has been paid or duly
provided for, until the principal amount of the Note is paid or duly made
available for payment. We will pay interest to the person in whose name the
Note (or one or more predecessor Notes) is registered at the close of business
fifteen calendar days before the interest payment date.
"1 Month LIBOR Rate" means the rate for deposits in U.S. dollars for the 1-
month period which appears on "Telerate Page 3750" at approximately 11:00 A.M.,
London time, on the second business day prior to the applicable interest reset
date; provided that the interest rate in effect from the date of issue to the
first interest reset date will be the 1 Month LIBOR Rate as calculated on the
date of issue. If this rate does not appear on the Telerate Page 3750, the
calculation agent will determine the rate on the basis of the rates at which
deposits in U.S. dollars are offered by four major banks in the London
interbank market (selected by the calculation agent) at approximately 11:00
a.m., London time, on the second business day prior to the applicable interest
reset date to prime banks in the London interbank market for a period of one
month commencing on that interest reset date and in a principal amount equal to
an amount not less than $1,000,000 that is representative for a single
transaction in such market at such time. In such case, the calculation agent
will request the principal London office of each of the aforesaid major banks
to provide a quotation of such rate. If at least two such quotations are
provided, the rate for that interest reset date will be the arithmetic mean of
the quotations, and, if fewer than two quotations are provided as requested,
the rate for that interest reset date will be the arithmetic mean of the rates
quoted by major banks in the City of New York, selected by the calculation
agent, at approximately 11:00 A.M., New York City time, on the second business
day prior to the applicable interest reset date for loans in U.S. dollars to
leading European banks for a period of one month commencing on that
S-5
interest reset date and in a principal amount equal to an amount not less than
$1,000,000 that is representative for a single transaction in such market at
such time. "Telerate Page 3750" means the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace such page on that
service for the purpose of displaying London interbank offered rates of major
banks). The interest rate on the Notes will in no event be higher than the
maximum rate permitted by New York law as the same may be modified by United
States law of general application.
The calculation agent will, upon the request of the holder of any Note,
provide the interest rate then in effect. The calculation agent is Citibank,
N.A. until such time as we appoint a successor calculation agent. All
calculations made by the calculation agent in the absence of manifest error
shall be conclusive for all purposes and binding on us and the holders of the
Notes. We may appoint a successor calculation agent with the written consent of
the trustee.
Interest on the Notes will be computed and paid on the basis of a 360-day
year and the actual number of days in each monthly interest payment period.
Optional Redemption
The Notes may be redeemed at any time after October 26, 2029, at our option,
in whole or in part, in amounts of $1,000 or an integral multiple thereof at
the following redemption prices (in each case expressed as a percentage of the
principal amount), if redeemed during the 12-month period beginning on October
26 of any of the following years:
Redemption
Year Price
---- ----------
2029.............................. 105.0%
2030.............................. 104.5%
2031.............................. 104.0%
2032.............................. 103.5%
2033.............................. 103.0%
2034.............................. 102.5%
2035.............................. 102.0%
2036.............................. 101.5%
2037.............................. 101.0%
2038.............................. 100.5%
and thereafter at 100% of the principal amount, in each case, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
rights of holders of record on relevant record dates to receive interest due on
an interest payment date).
We must mail notice of any redemption at least 30 days but not more than 60
days before the redemption date to each holder of the Notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the Notes or portions thereof
called for redemption.
In the event of any redemption of less than all the outstanding Notes, the
particular Notes (or portions thereof in integral multiples of $1,000) to be
redeemed shall be selected by the trustee by such method as the trustee
considers fair and appropriate.
S-6
Repayment at Option of Holder
The Notes will be repayable at the option of the holder thereof, in whole or
in part, on the repayment dates and at the repayment prices (in each case
expressed as a percentage of the principal amount) set forth in the following
table:
Repayment
Date Price
---- ---------
October 26, 2009............................. 99.00%
October 26, 2012............................. 99.25%
October 26, 2015............................. 99.50%
October 26, 2018............................. 99.75%
and on October 26 of every third year thereafter at 100% of the principal
amount, through and including October 26, 2048, in each case, together with
accrued and unpaid interest, if any, to the repayment date (subject to the
rights of holders of record on relevant record dates to receive interest due on
an interest payment date).
In order for a Note to be repaid, the paying agent must receive, at least 30
but not more than 60 calendar days prior to the optional repayment date, (i)
the Note with the form entitled "Option to Elect Repayment" on the reverse of
the Note duly completed or (ii) a telegram, facsimile transmission or a letter
from a member of a national securities exchange or a member of the National
Association of Securities Dealers, Inc. (the "NASD") or a commercial bank or
trust company in the United States which must set forth:
. the name of the holder of the Note;
. the principal amount of the Note;
. the principal amount of the Note to be repaid;
. the certificate number or a description of the tenor and terms of the
Note;
. a statement that the option to elect repayment is being exercised
thereby; and
. a guarantee that the Note to be repaid will be transferred to the DTC
account of the paying agent not later than the fifth Business Day after
the date of such telegram, facsimile transmission or letter.
The repayment option may be exercised by the holder of a Note for less than
the entire principal amount of the Note but, in that event, the principal
amount of the Note remaining outstanding after repayment must be in an
authorized denomination.
Conditional Right to Shorten Maturity
We intend to deduct interest paid on the Notes for United States Federal
income tax purposes. However, there have been proposed tax law changes over the
past several years that, among other things, would have prohibited an issuer
from deducting interest payments on debt instruments with a maturity of more
than 40 years. While none of these proposals has become law, there can be no
assurance that similar legislation affecting our ability to deduct interest
paid on the Notes will not be enacted in the future or that any such
legislation would not have a retroactive effective date. As a result, there can
be no assurance that a Tax Event (as defined below) will not occur.
Upon the occurrence of a Tax Event, we, without the consent of the holders
of the Notes, will have the right to shorten the maturity of the Notes to the
minimum extent required, in the opinion of nationally recognized independent
tax counsel, such that, after the shortening of the maturity, interest paid on
the Notes will be deductible for United States Federal income tax purposes or,
if such counsel is unable to opine definitively as to such a minimum period,
the minimum extent so required to maintain the Company's interest deduction to
the extent deductible under current law as determined in good faith by our
Board of Directors,
S-7
after receipt of an opinion of such counsel regarding the applicable legal
standards. In such case, the amount payable on such Notes on such new maturity
date will be equal to 100% of the principal amount of such Notes plus interest
accrued on such Notes to the date such Notes mature on such new maturity date.
There can be no assurance that we would not exercise our right to shorten the
maturity of the Notes on the occurrence of such a Tax Event or as to the period
by which such maturity would be shortened. In the event that we elect to
exercise our right to shorten the maturity of the Notes on the occurrence of a
Tax Event, we will mail a notice to each Holder of Notes by first-class mail
not more than 60 days after the occurrence of such Tax Event, stating the new
maturity date of the Notes. Such notice shall be effective immediately upon
mailing.
We believe that the Notes should constitute indebtedness for United States
Federal income tax purposes under current law and, in that case, an exercise of
our right to shorten the maturity of the Notes should not be a taxable event to
Holders for such purposes. Prospective investors should be aware, however, that
our exercise of our right to shorten the maturity of the Notes will be a
taxable event to Holders for United States Federal income tax purposes if the
Notes are treated as equity for United States federal income tax purposes
before the maturity is shortened, assuming that the Notes of shortened maturity
are treated as debt for such purposes.
"Tax Event" means that the Company shall have received an opinion of
nationally recognized independent tax counsel to the effect that, as a result
of one of the following events occurring on or after October 26, 1999, there is
more than an insubstantial increase in the risk that interest paid by us on the
Notes is not, or will not be, deductible, in whole or in part, by us for United
States Federal income tax purposes:
. any amendment to, clarification of, or change (including any announced
prospective amendment, clarification or change) in any law, or any
regulation thereunder, of the United States,
. any judicial decision, official administrative pronouncement, ruling,
regulatory procedure, regulation, notice or announcement, including any
notice or announcement of intent to adopt or promulgate any ruling,
regulatory procedure or regulation (any of the foregoing, an
"Administrative or Judicial Action"), or
. any amendment to, clarification of, or change in any official position
with respect to, or any interpretation of, an Administrative or Judicial
Action or a law or regulation of the United States that differs from the
theretofore generally accepted position or interpretation.
Notes Used as Qualified Replacement Property
Prospective investors seeking to treat the Notes as "qualified replacement
property" for purposes of section 1042 of the Internal Revenue Code of 1986, as
amended (the "Code"), should be aware that section 1042 requires the issuer to
meet certain requirements in order for the Notes to constitute qualified
replacement property. In general, qualified replacement property is a security
issued by a domestic corporation that did not, for the taxable year preceding
the taxable year in which such security was purchased, have "passive investment
income" in excess of 25 percent of the gross receipts of such corporation for
such preceding taxable year (the "Passive Income Test"). For purposes of the
Passive Income Test, where the issuing corporation is in control of one or more
corporations, all such corporations are treated as one corporation (the
"Affiliated Group") for the purposes of computing the amount of passive
investment income for purposes of section 1042.
We believe that less than 25 percent of our Affiliated Group's gross
receipts is passive investment income for the taxable year ending December 31,
1998. In making this determination, we have made certain assumptions and used
procedures which we believe are reasonable. We cannot give any assurance as to
whether we will continue to meet the Passive Income Test. It is, in addition,
possible that the IRS may disagree with the manner in which we have calculated
our Affiliated Group's gross receipts (including the characterization thereof)
and passive investment income and the conclusions reached herein. Prospective
purchasers of the Notes should consult with their own tax advisors with respect
to these and other tax matters relating to the Notes.
S-8
The Notes have been approved for listing on the New York Stock Exchange
under the trading symbol "UPS-49," subject to official notice of issuance;
however, a listing provides no guarantee of the availability or liquidity of a
trading market. The Notes are a new issue of securities with no established
trading market. No assurance can be given as to whether a trading market for
the Notes will develop or as to the liquidity of a trading market for the
Notes. The availability and liquidity of a trading market for the Notes will
also be affected by the degree to which purchasers treat the Notes as qualified
replacement property.
BOOK ENTRY SYSTEM
We have obtained the information in this section concerning DTC and its
book-entry system and procedures from sources that we believe to be reliable,
but we take no responsibility for the accuracy of this information.
The Notes will initially be represented by one or more fully registered
global notes. Each such global note will be deposited with, or on behalf of,
The Depository Trust Company or any successor thereto ("DTC") and registered in
the name of Cede & Co. (DTC's partnership nominee).
You may hold your interests in the global notes in the United States through
DTC, either as a participant in such system or indirectly through organizations
which are participants in such system. So long as DTC or its nominee is the
registered owner of the global securities representing the Notes, DTC or such
nominee will be considered the sole owner and holder of the Notes for all
purposes of the Notes and the indenture. Except as provided below, owners of
beneficial interests in the Notes will not be entitled to have the Notes
registered in their names, will not receive or be entitled to receive physical
delivery of the Notes in definitive form and will not be considered the owners
or holders of the Notes under the indenture, including for purposes of
receiving any reports that we or the trustee deliver pursuant to the indenture.
Accordingly, each person owning a beneficial interest in a Note must rely on
the procedures of DTC or its nominee and, if such person is not a participant,
on the procedures of the participant through which such person owns its
interest, in order to exercise any rights of a holder of Notes.
Unless and until we issue the Notes in fully certificated form under the
limited circumstances described below under the heading "Book-Entry System--
Certificated Notes":
. you will not be entitled to receive a certificate representing your
interest in the Notes;
. all references in this prospectus supplement or in the accompanying
prospectus to actions by holders will refer to actions taken by DTC upon
instructions from its direct participants; and
. all references in this prospectus supplement or the accompanying
prospectus to payments and notices to holders will refer to payments and
notices to DTC or Cede & Co., as the registered holder of the Notes, for
distribution to you in accordance with DTC procedures.
The Depository Trust Company
DTC will act as securities depositary for the Notes. The Notes will be
issued as fully registered Notes registered in the name of Cede & Co. DTC is:
. a limited-purpose trust company organized under the New York Banking Law;
.a "banking organization" under the New York Banking Law;
.a member of the Federal Reserve System;
.a "clearing corporation" under the New York Uniform Commercial Code; and
. a "clearing agency" registered under the provision of Section 17A of the
Securities Exchange Act of 1934.
S-9
DTC holds securities that its direct participants deposit with DTC. DTC also
facilitates the settlement among direct participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in direct participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct participants of DTC include securities brokers and dealers (including
underwriters), banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its direct participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Indirect participants of DTC,
such as securities brokers and dealers, banks and trust companies, can also
access the DTC system if they maintain a custodial relationship with a direct
participant.
If you are not a direct participant or an indirect participant and you wish
to purchase, sell or otherwise transfer ownership of, or other interests in,
notes, you must do so through a direct participant or an indirect participant.
DTC agrees with and represents to DTC participants that it will administer its
book-entry system in accordance with its rules and by-laws and requirements of
law. The Securities and Exchange Commission has on file a set of the rules
applicable to DTC and its direct participants.
Purchasers of Notes under DTC's system must be made by or through direct
participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each beneficial owner is in turn to be recorded on the
records of direct participants and indirect participants. Beneficial owners
will not receive written confirmation from DTC of their purchase, but
beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the direct participants or indirect participants through which such
beneficial owners entered into the direct participants or indirect participants
through which such beneficial owners entered into the transaction. Transfers of
ownership interests in the Notes are to be accomplished by entries made on the
books of participants acting on behalf of beneficial owners. Beneficial owners
will not receive certificates representing their ownership interests in Notes,
except as provided below in "Book-Entry System--Certificated Notes."
To facilitate subsequent transfers, all Notes deposited with DTC are
registered in the name of DTC's nominees, Cede & Co. The deposit of Notes with
DTC and their registration in the name of Cede & Co. effect no change in
beneficial ownership. DTC has no knowledge of the actual beneficial owners of
the Notes. DTC's records reflect only the identity of the direct participants
to whose accounts such Notes are credited, which may
or may not be the beneficial owners. The participants will remain responsible
for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Year 2000 Compliance
DTC has advised that DTC management is aware that some computer
applications, systems and the like for processing data that are dependent on
calendar dates, including dates before, on and after January 1, 2000, may
encounter "Year 2000" computer problems. DTC has informed its participants and
other members of the financial community that it has developed and is
implementing a program so that its computer systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries and settlement of trades within DTC,
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames.
DTC's ability to perform properly its services is also dependent on third
parties, including but not limited to issuers and their agents, as well as
third party vendors from whom DTC licenses software and hardware, and
S-10
third party vendors on whom DTC relies for information or the provision of
services, including telecommunications and electrical utility service
providers, among others. DTC has informed the financial community that it is
contacting (and will continue to contact) third party vendors from whom DTC
acquires services to (1) impress upon them the importance of such services
being Year 2000 compliant and (2) determine the extent of their efforts for
Year 2000 remediation (and, as appropriate, testing) of their services. In
addition, DTC is in the process of developing such contingency plans as it
deems appropriate.
The foregoing information with respect to DTC's Year 2000 preparations has
been provided to the financial community for informational purposes only and is
not intended to serve as a representation, warranty or contract modification of
any kind.
Book-Entry Format
Under the book-entry format, the trustee will pay interest or principal
payments to Cede & Co., as nominee of DTC. DTC will forward the payment to the
direct participants, who will then forward the payment to the indirect
participants or to you as the beneficial owner. You may experience some delay
in receiving your payments under this system.
DTC is required to make book-entry transfers on behalf of its direct
participants and is required to receive and transmit payments of principal,
premium, if any, and interests on the Notes. Any direct participant or indirect
participant with which you have an account is similarly required to make book-
entry transfers and to receive and transmit payments with respect to Notes on
your behalf. We and the trustee under the indenture have no responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Notes or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
The trustee will not recognize you as a holder under the indenture, and you
can only exercise the rights of a holder indirectly through DTC and its direct
participants. DTC has advised us that it will only take action regarding a Note
if one or more of the direct participants to whom the Note is credited direct
DTC to take such action. DTC can only act on behalf of its direct participants.
Your ability to pledge Notes to nondirect participants, and to take other
actions, may be limited because you will not possess a physical certificate
that represents your Notes.
Certificated Notes
Unless and until they are exchanged, in whole or in part, for Notes in
definitive form in accordance with the terms of the Notes, the Notes may not be
transferred except (1) as a whole by DTC to a nominee of DTC or (2) by a
nominee of DTC to DTC or another nominee of DTC or (3) by DTC or any such
nominee to a successor of DTC or a nominee of such successor.
We will issue Notes to you or your nominees, in fully certificated
registered form, rather than to DTC or its nominees, only if:
. we advise the trustee in writing that DTC is no longer willing or able
to discharge its responsibilities properly or that DTC is no longer a
registered clearing agency under the Securities Exchange Act of 1934,
and the trustee or we are unable to locate a qualified successor within
90 days;
. an event of default has occurred and is continuing under the indenture;
or
. we, at our option, elect to terminate the book-entry system through DTC.
If any of the three above events occurs, DTC is required to notify all
direct participants that Notes in fully certificated registered form are
available through DTC. DTC will then surrender the global Note representing the
Notes along with instructions for re-registration. The trustee will re-issue
the Notes in fully certificated registered form and will recognize the
registered holders of the certificated Notes as holders under the indenture.
S-11
SAME-DAY SETTLEMENT AND PAYMENT
The underwriter will settle the Notes in immediately available funds. We
will make principal and interest payments on the Notes in immediately available
funds or the equivalent.
Secondary market trading between DTC direct participants will occur in
accordance with DTC rules and will be settled in immediately available funds
using DTC's Same-Day Funds Settlement System. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity (if any) in the Notes.
UNDERWRITING
We have entered into an underwriting agreement and pricing agreement with
respect to the Notes with the underwriter listed below. Subject to certain
conditions, the underwriter has agreed to purchase the principal amount of
Notes indicated in the following table:
Underwriter Principal Amount of Notes
----------- -------------------------
PaineWebber Incorporated....................... $55,045,000
Notes sold by the underwriter to the public will initially be offered at the
initial public offering price set forth on the cover of this prospect
supplement. If all the Notes are not sold at the initial Offering price, the
underwriter may change the offering price and the other selling terms.
The Notes are a new issue of securities with no established trading market.
We have been advised by the underwriter that the underwriter intend to make a
market in the Notes, but they are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
In connection with the offering, the underwriter may purchase and sell the
Notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriter of a greater aggregate
principal amount of Notes than they are required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the Notes
while the offering is in process.
These activities by the underwriter may stabilize, maintain or otherwise
affect the market price of the Notes. As a result, the price of the Notes may
be higher than the price that otherwise might exist in the open market. If
these activities are commenced, they may be discontinued by the underwriter at
any time. These transactions may be effected in the over-the-counter market or
otherwise.
We estimate that the total expenses of the offering, excluding underwriting
discounts and commissions, will be approximately $100,000. We have agreed to
indemnify the underwriter against certain liabilities, including liabilities
under the Securities Act of 1933.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Company by Hunton &
Williams, New York, NY and for the underwriter by Brown & Wood, New York, NY.
S-12
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy materials that we have filed
with the SEC, including the registration statement, at the following SEC
reference rooms:
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, DC 20549 New York, New York 10048 Chicago, Illinois 60661
Please telephone the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The SEC also maintains an internet site at
http://www.sec.gov that contains reports, proxy statements and other
information regarding issuers that file electronically with the SEC. You may
find our reports, proxy statements and other information at this SEC website.
In addition, you can obtain our reports, proxy statements and other
information about the Company at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" into this document the
information that we file with them. This means that we can disclose important
information by referring you to those documents. The information incorporated
by reference is an important part of this prospectus supplement and the
accompanying prospectus, and information in documents that we file after the
date of this prospectus supplement and before the termination of the offering
will automatically update information in this prospectus supplement and the
accompanying prospectus.
We incorporate by reference into this prospectus supplement:
. Our Annual Report on Form 10-K for our fiscal year ended December 31,
1998;
. Our Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 1999, June 30, 1999 and September 30, 1999; and
. Any future filings made with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, until we sell all of the
securities offered by this prospectus supplement and the accompanying
prospectus.
S-13
PROSPECTUS
- -------------------------------------------------------------------------------
UNITED PARCEL SERVICE OF AMERICA, INC.
$2,000,000,000
DEBT SECURITIES
----------------
United Parcel Service of America, Inc., a Delaware corporation ("UPS" or the
"Company"), intends to issue from time to time, in one or more series, senior
unsecured debt securities (the "Debt Securities") with an aggregate initial
offering price not to exceed $2,000,000,000 or the equivalent thereof in one
or more foreign currencies or composite currencies. The Debt Securities may be
offered as separate series in amounts, at prices and on terms to be determined
in light of market conditions at the time of sale and set forth in a
Prospectus Supplement or Prospectus Supplements.
The terms of each series of Debt Securities, including, where applicable,
the specific designation, aggregate principal amount, authorized
denominations, maturity or maturities, rate or rates and time or times of
payment of any interest, any terms for optional or mandatory redemption or
payment of additional amounts or any sinking fund provisions, any initial
public offering price, the proceeds to the Company and any other specific
terms in connection with the offering and sale of such series will be set
forth in a Prospectus Supplement or Prospectus Supplements. Debt Securities
may be issued with amounts payable in respect of principal, premium or
interest on such Debt Securities to be determined by reference to the value,
rate or price of one or more specified indices, formulas or other methods.
The Debt Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See
"Plan of Distribution." If any agents of the Company or any underwriters are
involved in the sale of any Debt Securities in respect of which this
prospectus is delivered, the names of such agents or underwriters and any
applicable commissions or discounts will be set forth in the applicable
Prospectus Supplement.
This Prospectus may not be used to consummate sales of Debt Securities
unless accompanied by a Prospectus Supplement.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these Debt Securities or determined
if this Prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
The date of this Prospectus is January 26, 1999.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER OR AGENT. THIS PROSPECTUS AND ANY PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY AND THEREBY IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY
SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THEIR RESPECTIVE DATES.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; as
well as at the Regional Offices of the Commission at Seven World Trade Center,
13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. For additional
information about the Commission's public reference rooms, please call the
Commission at 800-SEC-0330. The Commission also maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company. The Company's Common Stock is not listed on
a national securities exchange or traded in the organized over-the-counter
markets.
This Prospectus constitutes a part of a Registration Statement (Registration
No. 333-08369) filed by the Company with the Commission under the Securities
Act of 1933, as amended (the "Securities Act") with respect to the Debt
Securities offered hereby (together with all amendments and exhibits, the
"Registration Statement"). This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and related exhibits for further information with
respect to the Company. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each
instance, reference is made to the copy of such document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission. Each
such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act and are incorporated herein by reference and made
a part hereof: (a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997; (b) the Company's Quarterly Reports on Form 10-Q for the
fiscal quarters ended March 31, 1998, June 30, 1998 and September 30, 1998;
and the Company's Current Report on Form 8-K filed March 4, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act ("Exchange Act Documents") after January 26, 1999
and prior to effectiveness of the Registration Statement shall be deemed to be
incorporated by reference into this Prospectus. Exchange Act Documents filed
subsequent to the date of this Prospectus are incorporated by reference herein
and shall be a part hereof from the date of
2
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated herein or in any Prospectus
Supplement shall be deemed to be modified or superseded for purposes of this
Prospectus and such Prospectus Supplement to the extent that a statement
contained herein or therein, or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus or any Prospectus Supplement.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon written or oral request, a copy of any and
all of the documents incorporated by reference in this Prospectus, other than
the exhibits to such documents unless such exhibits are specifically
incorporated by reference into the documents that this Prospectus
incorporates. Requests for copies of such documents should be directed to
Joseph R. Moderow, Senior Vice President and Secretary, United Parcel Service
of America, Inc., 55 Glenlake Parkway, N.E., Atlanta, Georgia, 30328,
telephone number (404) 828-6000.
----------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars,"
"U.S. dollars," or "U.S. $1").
----------------
3
THE COMPANY
United Parcel Service of America, Inc., through its subsidiaries, provides
specialized transportation and logistics services, primarily through the
pickup and delivery of packages and documents. Service is offered throughout
the United States and over 200 other countries and territories around the
globe. In terms of both revenue and volume, UPS is the largest package
distribution company in the world, with revenues of over $22 billion in 1997
generated by the delivery of more than three billion packages and documents.
UPS provides a daily pickup service for approximately 1.6 million customers.
With minor exceptions, UPS Common Stock, $.10 par value per share (the
"Common Stock"), is owned by or held for the benefit of its active employees
and their families, former employees and their estates or heirs, charitable
foundations established by UPS founders and their family members or by other
charitable organizations that acquired their stock by donations from
shareowners. UPS Common Stock is not listed on a national securities exchange
or traded in the organized over-the-counter markets. When used herein, the
terms "UPS" and the "Company" refer to United Parcel Service of America, Inc.,
a Delaware corporation, and its subsidiaries. The address and telephone number
of the Company's principal executive offices are 55 Glenlake Parkway, N.E.,
Atlanta, Georgia 30328, telephone number (404) 828-6000.
RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31, Nine Months
------------------------ Ended
1993 1994 1995 1996 1997 Sept. 30, 1998
---- ---- ---- ---- ---- ---------------
Ratio of Earnings to
Fixed Charges (1)..................... 9.4 9.1 7.6 8.2 4.9 8.7
- --------
(1) For purposes of calculating the ratio of earnings to fixed charges,
earnings is defined as income before income taxes and fixed charges
(excluding capitalized interest). Fixed charges include interest (whether
capitalized or expensed), amortization of debt expense and any discount or
premium relating to any indebtedness (whether capitalized or expensed) and
the portion of rent expense considered to represent interest.
USE OF PROCEEDS
Unless otherwise stated in a Prospectus Supplement, the net proceeds from
the sale of the Debt Securities offered hereby will be used for general
corporate purposes, including the Company's working capital needs, the funding
of investments in, or extensions of credit to, the Company's operating
subsidiaries, possible acquisitions and investments in joint ventures and the
possible reduction of outstanding indebtedness. Pending such use, UPS may
temporarily invest the net proceeds in investment grade securities.
4
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an Indenture, dated as of January
26, 1999 (the "Indenture"), between the Company and Citibank, N.A., as Trustee
(the "Trustee"), a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Debt Securities may be
issued from time to time in one or more series. The particular terms of each
series, or of Debt Securities forming a part of a series, which are offered by
a Prospectus Supplement will be described in such Prospectus Supplement.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject, and are qualified in their entirety by
reference, to all the provisions of the Indenture, including the definitions
therein of certain terms, and, with respect to any particular Securities, to
the description of the terms thereof included in the Prospectus Supplement
relating thereto. Wherever particular Sections or defined terms of the
Indenture are referred to herein or in a Prospectus Supplement, such Sections
or defined terms are incorporated by reference herein or therein, as the case
may be.
The term "Securities," as used under this caption, refers to all Securities
issued under the Indenture, including the Debt Securities.
General
The Indenture provides that Securities in separate series may be issued
thereunder from time to time, without limitation as to aggregate principal
amount. The Company may specify a maximum aggregate principal amount for the
Securities of any series. (Section 3.01) The Securities are to have such terms
and provisions that are not inconsistent with the Indenture, including terms
as to maturity, principal and interest as the Company may determine. The
Securities will be unsecured obligations of the Company and will rank on a
parity with all other unsecured and unsubordinated indebtedness of the
Company. The provisions of the Indenture described below provide the Company
with the ability, in addition to the ability to issue Securities with terms
different from those of Securities previously issued, to "reopen" a previous
issue of a series of Securities and issue additional Securities of such
series.
The applicable Prospectus Supplement will set forth the price or prices at
which the Securities to be offered will be issued and will describe certain of
the following terms, as applicable, of such Securities:
(a) the title of the Securities of the series;
(b) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under the Indenture;
(c) the person or entity to whom any interest on the Securities of the
series will be payable;
(d) the date or dates on which the principal, premium, if any, or other
form or type of consideration to be paid upon maturity on any Securities of
the series will be payable;
(e) the rate or rates at which any Securities of the series will bear
interest, if any, or any method by which such rate or rates will be
determined, the date or dates from which any such interest will accrue, the
interest payment dates on which any such interest will be payable and the
record date for any such interest payable on any interest payment date;
(f) the place or places where the principal, premium, if any, interest or
other form or type of consideration to be paid upon maturity on any
Securities of the series will be payable;
(g) the period or periods within which, the price or prices at which and
the terms and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other
than by a resolution by the Company's Board of Directors or Executive
Committee thereof, the manner in which any election by the Company to
redeem the Securities will be evidenced;
(h) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder of the Securities, and the period
5
or periods within which, the price or prices at which and the terms and
conditions upon which any Securities of the series will be redeemed or
purchased, in whole or in part, pursuant to such obligation and any
provisions for the remarketing of any Securities;
(i) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series will be
issuable;
(j) if the amount of principal of or any premium or interest on any
Securities of the series may be determined with reference to an index,
formula or other method, the manner in which such amounts will be
determined;
(k) if other than the currency of the United States of America, the
currency, currencies or composite currencies in which the principal of or
any premium or interest on any Securities of the series will be payable and
the manner of determining the equivalent thereof in the currency of the
United States of America for any purpose;
(l) if the principal of or any premium or interest on any Securities of
the series is to be payable, at the election of the Company or the Holder
thereof, in one or more currencies or composite currencies other than that
or those in which such Securities are stated to be payable, the currency,
currencies or composite currencies in which the principal of or interest on
such Securities as to which such election is made will be payable, the
periods within which and the terms and conditions upon which such election
is to be made and the amount so payable (or the manner in which such amount
will be determined);
(m) if other than the entire principal amount thereof, the portion of the
principal amount of any Securities of the series which will be payable upon
declaration of acceleration of the maturity thereof;
(n) if the principal amount payable at the stated maturity of any
Securities of the series will not be determinable as of any one or more
dates prior to the stated maturity, the amount which will be deemed to be
the principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which will
be due and payable upon any maturity other than the stated maturity or
which will be deemed to be outstanding as of any date prior to the stated
maturity;
(o) if applicable, that the Securities of the series, in whole or any
specified part, will be defeasible and that certain covenants of the
Company will be defeasible and, if other than by a resolution of the Board
of Directors or Executive Committee thereof, the manner in which any
election by the Company to defease such Securities or covenants will be
evidenced;
(p) if applicable, that any Securities of the series will be issuable in
whole or in part in the form of one or more global securities and, in such
case, the respective depositories for such global securities, the form of
any legend or legends which will be borne by any such global security and
any circumstances in which any such global security may be exchanged in
whole or in part for Securities registered, and any transfer of such global
security in whole or in part may be registered, in the name or names of
persons or entities other than a depository for such global security;
(q) whether, and the terms and conditions relating to when, the Company
may satisfy certain of its obligations with respect to such Securities with
regard to payment upon maturity, or any redemption or required repurchase
or in connection with any exchange provisions by delivering to the holders
thereof principal, premium, if any, interest or other form or type of
consideration to be paid upon maturity on any Securities;
(r) any addition to or change in the events of default which applies to
any Securities of the series and any change in the right of the trustee or
the requisite holders of such Securities to declare the principal amount
thereof due and payable;
(s) any addition to or change in the covenants which apply to Securities
of the series;
(t) the terms and conditions pursuant to which the Securities may be
converted into or exchanged for other debt securities of the Company;
6
(u) terms with respect to book-entry procedures; and
(v) any other terms of the Securities of the series, which terms will not
otherwise be inconsistent with the Indenture and as authorized and approved
by the Company.
Securities, including Original Issue Discount Securities, may be sold at a
substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Securities
sold at an original issue discount may be described in the applicable
Prospectus Supplement. In addition, certain special United States federal
income tax or other considerations (if any) applicable to any Securities that
are denominated in a currency or currency unit other than United States
dollars may be described in the applicable Prospectus Supplement.
Form, Exchange and Transfer
The Securities of each series will be issuable only in registered form,
without coupons and, unless otherwise specified in the applicable Prospectus
Supplement, only in denominations of $1,000 and integral multiples thereof.
(Section 3.02)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Securities of each series will be
exchangeable for other Securities of the same series of any authorized
denomination and of a like tenor and aggregate principal amount. (Section
3.05)
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Securities may be presented for exchange as provided above
or for registration of transfer (duly endorsed or with the form of transfer
endorsed thereon duly executed) at the office of the Security Registrar or at
the office of any transfer agent designated by the Company for such purpose.
No service charge will be made for any registration of transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Such
transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of
title and identity of the person making the request. The Company has appointed
the Trustee as Security Registrar. (Section 3.05) The Company may at any time
designate additional transfer agents or rescind the designation of any
transfer agent or approve a change in the office through which any transfer
agent acts, except that the Company will be required to maintain a transfer
agent in each Place of Payment for the Securities of each series. (Section
10.02)
If the Securities of any series (or of any series and specified tenor) are
to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of or exchange any Security of that series (or of that
series and specified tenor, as the case may be) during a period beginning at
the opening of business 15 days before the day of mailing of a notice of
redemption of any such Security that may be selected for redemption and ending
at the close of business on the day of such mailing or (ii) register the
transfer of or exchange any Security so selected for redemption, in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
(Section 3.05)
Global Securities
Some or all of the Securities of any series may be represented, in whole or
in part, by one or more Global Securities that have an aggregate principal
amount equal to that of the Securities represented thereby. Each Global
Security will be registered in the name of The Depository Trust Company, New
York, New York (the "Depository") or a nominee thereof identified in the
applicable Prospectus Supplement, will be deposited with the Depository or
nominee or a custodian therefor and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred to
below and any such other matters as may be provided for pursuant to the
Indenture. Unless otherwise described in the Prospectus Supplement relating to
each series, the Securities of each series offered, sold or delivered in the
United States will be issued in the form of one or more fully-registered
global notes which will be deposited with, or on behalf of, the Depository and
registered in the name of the Depository's nominee.
7
The Depository has advised us as follows: it is a limited-purpose trust
company which was created to hold securities for its participating
organizations (the "Participants") and to facilitate the clearance and
settlement of securities transactions between Participants in such securities
through electronic book-entry changes in accounts of its Participants.
Participants include securities brokers and dealers (including the
underwriters for such Securities), banks and trust companies, clearing
corporations and certain other organizations. Access to the Depository's
system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("indirect participants"). Persons
who are not Participants may beneficially own securities held by the
Depository only through Participants or indirect participants.
Unless otherwise provided in the applicable Prospectus Supplement, payments
of principal, any premium or interest on or related to the Securities of each
series registered in the name of the Depository's nominee will be made by the
Trustee to the Depository's nominee as the registered owner of the Global
Security. Under the terms of the Indenture, the Company and the Trustee will
treat the persons in whose names the Securities of each series are registered
as the owners of such Securities for the purpose of receiving payment of
principal, any premium or interest on the Securities and for all other
purposes whatsoever. Therefore, neither the Company, the Trustee nor the
Paying Agent has any direct responsibility or liability for the payment of the
principal, any premium or interest on the Securities to owners of beneficial
interests in a Global Security. The Depository has advised the Company and the
Trustee that its present practice is, upon receipt of any payment of
principal, any premium, or interest, to immediately credit the accounts of the
Participants with such payment in amounts proportionate to their respective
holdings in principal amount of beneficial interests in such Global Security
as shown on the records of the Depository.
Notwithstanding any provision of the Indenture or any Security described
herein, no Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part may be
registered, in the name of any Person other than the Depository for such
Global Security or any nominee of the Depository unless (i) the Depository has
notified the Company that it is unwilling or unable to continue as depositary
for such Global Security or has ceased to be qualified to act as such as
required by the Indenture, (ii) there shall have occurred and be continuing an
Event of Default with respect to the Securities represented by such Global
Security or (iii) there shall exist such circumstances, if any, in addition to
or in lieu of those described above as may be described in the applicable
Prospectus Supplement. All securities issued in exchange for a Global Security
or any portion thereof will be registered in such names as the Depository may
direct. (Sections 2.04 and 3.05)
As long as the Depository, or its nominee, is the registered Holder of a
Global Security, the Depository or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the
Securities represented thereby for all purposes under the Securities and the
Indenture. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Security will not be entitled to have such
Global Security or any Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Securities in exchange therefor and will not be considered to be
the owners or Holders of such Global Security or any Securities represented
thereby for any purpose under the Securities or the Indenture. All payments
and deliveries of principal of and any premium, Maturity Consideration and
interest on a Global Security will be made to the Depository or its nominee,
as the case may be, as the Holder thereof. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to transfer
beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
Participants and to persons that may hold beneficial interests through
Participants. In connection with the issuance of any Global Security, the
Depository will credit, on its book entry registration and transfer system,
the respective principal amounts of Securities represented by the Global
Security to the accounts of its Participants. Ownership of beneficial
interests
8
in a Global Security will be shown only on, and the transfer of those
ownership interests will be effected only through, records maintained by the
Depository (with respect to Participants' interests) or any such Participant
(with respect to interests of persons held by such Participants on their
behalf). Payments, transfers, exchanges and other matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the Depository from time to time. None of the
Company, the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depository's or any
Participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising or
reviewing any records relating to such beneficial interests.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, beneficial interests
in a Global Security will trade in the Depository's same-day funds settlement
system, in which secondary market trading activity in those beneficial
interests would be required by the Depository to settle in immediately
available funds. There is no assurance as to the effect, if any, that
settlement in immediately available funds would have on trading activity in
such beneficial interests. Also, settlement for purchases of beneficial
interests in a Global Security upon the original issuance thereof may be
required to be made in immediately available funds.
The Depository has advised the Company that its management is aware that
some computer applications, systems and the like for processing data
("Systems") that are dependent upon calendar dates, including dates before, on
and after January 1, 2000, may encounter "Year 2000 problems". The Depository
has informed direct and indirect Participants and other members of the
financial community (the "Industry") that it has developed and is implementing
a program so that its Systems, as they related to the timely payment of
distributions (including principal and interest payments) to security holders,
book-entry deliveries and settlement of trades within the Depository
("Depositary Services"), continue to function appropriately. This program
includes a technical assessment and a remediation plan, each of which is
complete. Additionally, the Depository's plan include a testing phase, which
is expected to be completed within appropriate time frames.
However, the Depository's ability to perform properly its services is also
dependent upon other parties, including without limitation, issuers and their
agents, as well as the Depository's direct and indirect Participants, and
third party vendors from whom the Depository licenses software and hardware,
and third party vendors on whom the Depository relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. The Depository has informed the Industry that
it has contacted (and will continue to contact) third party vendors from whom
the Depository acquires services to: (i) impress upon them the importance of
such services being Year 2000 compliant, and (ii) determine the extent of
their efforts for Year 2000 remediation (and, as appropriate, testing) of
their services. In addition, the Depository is in the process of developing
such contingency plans as it deems appropriate.
According to the Depository, the information in the preceding two paragraphs
has been provided to the Industry for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of
any kind.
Payment and Paying Agents
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Security on any Interest Payment Date will be made to the
Person in whose name such Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest. (Section 3.07)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium, Maturity Consideration and interest on the
Securities of a particular series (other than a Global Security) will be
payable or deliverable at the office of such Paying Agent or Paying Agents as
the Company may designate for such purpose from time to time, except that at
the option of the Company payment of any interest may be made by check mailed
to the address of the Person entitled thereto as such address appears in the
Security Register. Unless otherwise indicated in the applicable Prospectus
Supplement, the corporate trust office of the Trustee in
9
The City of New York will be designated as the Company's sole Paying Agent for
payments and deliveries with respect to Securities of each series. Any other
Paying Agents initially designated by the Company for the Securities of a
particular series will be named in the applicable Prospectus Supplement. The
Company may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through
which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each Place of Payment for the Securities of a
particular series. (Section 10.02)
All consideration paid or delivered by the Company to a Paying Agent for the
payment or delivery of the principal of or any premium, Maturity Consideration
or interest on any Security which remain unclaimed at the end of two years
after such principal, premium, Maturity Consideration or interest has become
due and payable or deliverable will be repaid to the Company, and the Holder
of such Security thereafter, as an unsecured general creditor, may look only
to the Company for payment or delivery thereof. (Section 10.03)
Certain Covenants of the Company
Limitation on Secured Indebtedness
The Company will not create, assume, incur or guarantee, and will not permit
any Restricted Subsidiary to create, assume, incur or guarantee, any Secured
Indebtedness without making provision whereby all the Securities shall be
secured equally and ratably with (or prior to) such Secured Indebtedness
(together with, if the Company shall so determine, any other Indebtedness of
the Company or such Restricted Subsidiary then existing or thereafter created
which is not subordinate to the Securities) so long as such Secured
Indebtedness shall be outstanding unless such Secured Indebtedness, when added
to (a) the aggregate amount of all Secured Indebtedness then outstanding (not
including in this computation Secured Indebtedness if the Securities are
secured equally and ratably with (or prior to) such Secured Indebtedness and
further not including in this computation any Secured Indebtedness which is
concurrently being retired) and (b) the aggregate amount of all Attributable
Debt then outstanding pursuant to Sale and Leaseback Transactions entered into
by the Company after January 26, 1999, or entered into by a Restricted
Subsidiary after January 26, 1999 or, if later, the date on which it became a
Restricted Subsidiary (not including in this computation any Attributable Debt
which is concurrently being retired), would not exceed 10% of Consolidated Net
Tangible Assets. (Section 10.06)
Limitation on Sale and Lease-Back Transactions
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Leaseback Transaction unless (a) the sum of (i) the
Attributable Debt to be outstanding pursuant to such Sale and Leaseback
Transaction, (ii) all Attributable Debt then outstanding pursuant to all other
Sale and Leaseback Transactions entered into by the Company after January 26,
1999, or entered into by a Restricted Subsidiary after January 26, 1999 or, if
later, the date on which it became a Restricted Subsidiary, and (iii) the
aggregate of all Secured Indebtedness then outstanding (not including in this
computation Secured Indebtedness if the Securities are secured equally and
ratably with (or prior to) such Secured Indebtedness) would not exceed 10% of
Consolidated Net Tangible Assets or (b) an amount equal to the greater of (i)
the net proceeds to the Company or the Restricted Subsidiary of the sale of
the Principal Property sold and leased back pursuant to such Sale and
Leaseback Transaction and (ii) the amount of Attributable Debt to be
outstanding pursuant to such Sale and Leaseback Transaction is applied to the
retirement of Funded Debt of the Company or any Restricted Subsidiaries (other
than Funded Debt which is subordinate to the Securities or which is owing to
the Company or any Restricted Subsidiaries) within 180 days after the
consummation of such Sale and Leaseback Transaction. (Section 10.07)
10
Consolidation, Merger and Sale of Assets
The Company shall not consolidate with or merge with or into any other
Person or convey, transfer or lease all or substantially all of its properties
and assets substantially as an entirety to any Person unless:
(a) either (i) the Company shall be the continuing corporation or (ii)
the Person (if other than the Company) formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance,
transfer, or lease, the properties and assets of the Company substantially
as an entirety shall be a corporation, partnership or trust, shall be
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume, in form satisfactory to the Trustee, the due and punctual payment
or delivery of the Maturity Consideration and interest on all the
Securities and the performance of every covenant herein on the part of the
Company to be performed or observed;
(b) immediately after giving effect to such transaction (and treating any
Indebtedness which becomes an obligation of the Company or any Subsidiary
in connection with or as a result of such transaction as having been
incurred at the time of such transaction), no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event
of Default, shall have occurred and be continuing; and
(c) the Company or such Person has delivered to the Trustee an Officer's
Certificate and an opinion of counsel (as to which opinion, counsel may
rely on the Officer's Certificate as to factual matters), each stating that
such consolidation, merger, conveyance, transfer or lease comply with the
foregoing this covenant and that all conditions precedent therein provided
for in the Indenture, or relating to, such transaction have been complied
with.
Upon any such consolidation or merger or any conveyance, transfer or lease
of the properties and assets of the Company substantially as an entirety, the
successor Person formed by such consolidation, or into which the Company is
merged or the successor Person to which such conveyance, transfer or lease is
made, shall succeed to, and be substituted for, and may exercise every right
and power of the Company under the Securities and the Indenture with the same
effect as if such successor had been named as the Company therein; and
thereafter, except in the case of a lease, the Company shall be discharged
from all obligations and covenants under the Indenture and the Securities.
(Sections 8.01 and 8.02)
Definitions of Certain Terms
"Attributable Debt" means, as of the date of its determination, the present
value (discounted semiannually at an interest rate of 7.0% per annum) of the
obligation of a lessee for rental payments pursuant to any Sale and Leaseback
Transaction (reduced by the amount of the rental obligations of any sublessee
of all or part of the same property) during the remaining term of such Sale
and Leaseback Transaction (including any period for which the lease relating
thereto has been extended), such rental payments not to include amounts
payable by the lessee for maintenance and repairs, insurance, taxes,
assessments and similar charges and for contingent rents (such as those based
on sales). In the case of any Sale and Leaseback Transaction in which the
lease is terminable by the lessee upon the payment of a penalty, such rental
payments shall be considered for purposes of this definition to be the lesser
of (a) the rental payments to be paid under such Sale and Leaseback
Transaction until the first date (after the date of such determination) upon
which it may be so terminated plus the then applicable penalty upon such
termination and (b) the rental payments required to be paid during the
remaining term of such Sale and Leaseback Transaction (assuming such
termination provision is not exercised).
"Board of Directors" means either the board of directors of the Company or
committee of that board duly authorized to act for it in respect hereof.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification.
11
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) real
or personal property that is required to be classified and accounted for as a
capital lease obligation under generally accepted accounting principles, and,
for the purposes of the Indenture, the amount of such obligation at any date
shall be the capitalized amount thereof at such date, determined in accordance
with such principles.
"Consolidated Net Tangible Assets" means at any date, the total assets
appearing on the most recently prepared consolidated balance sheet of the
Company and the Subsidiaries as of the end of a fiscal quarter of the Company,
prepared in accordance with generally accepted accounting principles, less (a)
all current liabilities as shown on such balance sheet and (b) Intangible
Assets.
"Funded Debt" means any indebtedness maturing by its terms more than one
year from the date of the issuance thereof, including any indebtedness
renewable or extendable at the option of the obligor to a date later than one
year from the date of the original issuance thereof.
"Indebtedness" means (a) any liability of any Person (1) for borrowed money,
or under any reimbursement obligation relating to a letter of credit, or (2)
evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than a trade payable or a current
liability arising in the ordinary course of business), or (3) for the payment
of money relating to a Capitalized Lease Obligation, or (4) for Interest Rate
Protection Obligations; (b) any liability of others described in the preceding
clause (a) that the Person has guaranteed or that is otherwise its legal
liability; and (c) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses
(a) and (b) above.
"Intangible Assets" means at any date the value (net of any applicable
reserves), as shown on or reflected in the most recently prepared consolidated
balance sheet of the Company, prepared in accordance with generally accepted
accounting principles, of: (i) all trade names, trademarks, licenses, patents,
copyrights and goodwill; (ii) organizational and development costs; (iii)
deferred charges (other than prepaid items such as insurance, taxes, interest,
commissions, rents and similar items and tangible assets being amortized); and
(iv) unamortized debt discount and expense, less unamortized premium.
"Interest Rate Protection Obligations" of any Person means the obligations
of such Person pursuant to any arrangement with any other Person whereby,
directly or indirectly, such Person is entitled to receive from time to time
periodic payments calculated by applying a fixed rate of interest on a stated
notional amount in exchange for periodic payments made by such Person
calculated by applying a floating rate of interest on the same notional
amount.
"Liens" means any mortgage, lien, pledge, security interest, charge or
encumbrance.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any other entity.
"Principal Property" means any land, land improvements, buildings and
associated factory, distribution, laboratory and office equipment (excluding
any products marketed by the Company or any Subsidiary) constituting a
distribution facility, operating facility, manufacturing facility, development
facility, warehouse facility, service facility or office facility (including
any portion thereof), which facility (a) is owned by or leased to the Company
or any Restricted Subsidiary, (b) is located within the United States and (c)
has an acquisition cost plus capitalized improvements in excess of 0.50% of
Consolidated Net Tangible Assets as of the date of such determination, other
than (i) any such facility, or portion thereof, which has been financed by
obligations issued by or on behalf of a State, a Territory or a possession of
the United States, or any political subdivision of any of the foregoing, or
the District of Columbia, the interest on which is excludable from gross
income of the holders thereof (other than a "substantial user" of such
facility or a "related Person" as those terms are used in
12
Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"))
pursuant to the provisions of Section 103 of the Code (or any similar
provision hereafter enacted) as in effect at the time of issuance of such
obligations, (ii) any such facility that the Board of Directors may by Board
Resolution declare is not of material importance to the Company and the
Restricted Subsidiaries taken as a whole and (iii) any such facility, or
portion thereof, owned or leased jointly or in common with one or more Persons
other than the Company and any Subsidiary and in which the interest of the
Company and all Subsidiaries does not exceed 50%.
"Restricted Securities" means any shares of the capital stock or
Indebtedness of any Restricted Subsidiary.
"Restricted Subsidiary" means (a) any Subsidiary (i) which has substantially
all its property within the United States of America, (ii) which owns or is a
lessee of any Principal Property, and (iii) in which the investment of the
Company and all other Subsidiaries exceeds 0.50% of Consolidated Net Tangible
Assets as of the date of such determination; provided, however, that the term
"Restricted Subsidiary" shall not include (A) any Subsidiary (x) primarily
engaged in the business of purchasing, holding, collecting, servicing or
otherwise dealing in and with installment sales contracts, leases, trust
receipts, mortgages, commercial paper or other financing instruments, and any
collateral or agreements relating thereto, including in the business,
individually or through partnerships, of financing (whether through long- or
short-term borrowings, pledges, discounts or otherwise) the sales, leasing or
other operations of the Company and the Subsidiaries or any of them, or (y)
engaged in the business of financing the assets and operations of third
parties, and (z) in any case, not, except as incidental to such financing
business, engaged in owning, leasing or operating any property which, but for
this proviso, would qualify as Principal Property or (B) any Subsidiary
acquired or organized after January 26, 1999, for the purpose of acquiring the
stock or business or assets of any Person other than the Company or any
Restricted Subsidiary, whether by merger, consolidation, acquisition of stock
or assets or similar transaction analogous in purpose or effect, so long as
such Subsidiary does not acquire by merger, consolidation, acquisition of
stock or assets or similar transaction analogous in purpose or effect all or
any substantial part of the business or assets of the Company or any
Restricted Subsidiary; and (b) any other Subsidiary which is hereafter
designated by the Board of Directors as a Restricted Subsidiary.
"Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of any
Principal Property (whether such Principal Property is now owned or hereafter
acquired) that has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person, other than (a) temporary leases for a
term, including renewals at the option of the lessee, of not more than three
years; (b) leases between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries; and (c) leases of Principal Property executed by the
time of, or within 180 days after the latest of, the acquisition, the
completion of construction or improvement (including any improvements on
property which will result in such property becoming Principal Property), or
the commencement of commercial operation of such Principal Property.
"Secured Indebtedness" means (a) Indebtedness of the Company or a Restricted
Subsidiary which is secured by any Lien upon any Principal Property or
Restricted Securities and (b) Indebtedness of the Company or a Restricted
Subsidiary in respect of any conditional sale or other title retention
agreement covering Principal Property or Restricted Securities; but "Secured
Indebtedness" shall not include any of the following:
(i) Indebtedness of the Company and the Restricted Subsidiaries
outstanding on January 26, 1999, secured by then existing Liens upon, or
incurred in connection with conditional sales agreements or other title
retention agreements with respect to Principal Property or Restricted
Securities;
(ii) Indebtedness which is secured by (A) purchase money Liens upon
Principal Property acquired after January 26, 1999 or (B) Liens placed on
Principal Property after January 26, 1999, during construction or
improvement thereof (including any improvements on property which will
result in such property becoming Principal Property) or placed thereon
within 180 days after the later of acquisition, completion of construction
or improvement or the commencement of commercial operation of such
Principal Property or improvement, or placed on Restricted Securities
acquired after January 26, 1999, or (C) conditional sale agreements or
other title retention agreements with respect to any Principal Property or
13
Restricted Securities acquired after January 26, 1999, if (in each case
referred to in this subparagraph (ii)) (x) such Lien or agreement secures
all or any part of the Indebtedness incurred for the purpose of financing
all or any part of the purchase price or cost of construction of such
Principal Property or improvement or Restricted Securities and (y) such
Lien or agreement does not extend to any Principal Property or Restricted
Securities other than the Principal Property so acquired or the Principal
Property, or portion thereof, on which the property so constructed or such
improvement is located; provided, however, that the amount by which the
aggregate principal amount of Indebtedness secured by any such Lien or
agreement exceeds the cost to the Company or such Restricted Subsidiary of
the related acquisition, construction or improvement will be considered to
be "Secured Indebtedness;"
(iii) Indebtedness which is secured by Liens on Principal Property or
Restricted Securities, which Liens exist at the time of acquisition (by any
manner whatsoever) of such Principal Property or Restricted Securities by
the Company or a Restricted Subsidiary;
(iv) Indebtedness of Restricted Subsidiaries owing to the Company or any
other Restricted Subsidiary and Indebtedness of the Company owing to any
Restricted Subsidiary;
(v) In the case of any corporation which becomes (by any manner
whatsoever) a Restricted Subsidiary after January 26, 1999, Indebtedness
which is secured by Liens upon, or conditional sale agreements or other
title retention agreements with respect to, its property which constitutes
Principal Property or Restricted Securities, which Liens exist at the time
such corporation becomes a Restricted Subsidiary;
(vi) Guarantees by the Company of Secured Indebtedness and Attributable
Debt of any Restricted Subsidiaries and guarantees by a Restricted
Subsidiary of Secured Indebtedness and Attributable Debt of the Company and
any other Restricted Subsidiaries;
(vii) Indebtedness arising from any Sale and Leaseback Transaction;
(viii) Indebtedness secured by Liens on property of the Company or a
Restricted Subsidiary in favor of the United States of America, any State,
Territory or possession thereof, or the District of Columbia, or any
department, agency or instrumentality or political subdivision of the
United States of America or any State, Territory or possession thereof, or
the District of Columbia, or in favor of any other country or any political
subdivision thereof, if such Indebtedness was incurred for the purpose of
financing all or any part of the purchase price or the cost of construction
of the property subject to such Lien; provided, however, that the amount by
which the aggregate principal amount of Indebtedness secured by any such
Lien exceeds the cost to the Company or such Restricted Subsidiary of the
related acquisition or construction will be considered to be "Secured
Indebtedness";
(ix) Indebtedness secured by Liens on aircraft, airframes or aircraft
engines, aeronautic equipment or computers and electronic data processing
equipment; and
(x) The replacement, extension or renewal (or successive replacements,
extensions or renewals) of any Indebtedness (in whole or in part) excluded
from the definition of "Secured Indebtedness" by subparagraphs (i) through
(ix) above; provided, however, that no Lien securing, or conditional sale
or title retention agreement with respect to, such Indebtedness will extend
to or cover any Principal Property or any Restricted Securities, other than
such property which secured the Indebtedness so replaced, extended or
renewed (plus improvements on or to any such Principal Property); provided
further, however, that to the extent that such replacement, extension or
renewal increases the principal amount of Indebtedness secured by such Lien
or is in a principal amount in excess of the principal amount of
Indebtedness excluded from the definition of "Secured Indebtedness" by
subparagraphs (i) through (ix) above, the amount of such increase or excess
will be considered to be "Secured Indebtedness."
In no event shall the foregoing provisions be interpreted to mean or their
operation to cause the same Indebtedness to be included more than once in the
calculation of "Secured Indebtedness" as that term is used in the Indenture.
14
"Subsidiary" means any corporation of which, at the time of determination,
the Company and/or one or more Subsidiaries owns or controls directly or
indirectly more than 50% of the shares of voting stock.
"Wholly owned," when used with reference to a Subsidiary, means a Subsidiary
of which all of the outstanding capital stock is owned by the Company or by
one or more wholly owned Subsidiaries.
"Voting Stock," when used with reference to a Subsidiary, means stock of the
class or classes having general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of
such corporation provided that, for the purposes hereof, stock which carries
only the right to vote conditionally on the happening of an event shall not be
considered voting stock whether or not such event shall have happened.
Events of Default
The Indenture defines an Event of Default with respect to any series of
Securities as being any one of the following events: (a) default in the
payment of any interest on the Securities of that series when due, and the
continuance of such default for a period of 30 days; (b) default in the
delivery or payment of the Maturity Consideration on the Securities of that
series at the date on which such principal becomes due and payable as provided
in the Security or in the Indenture, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise; (c) default in
the deposit of any sinking fund payment, when and as due on the Securities of
that series; (d) default in the performance or breach of any covenant or
warranty of the Company under the Indenture (other than a covenant or warranty
a default in performance or breach of which is specifically dealt with in the
Indenture) and the continuance of such default or breach for a period of 60
days after written notice as provided in the Indenture; or (e) certain events
involving bankruptcy, insolvency or reorganization of the Company. (Section
5.01)
The Indenture provides that if an Event of Default specified therein shall
occur and be continuing with respect to the Securities of any series, other
than an Event of Default involving bankruptcy, insolvency or reorganization,
either the Trustee or the Holders of 25% in principal amount, or if such
Securities are not payable at Maturity for a fixed principal amount, 25% of
the aggregate issue price, of the Outstanding Securities of that series (each
series acting as a separate class) may declare the principal of the Securities
of that series, or such other amount or property, as may be provided for in
the Securities of that series, to be due and payable. If an Event of Default
described in clause (e) above with respect to the Securities of any series at
the time outstanding shall occur, the principal amount of all the Securities
of that series, or such other amount or property, as may be provided for in
the Securities of that series, (or, in the case of any such Original Issue
Discount Security, such specified amount) will automatically, and without any
action by the Trustee or any Holder, become immediately due and payable.
(Section 5.02). The Holders of not less than a majority in aggregate principal
amount of the Securities of a series may, on behalf of all Holders of
Securities of such series, waive any past default under the Indenture with
respect to the Securities of such series, except a default (a) in the delivery
or payment of the Maturity Consideration or interest on any Security of such
series, and (b) in respect of a covenant or provision of the Indenture which
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of the affected series. (Section 5.13)
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or discretion of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Section 6.03)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in aggregate principal amount of the Outstanding Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of that series. (Section 5.12)
No Holder of a Security of any series will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or a trustee, or for any other remedy under the Indenture, unless
15
(i) such Holder has previously given to the Trustee written notice of a
continuing Event of Default with respect to the Securities of that series,
(ii) the Holders of at least 25% in aggregate principal amount, or if such
Securities are not payable at Maturity for a fixed principal amount, the
aggregate issue price of the Outstanding Securities of that series have made
written request to the Trustee to institute such proceeding as trustee (iii)
the Holder or Holders have offered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with such
request, (iv) the Trustee has failed to institute such proceeding, and has not
received from the Holders of a majority in aggregate principal amount or, if
such Securities are not payable at Maturity for a fixed principal amount, the
aggregate issue price of the Outstanding Securities of that series a direction
inconsistent with such request, within 60 days after such notice, request and
offer. (Section 5.07) However, such limitations do not apply to a suit
instituted by a Holder of a Security for the enforcement of delivery or
payment of the Maturity Consideration relating to, or interest on, such
Security on or after the applicable due date specified in such Security.
(Section 5.08)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions and conditions of the Indenture and, if so, specifying all such
known defaults. (Section 10.04)
Defeasance and Covenant Defeasance
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of
Section 13.02 of the Indenture, relating to defeasance and discharge of
indebtedness, or Section 13.03 of the Indenture, relating to defeasance of
certain restrictive covenants in the Indenture, applied to the Securities of
any series, or to any specified part of a series. (Section 13.01)
Defeasance and Discharge
The Indenture provides that, upon the Company's exercise of its option to
have Section 13.02 of the Indenture apply to any Securities, the Company will
be deemed to have been discharged from all its obligations with respect to
such Securities (except for certain obligations to exchange or register the
transfer of Securities, to replace stolen, lost or mutilated Securities, to
maintain paying agencies and to hold moneys for payment in trust) upon the
deposit in trust for the benefit of the Holders of such Securities of money or
U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and any premium and
interest on such Securities on the respective Stated Maturities in accordance
with the terms of the Indenture and such Securities. Such defeasance or
discharge may occur only if, among other things, the Company has delivered to
the Trustee an Opinion of Counsel to the effect that the Company has received
from, or there has been published by, the United States Internal Revenue
Service a ruling, or there has been a change in tax law, in either case to the
effect that Holders of such Securities will not recognize gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such deposit,
defeasance and discharge were not to occur. (Sections 13.02 and 13.04)
Defeasance of Certain Covenants
The Indenture provides that, upon the Company's exercise of its option to
have Section 13.03 of the Indenture apply to any Securities, the Company may
omit to comply with certain restrictive covenants, including those described
under "Certain Covenants of the Company," any that may be described in the
applicable Prospectus Supplement, and the occurrence of certain Events of
Default, which are described above in clause (d) (with respect to such
restrictive covenants) and under "Events of Default" and any that may be
described in the applicable Prospectus Supplement, will be deemed not to be or
result in an Event of Default, in each case with respect to such Securities.
The Company, in order to exercise such option, will be required to deposit, in
trust for the benefit of the Holders of such Securities, money or U.S.
Government Obligations, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay the principal of and any premium and interest
on such Securities on the respective Stated
16
Maturities in accordance with the terms of the Indenture and such Securities.
The Company will also be required, among other things, to deliver to the
Trustee an Opinion of Counsel to the effect that Holders of such Securities
will not recognize gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain obligations and will be subject to
federal income tax on the same amount, in the same manner and at the same
times as would have been the case if such deposit and defeasance were not to
occur. In the event the Company exercised this option with respect to any
Securities and such Securities were declared due and payable because of the
occurrence of any Event of Default, the amount of money and U.S. Government
Obligations so deposited in trust would be sufficient to pay amounts due on
such Securities at the time of their respective Stated Maturities but may not
be sufficient to pay amounts due on such Securities upon any acceleration
resulting from such Event of Default. In such case, the Company would remain
liable for such payments. (Sections 13.03 and 13.04)
Modification of the Indenture
The Indenture provides that the Company and the Trustee may, without the
consent of any Holders of Securities, enter into supplemental indentures for
the purposes, among other things, of adding to the Company's covenants, adding
additional Events of Default, establishing the form or terms of Securities or
curing ambiguities or inconsistencies in the Indenture or making other
provisions, provided that any such action to cure ambiguities or
inconsistencies shall not adversely affect the interests of the Holders of any
Outstanding series of Securities in any material respect. (Section 9.01)
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of a majority in aggregate
principal amount or, if such Securities are not payable at Maturity for a
fixed principal amount, the aggregate issue price of the Outstanding
Securities of each series affected thereby, except that no such modification
or amendment may, without the consent of the Holder of each Outstanding
Security affected thereby, (a) change the Stated Maturity of the Maturity
Consideration or any installment of Maturity Consideration or interest on, any
Security, (b) reduce the principal amount of or reduce the amount or change
the type of Maturity Consideration or reduce the rate of interest on, or any
premium payable upon the redemption of, or the amount of Maturity
Consideration of an Original Issue Discount Security or any other Security
which would be due and deliverable or payable upon a declaration of
acceleration of the Maturity thereof upon the occurrence of an Event of
Default, of any Security, (c) change the Place of Payment where, or the coin
or currency in which, any Maturity Consideration or interest on any Security
are deliverable or payable, (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Security, (e) reduce the
percentage in principal amount or aggregate issue price, as the case may be,
of Securities of any series, the consent of whose Holders is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or for waiver of certain defaults, or (f)
modify the requirements contained in the Indenture for consent to or approval
of certain matters except to increase any percentage for such consent or
approval or to provide that certain other provisions cannot be modified or
waived without the consent of the Holder of each Security affected thereby.
(Section 9.02)
A supplemental indenture which changes or eliminates any covenant or other
provision of the Indenture which has been expressly included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
the Indenture of the Holders of Securities of any other series. Section 9.02
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of a series may, on behalf of the Holders of all the Securities of
such series, waive compliance by the Company with certain restrictive
provisions of the Indenture. (Section 10.08)
Notices
Notices to Holders of Securities will be given by mail to the addresses of
such Holders as they may appear in the Security Register. (Section 1.06)
17
Title
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Security is registered as the absolute owner
thereof for the purpose of making payment and for all other purposes. (Section
3.08)
Governing Law
The Indenture and the Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 1.12)
Regarding the Trustee
Citibank, N.A. is the Trustee under the Indenture. The Company has other
customary banking relationships with Citibank, N.A. in the ordinary course of
business.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale
of the Debt Securities (the "Offered Debt Securities") will be named in an
applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Debt Securities at a fixed price
or prices, which may be changed, or from time to time at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Company also may offer and sell the
Offered Debt Securities in exchange for one or more of its outstanding issues
of debt securities. The Company also may, from time to time, authorize
underwriters acting as the Company's agents to offer and sell the Offered Debt
Securities upon the terms and conditions as shall be set forth in any
Prospectus Supplement. In connection with the sale of Offered Debt Securities,
underwriters may be deemed to have received compensation from the Company in
the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Offered Debt Securities for whom they may act
as agent. Underwriters may sell Offered Debt Securities to or through dealers,
and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions (which may
be changed from time to time) from the purchasers for whom they may act as
agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Offered Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters,
dealers and agents participating in the distribution of the Offered Debt
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Offered Debt
Securities may be deemed to be underwriting discounts and commissions, under
the Securities Act. Underwriters, dealers and agents may be entitled, under
agreements with the Company, to indemnification against and contribution
toward certain civil liabilities, including liabilities under the Securities
Act, and to reimbursement by the Company for certain expenses.
If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Offered Debt Securities from the Company at the
public offering price set forth in such Prospectus Supplement pursuant to
Delayed Delivery Contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount not less than, and the aggregate principal amount of Offered
Debt Securities sold pursuant to Contracts shall be not less nor more than,
the respective amounts stated in such Prospectus Supplement. Institutions with
whom Contracts, when authorized, may be made include commercial and savings
18
banks, insurance companies, pension funds, investment companies, educational
and charitable institutions and other institutions, but will in all cases be
subject to the approval of the Company. Contracts will not be subject to any
conditions except (i) the purchase by an institution of the Offered Debt
Securities covered by its Contracts shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which
such institution is subject, and (ii) if the Offered Debt Securities are being
sold to underwriters, the Company shall have sold to such underwriters the
total principal amount of the Offered Debt Securities less the principal
amount thereof covered by Contracts. Agents and underwriters will have no
responsibility in respect of the delivery or performance of Contracts.
All Offered Debt Securities will be a new issue of securities with no
established trading market. Any underwriters to whom Offered Debt Securities
are sold by the Company for public offering and sale may make a market in such
Offered Debt Securities, but such underwriters will not be obligated to do so
and may discontinue any market making at any time without notice. No assurance
can be given as to the liquidity of or the trading markets for any Offered
Debt Securities.
Any underwriter may engage in over-allotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves sales in excess of the
offering size, which creates a short position. Stabilizing transactions permit
bids to purchase the underlying security so long as the stabilizing bids do
not exceed a specified maximum. Short covering transactions involve purchases
of the Offered Debt Securities in the open market after the distribution is
completed to cover short positions. Penalty bids permit the underwriters to
reclaim a selling concession from a dealer when the Offered Debt Securities
originally sold by the dealer are purchased in a covering transaction to cover
short positions. Those activities may cause the price of the Offered Debt
Securities to be higher than it would otherwise be. If commenced, the
underwriters may discontinue those activities at any time.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
VALIDITY OF OFFERED DEBT SECURITIES
The validity of the Debt Securities will be passed upon for the Company by
Hunton & Williams, Atlanta, Georgia. Certain legal matters in connection with
the Debt Securities will be passed upon for the underwriters by Brown & Wood
LLP, New York, New York.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$55,045,000
- --------------------------------------------------------------------------------
UNITED PARCEL SERVICE OF AMERICA, INC.
Floating Rate Senior Notes Due 2049
------------------------
PROSPECTUS SUPPLEMENT
------------------------
PaineWebber Incorporated
----------------
October 21, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------