Filed Pursuant to Rule 424(b)(5)
Registration No. 333-68508
333-68508-01
PROSPECTUS SUPPLEMENT
(To prospectus dated August 31, 2001)
$1,500,000,000
TYCO INTERNATIONAL GROUP S.A.
$1,500,000,000 6.375% Notes due 2011
Fully and Unconditionally Guaranteed by
[LOGO OF TYCO]
-----------------
Our 6.375% notes due 2011 will mature on October 15, 2011. Interest on the
notes is payable on April 15 and October 15 of each year, beginning on April
15, 2002.
We may redeem the notes prior to maturity, in whole or in part, at a
redemption price equal to the greater of the principal amount of the notes and
the make-whole price described under "Description of the Notes and the
Guarantees" in this prospectus supplement, plus, in each case, accrued and
unpaid interest. We do not intend to list the notes on any securities exchange.
-----------------
Price to Underwriting Proceeds, Before
Public(1) Discounts Expenses, to Us
-------------- ------------ ----------------
Per Note............................... 99.97% 0.65% 99.32%
Total............................... $1,499,550,000 $9,750,000 $1,489,800,000
---------------------
(1) Plus accrued interest from October 26, 2001, if settlement occurs after
that date.
-----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about October 26, 2001.
-----------------
Joint Book-Running Managers
Bear, Stearns & Co. Inc. Credit Suisse First Boston
-----------------
Senior Co-Managers
ABN AMRO Incorporated Banc of America Securities LLC
JPMorgan Lehman Brothers
Merrill Lynch & Co. Morgan Stanley
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Junior Co-Managers
BNY Capital Markets, Inc. McDonald Investments Inc.
Scotia Capital TD Securities
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The date of this prospectus supplement is October 23, 2001.
FORWARD LOOKING INFORMATION
Certain statements contained in or incorporated by reference into this
document are "forward looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. All forward looking
statements involve risks, uncertainties and contingencies, many of which are
beyond the control of the Company and Tyco, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performance or achievements. All statements contained or incorporated by
reference that are not clearly historical in nature are forward looking. When
used in this document, the words "anticipate," "believe," "expect," "estimate"
and similar expressions are generally intended to identify forward looking
statements. Examples of forward looking statements include any statements
regarding the consummation and benefits of future acquisitions, as well as
expectations with respect to future sales and other results of operations,
operating efficiencies and product expansion. Factors that might affect such
forward looking statements include, among other things:
. overall economic and business conditions;
. the demand for the Company's and Tyco's goods and services;
. competitive factors in the industries in which the Company and Tyco
compete;
. changes in U.S. and non-U.S. government regulations;
. changes in tax requirements (including tax rate changes, new tax laws and
revised tax law interpretations);
. results of litigation;
. interest rate fluctuations and other capital market conditions, including
foreign currency rate fluctuations;
. economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer capital
across borders;
. the ability to achieve anticipated synergies in connection with recent
acquisitions, including Tyco's acquisition of Tyco Capital Corporation;
. the timing, impact and other uncertainties of future acquisitions by Tyco;
and
. the timing of construction and the successful operation of the TyCom
Global Network by Tyco's majority owned subsidiary, TyCom Ltd., Tyco's
undersea cable communications business.
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TYCO
Tyco is a diversified manufacturing and service company that, through its
subsidiaries:
. designs, manufactures and distributes electrical and electronic components
and multi-layer printed circuit boards;
. designs, manufactures and distributes disposable medical supplies and
other specialty products;
. designs, manufactures, installs and services fire detection and
suppression systems, installs, monitors and maintains electronic security
systems and designs, manufactures, distributes and services specialty
valves;
. designs, engineers, manufactures, installs, operates and maintains
undersea cable communications systems; and
. offers vendor, equipment, commercial, factoring, consumer and structured
financing and leasing capabilities through its indirect wholly-owned
subsidiary, Tyco Capital Corporation.
Tyco operates in more than 100 countries around the world and had revenues
for its fiscal year ended September 30, 2001 in excess of $36 billion.
Tyco's strategy is to be the low-cost, high quality producer and provider in
each of its markets. It promotes its leadership position by investing in its
existing businesses, developing new markets and acquiring complementary
businesses and products. Combining the strengths of its existing operations and
its business acquisitions, Tyco seeks to enhance shareholder value through
increased earnings per share and strong cash flows.
Tyco reviews acquisition opportunities in the ordinary course of business,
some of which may be material and some of which are currently under
investigation, discussion or negotiation. There can be no assurance that any of
these acquisitions will be consummated.
Tyco's common shares are listed on the New York Stock Exchange and the
Bermuda Stock Exchange under the symbol "TYC" and on the London Stock Exchange
under the symbol "TYI."
Tyco is a Bermuda company whose registered and principal executive offices
are located at The Zurich Centre, Second Floor, 90 Pitts Bay Road, Pembroke HM
08, Bermuda, telephone number (441) 292-8674. The executive offices of Tyco's
principal United States subsidiaries are located at One Tyco Park, Exeter, New
Hampshire 03833, and the telephone number there is (603) 778-9700.
For additional information regarding the business of Tyco, please see Tyco's
Form 10-K and other filings of Tyco with the SEC, which are incorporated by
reference into this document.
S-3
THE COMPANY
Tyco International Group S.A. was formed as a Luxembourg corporation on
March 30, 1998, as a wholly-owned subsidiary of Tyco. The registered and
principal offices of the Company are located at 6, avenue Emile Reuter, 2nd
Floor, L-2420 Luxembourg, and its telephone number is (352) 464-340-1. The
Company is a holding company whose only business is to own indirectly a
substantial portion of the operating subsidiaries of Tyco and to perform
treasury operations for Tyco companies. Otherwise, it conducts no independent
business.
RECENT DEVELOPMENTS OF TYCO
On October 18, 2001, Tyco announced that a subsidiary of Tyco has accepted
for exchange all shares properly tendered in the offer for the outstanding
common shares of Sensormatic Electronics Corporation ("Sensormatic"). Through
October 17, 2001, a total of approximately 84 million Sensormatic common shares
were tendered in the offer. The exchange ratio for the offer is 0.5189 of a
Tyco common share for each Sensormatic common share. Tyco also announced that
the offering period had been further extended to November 7, 2001. As soon as
practicable after the expiration of the offer and the conversion or redemption
of all Sensormatic preferred shares, Sensormatic will be merged into a
wholly-owned subsidiary of Tyco. In the merger, stockholders will receive the
same consideration of 0.5189 of a Tyco common share per Sensormatic common
share as received by stockholders who have tendered their shares in the offer.
On October 18, 2001, Tyco announced its results for the fourth quarter and
fiscal year ended September 30, 2001. Revenues before non-recurring items and
the adoption of Staff Accounting Bulletin No. 101 ("SAB 101") for the quarter
rose 29% to $10.08 billion compared with last year's $7.80 billion. Diluted
earnings per share before non-recurring items, extraordinary items and the
adoption of SAB 101 for the fourth quarter of fiscal 2001 were $0.86, a 34%
increase over earnings of $0.64 per diluted share in the fourth quarter of
fiscal 2000. After giving effect to such items, revenues for the fourth quarter
of fiscal 2001 were $10.01 billion compared to $9.57 billion in the fourth
quarter of fiscal 2000 and diluted earnings per share for the fourth quarter of
fiscal 2001 were $0.70 per share, compared to $1.12 diluted earnings per share
in the fourth quarter of fiscal 2000. Included in the prior year's $1.12 is
$0.59 resulting from a non-recurring gain on the issuance of shares by a
subsidiary.
Revenues before non-recurring items and the adoption of SAB 101 for the year
ended September 30, 2001 increased to $36.29 billion, 25% higher than last
year's $28.93 billion. Diluted earnings per share before non-recurring charges
and credits and extraordinary items, and the adoption of SAB 101, for the year
rose to $2.81 per diluted share, or $5.15 billion, a 29% increase over last
year's diluted per share earnings of $2.18, or $3.73 billion. After giving
effect to such items, revenues for fiscal 2001 were $36.39 billion compared to
$30.69 billion in fiscal 2000, and diluted earnings per share for fiscal 2001
were $2.17, or $3.97 billion, compared to $2.64, or $4.52 billion, in fiscal
2000. Included in the current year's results of $2.17 is a non-recurring charge
of $0.36 for the cumulative effect of adopting SAB 101. Included in the prior
year's $2.64 is $0.59 resulting from a non-recurring gain on the issuance of
shares by a subsidiary.
The quarterly segment profits and margins for Tyco's Electronics, Healthcare
and Specialty Products, Fire and Security Services, and Telecommunications
businesses that are presented in the discussion below are operating profits
before non-recurring items, goodwill amortization and the adoption of SAB 101.
Results for Tyco's Tyco Capital business are pre-tax profits before goodwill
amortization.
Revenues at Tyco Electronics decreased 9% to $2.95 billion and operating
profits decreased 6% to $769.5 million; however, operating profits as a
percentage of revenues increased from 25% in the fiscal 2000 fourth quarter to
26% in the fiscal 2001 fourth quarter. Revenues at Tyco Healthcare and
Specialty Products increased 40% to $2.34 billion and operating profits
increased 51% to $609.3 million and increased as a percentage of revenues from
24% in the fiscal 2000 fourth quarter to 26% in the fiscal 2001 fourth quarter.
Revenues at Tyco Fire and Security Services increased 36% to $3.12 billion,
operating profits increased 51% to $662.3 million and
S-4
increased as a percentage of revenues from 19% in the fiscal 2000 fourth
quarter to 21% in the fiscal 2001 fourth quarter. Revenues at Tyco
Telecommunications decreased 71% to $173.2 million, and segment operating
profits decreased 35% to $94.0 million. TyCom's overall revenues decreased due
to delays in the timing of third-party systems projects and capacity sales on
the TyCom Global Network. The shortfall in revenue related to third-party
system sales is primarily caused by a deferral of revenue recognition for the
C2C project. During the quarter, C2C was required to seek outside financing to
fill a funding gap caused by the bankruptcy filing of a major customer of C2C.
Full financing for the project is anticipated to be in place during the first
fiscal quarter of 2002. Revenues at Tyco Capital were $1.50 billion and pre-tax
earnings were $367.4 million in the fiscal 2001 fourth quarter.
On October 18, 2001, Tyco announced that it intends to pay the purchase
price for any Liquid Yield Option(TM) Notes due 2020 (Zero Coupon--Senior) it
is required to repurchase as of November 17, 2001 entirely in cash. Holders of
the LYONs have the right to require Tyco to repurchase all or a portion of the
holders' LYONs as of November 17, 2001.
On October 19, 2001, Tyco announced that TyCom Ltd. and a wholly-owned
subsidiary of Tyco had executed a definitive agreement under which the
subsidiary and TyCom will amalgamate and each outstanding TyCom common share
not owned by Tyco or any of its subsidiaries will be converted into the right
to receive 0.3133 of a Tyco common share. Upon completion of the amalgamation,
Tyco will have acquired the outstanding 11% minority interest in TyCom
representing approximately 56 million TyCom common shares. Tyco currently holds
approximately 89% of all TyCom common shares, and acquiring the outstanding
minority shares would bring TyCom back into the Tyco International Ltd.
corporate structure as a wholly-owned subsidiary.
USE OF PROCEEDS
We estimate that the net proceeds from this offering will be approximately
$1.49 billion, after deducting the underwriting discount and certain offering
expenses. We will use the net proceeds to repay a portion of the borrowings
under our $5.855 billion commercial paper program which is backed by a
long-term credit facility. As of October 19, 2001, there was $5.01 billion
outstanding under this program, which bears interest at a weighted average rate
of 2.75% and has current maturities of up to 104 days. For more information,
see "Capitalization of Tyco." Pending the application of the net proceeds, we
expect to invest the net proceeds from this offering in short-term
interest-bearing securities.
S-5
CAPITALIZATION OF TYCO
The following table sets forth the consolidated capitalization of Tyco at
June 30, 2001:
(1)on an actual basis;
(2)on a pro forma basis to give effect to:
. changes in amounts outstanding under Tyco's $5.855 billion commercial
paper program through October 19, 2001, primarily as a result of cash
borrowings made to pay for acquisitions, such as the acquisition on July
3, 2001 of the electronic security systems businesses of Cambridge
Protection Industries, L.L.C., which includes SecurityLink, and the
repurchase of treasury shares;
. the issuance of $500 million floating rate notes due 2003, $600 million
4.95% notes due 2003 and $700 million 5.80% notes due 2006 in July 2001
for aggregate net proceeds of approximately $1,787.9 million;
. the issuance of approximately 43.4 million common shares through October
19, 2001 as a result of the acquisition of Sensormatic Electronics
Corporation;
. the repayment of a $400 million intercompany note payable to Tyco Capital
from Tyco Industrial and the issuance of an additional $200 million note
payable to Tyco Capital; and
. changes in amounts outstanding under Tyco Capital's commercial paper
program and changes in the amounts outstanding of Tyco Capital's
variable-rate senior notes and fixed-rate senior notes through October 19,
2001; and
(3)as adjusted to give effect to the issuance of the notes offered hereby and
the application of the net proceeds from their sale.
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June 30, 2001
---------------------------------
Actual Pro Forma As Adjusted
--------- --------- -----------
($ in millions, except share data)
Loans payable and current maturities of long-term debt:
Tyco Industrial
Fixed-rate senior notes............................................. $ 299.9 $ 299.9 $ 299.9
Note payable to Tyco Capital........................................ 400.0 200.0 200.0
Other............................................................... 418.7 418.7 418.7
--------- --------- ---------
Total........................................................... 1,118.6 918.6 918.6
Tyco Capital (1)
Commercial paper
U.S............................................................... 8,692.5 8,902.5 8,902.5
Non-U.S........................................................... 463.3 286.2 286.2
Variable-rate senior notes.......................................... 5,185.0 3,885.0 3,885.0
Fixed-rate senior notes............................................. 2,887.9 1,987.9 1,987.9
Fixed-rate subordinated notes....................................... 100.0 100.0 100.0
--------- --------- ---------
Total........................................................... 17,328.7 15,161.6 15,161.6
Eliminations........................................................... (400.0) (200.0) (200.0)
--------- --------- ---------
Consolidated loans payable and current maturities of long-term debt.... $18,047.3 $15,880.2 $15,880.2
========= ========= =========
Long-term debt:
Tyco Industrial
Commercial paper
U.S............................................................... $ 3,816.6 $ 5,011.0 $ 3,523.2
Non-U.S........................................................... 23.3 23.3 23.3
Variable-rate senior notes.......................................... -- 497.5 497.5
Fixed-rate senior notes............................................. 8,609.7 9,900.1 11,387.9
Zero coupon convertible senior debentures........................... 5,750.3 5,750.3 5,750.3
Zero coupon convertible subordinated debentures..................... 31.1 31.1 31.1
Other............................................................... 375.1 375.1 375.1
--------- --------- ---------
Total........................................................... 18,606.1 21,588.4 21,588.4
Tyco Capital (1)
Variable-rate senior notes.......................................... 4,671.3 5,671.3 5,671.3
Fixed-rate senior notes............................................. 14,758.7 14,716.9 14,716.9
--------- --------- ---------
Total........................................................... 19,430.0 20,388.2 20,388.2
--------- --------- ---------
Consolidated long-term debt............................................ 38,036.1 41,976.6 41,976.6
Mandatorily redeemable preference shares............................... 260.0 260.0 260.0
Shareholders' equity:
Preference shares, $1 par value, 125,000,000 authorized, none issued.. -- -- --
Common shares, $0.20 par value, 2,500,000,000 shares authorized;
1,935,521,933 shares outstanding (1,978,916,943 shares outstanding
on a pro forma and as adjusted basis), net of 8,235,528 shares owned
by subsidiaries (2)................................................. 387.1 395.8 395.8
Capital in excess:
Share premium....................................................... 7,899.8 7,899.8 7,899.8
Contributed surplus, net of deferred compensation of $200.3......... 12,459.6 14,757.3 14,757.3
Accumulated earnings.................................................. 11,692.8 11,692.8 11,692.8
Accumulated other comprehensive loss.................................. (1,252.1) (1,252.1) (1,252.1)
--------- --------- ---------
Total shareholders' equity...................................... 31,187.2 33,493.6 33,493.6
--------- --------- ---------
Total capitalization............................................ $69,483.3 $75,730.2 $75,730.2
========= ========= =========
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(1)Tyco Capital's senior notes and commercial paper, which have been issued by
Tyco Capital Corporation (formerly The CIT Group, Inc), have a priority
position over other obligations of Tyco Capital. Tyco Capital's debt is not
an obligation of Tyco Industrial, and Tyco International Ltd. has not
guaranteed this debt.
(2)Includes 7,040,905 common shares representing the assumed conversion of
10,193,868 exchangeable shares of CIT Exchangeco Inc., a wholly-owned
subsidiary of Tyco, at 0.6907 of a Tyco common share per exchangeable share.
S-7
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TYCO(1)
The following table sets forth selected consolidated financial information
of Tyco for the nine months ended June 30, 2001 and 2000, the fiscal years
ended September 30, 2000, 1999 and 1998, the nine months ended September 30,
1997, and the year ended December 31, 1996. The selected financial information
for the nine months ended June 30, 2001 and 2000 was derived from the unaudited
Consolidated Financial Statements included in Tyco's Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2001. The data presented for the
nine months ended June 30, 2001 and 2000 are unaudited and, in the opinion of
Tyco's management, include all adjustments, consisting of normal recurring
adjustments, necessary for the fair presentation of such data. Tyco's results
for the nine months ended June 30, 2001 are not necessarily indicative of the
results to be expected for the fiscal year ended September 30, 2001. The
selected financial information for the fiscal years ended September 30, 2000,
1999 and 1998 was derived from the audited Consolidated Financial Statements
included in Tyco's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000. The selected financial information for the nine months
ended September 30, 1997 was derived from the audited Consolidated Financial
Statements included in Tyco's Annual Report on Form 10-K/A filed on June 26,
2000. The selected financial information for the year ended December 31, 1996
was derived from the audited Consolidated Financial Statements included in
Tyco's Current Report on Form 8-K filed on June 3, 1999.
The information should be read in conjunction with the historical financial
statements and related notes contained in the annual, quarterly and other
reports filed by Tyco with the SEC.
Nine Months Ended Nine Months
June 30, Year Ended September 30, Ended Year Ended
-------------------- ----------------------------- September 30, December 31,
2001(2) 2000(3) 2000(3) 1999(4) 1998(5) 1997(6)(7) 1996(8)(9)
---------- --------- --------- --------- --------- ------------- ------------
(Unaudited)
(in millions, except per share data)
Consolidated Statements of Operations
Data:
Total revenues.............................. $ 26,549.7 $21,126.5 $30,691.9 $22,496.5 $19,061.7 $12,742.5 $14,671.0
Income (loss) from continuing operations.... 3,376.7 2,610.0 4,520.1 1,067.7 1,168.6 (348.5) 49.4
Income (loss) from continuing operations per
common share(10):
Basic.................................... 1.91 1.55 2.68 0.65 0.74 (0.24) 0.02
Diluted.................................. 1.89 1.52 2.64 0.64 0.72 (0.24) 0.02
Cash dividends per common share(10)......... See (11) below.
Consolidated Balance Sheet Data
(End of Period):
Total assets................................ $106,892.8 $40,404.3 $32,344.3 $23,440.7 $16,960.8 $14,686.2
Long-term debt.............................. 38,036.1 9,461.8 9,109.4 5,424.7 2,785.9 2,202.4
Manditorily redeemable preference shares.... 260.0 -- -- -- -- --
Total shareholders' equity.................. 31,187.2 17,033.2 12,369.3 9,901.8 7,478.7 7,022.6
---------------------
(1)On April 2, 1999, October 1, 1998, August 29, 1997 and August 27, 1997, Tyco
merged with AMP Incorporated, United States Surgical Corporation, Keystone
International, Inc. and Inbrand Corporation, respectively. On July 2, 1997,
Tyco, formerly called ADT Limited, merged with Tyco International Ltd., a
Massachusetts corporation at the time ("Former Tyco"). These five
combinations were accounted for under the pooling of interests method of
accounting. As such, the consolidated financial data presented above include
the effect of the mergers, except for the period prior to January 1, 1997,
which does not include Inbrand due to immateriality.
(2)Income from continuing operations in the nine months ended June 30, 2001
includes a charge of $184.3 million for the write-off of purchased
in-process research and development, net charges of $86.9 million, of which
$78.8 million is included in cost of sales, for restructuring and other
non-recurring items, a charge of $27.9 million for the impairment of
long-lived assets, a net gain of $276.6 million on the sale of businesses
and investments and a net gain of $64.1 million on the sale of shares of a
subsidiary. Income from continuing operations in the nine months ended June
30, 2000 includes charges of $99.0 million for the
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impairment of long-lived assets and a net credit of $81.3 million, of which
net charges of $1.0 million is included in cost of sales, for merger,
restructuring and other non-recurring items. See Notes 2, 7 and 8 to the
Consolidated Financial Statements contained in Tyco's quarterly report on
Form 10-Q for the quarterly period ended June 30, 2001, which is
incorporated by reference in this document.
(3)Income from continuing operations in the fiscal year ended September 30,
2000 includes a net charge of $176.3 million, of which $1.0 million is
included in cost of sales, for restructuring and other non-recurring
charges, and charges of $99.0 million for the impairment of long-lived
assets. See Notes 12 and 16 to the Consolidated Financial Statements
contained in Tyco's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000, which is incorporated by reference in this document.
Income from continuing operations for the fiscal year ended September 30,
2000 includes a one-time pre-tax gain of $1,760.0 million related to the
issuance of common shares by a subsidiary. See Note 15 to the Consolidated
Financial Statements contained in Tyco's Annual Report on Form 10-K for the
fiscal year ended September 30, 2000.
(4)Income from continuing operations in the fiscal year ended September 30,
1999 includes charges of $1,035.2 million for merger, restructuring and
other non-recurring charges, of which $106.4 million is included in cost of
sales, and charges of $507.5 million for the impairment of long-lived assets
related to the mergers with U.S. Surgical Corporation and AMP and AMP's
profit improvement plan. See Notes 12 and 16 to the Consolidated Financial
Statements contained in Tyco's Annual Report on Form 10-K for the fiscal
year ended September 30, 2000.
(5)Income from continuing operations in the fiscal year ended September 30,
1998 includes charges of $80.5 million primarily related to costs to exit
certain businesses in U.S. Surgical Corporation's operations and
restructuring charges of $12.0 million related to the continuing operations
of U.S. Surgical Corporation. In addition, AMP recorded restructuring
charges of $185.8 million in connection with its profit improvement plan and
a credit of $21.4 million to restructuring charges representing a revision
of estimates related to its 1996 restructuring activities. See Note 16 to
the Consolidated Financial Statements contained in Tyco's Annual Report on
Form 10-K for the fiscal year ended September 30, 2000.
(6)In September 1997, Tyco changed its fiscal year end from December 31 to
September 30. Accordingly, the nine-month transition period ended September
30, 1997 is presented.
(7)Loss from continuing operations in the nine months ended September 30, 1997
includes charges related to merger, restructuring and other non-recurring
costs of $917.8 million and impairment of long-lived assets of $148.4
million primarily related to the mergers and integration of ADT, Former
Tyco, Keystone, and Inbrand, and charges of $24.3 million for litigation and
other related costs and $5.8 million for restructuring charges in U.S.
Surgical Corporation's operations. The results for the nine months ended
September 30, 1997 also include a charge of $361.0 million for the write-off
of purchased in-process research and development related to the acquisition
of the submarine systems business of AT&T Corp.
(8)Prior to their respective mergers, ADT, Keystone, U.S. Surgical Corporation
and AMP had December 31 fiscal year ends and Former Tyco had a June 30
fiscal year end. The selected consolidated financial data have been combined
using a December 31 fiscal year end for ADT, Keystone, Former Tyco, U.S.
Surgical Corporation and AMP for the year ended December 31, 1996.
(9)Income from continuing operations in 1996 includes non-recurring charges of
$744.7 million related to the adoption of Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets to be
Disposed Of," $237.3 million related principally to the restructuring of
ADT's electronic security services business in the United States and the
United Kingdom, $98.0 million to exit various product lines and
manufacturing operations associated with AMP's operations and $8.8 million
of fees and expenses related to ADT's acquisition of Automated Security
(Holdings) plc, a United Kingdom company.
(10)Per share amounts have been retroactively restated to give effect to the
mergers with Former Tyco, Keystone, Inbrand, U.S. Surgical Corporation and
AMP; a 0.48133 reverse stock split (1.92532 after giving effect to the
subsequent stock splits) effected on July 2, 1997; and two-for-one stock
splits distributed on October 22, 1997 and October 21, 1999, both of which
were effected in the form of a stock dividend.
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(11)Tyco has paid a quarterly cash dividend of $0.0125 per common share since
July 2, 1997, the date of the Former Tyco/ADT merger. Prior to the merger
with ADT, Former Tyco had paid a quarterly cash dividend of $0.0125 per
share of common stock since January 1992. ADT had not paid any dividends on
its common shares since 1992. U.S. Surgical Corporation paid quarterly
dividends of $0.04 per share in the year ended September 30, 1998 and the
nine months ended September 30, 1997 and aggregate dividends of $0.08 per
share in 1996. AMP paid dividends of $0.27 per share in the first two
quarters of the year ended September 30, 1999, $0.26 per share in the first
quarter and $0.27 per share in the last three quarters of the year ended
September 30, 1998, $0.26 per share in each of the three quarters of the
nine months ended September 30, 1997 and aggregate dividends of $1.00 per
share in 1996. The payment of dividends by Tyco in the future will depend
on business conditions, Tyco's financial condition and earnings and other
factors.
S-10
DESCRIPTION OF THE NOTES AND THE GUARANTEES
The notes offered by this prospectus supplement will be issued under an
indenture dated as of June 9, 1998, as supplemented by supplemental indenture
no. 20, among the Company, Tyco and The Bank of New York, as trustee.
Information about the indenture and the general terms and provisions of the
notes is contained in the accompanying prospectus under "Description of the
Debt Securities and the Guarantees." The following description is subject to
the detailed provisions of the indenture and the supplemental indenture, copies
of which can be obtained upon request from Tyco. See "Where You Can Find More
Information" in the accompanying prospectus. The statements made in this
section relating to the indenture, the supplemental indenture, the notes and
the guarantees are summaries, do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
indenture, the supplemental indenture, the notes and the guarantees. For a full
description of the notes and the guarantees, noteholders should refer to the
indenture as supplemented by the supplemental indenture.
General
The interest rate, aggregate principal amount and maturity date of the notes
are as follows:
Notes
----------------
Annual Interest Rate...... 6.375%
Aggregate Principal Amount $1.5 billion
Maturity Date............. October 15, 2011
Interest on the notes is payable semiannually on April 15 and October 15 of
each year, commencing April 15, 2002, to the persons in whose names the notes
are registered at the close of business on April 1 or October 1 (whether or not
a Business Day), as the case may be, immediately preceding such interest
payment date. Interest will begin to accrue on the notes on October 26, 2001.
"Business Day" means any day other than a Saturday, a Sunday or a day on which
banking institutions in New York City are authorized or obligated by law,
executive order or governmental decree to be closed.
The notes will be unsecured and unsubordinated obligations of the Company
and will be fully and unconditionally guaranteed on an unsubordinated basis by
Tyco. See "Description of the Debt Securities and the Guarantees--Guarantees"
in the accompanying prospectus.
The notes will be issued in the form of one or more registered global
securities and will be deposited with, or on behalf of, The Depository Trust
Company, as depositary, and registered in the name of the depositary's nominee.
A description of the depositary's procedures with respect to the global
securities is set forth in the accompanying prospectus under "Description of
the Debt Securities and the Guarantees--Book Entry, Delivery and Form."
The indenture does not limit the aggregate principal amount of debt
securities which may be issued thereunder. The Company may issue additional
notes in the future without the consent of existing noteholders. If additional
notes of this series are issued, those notes will contain the same terms as and
be deemed part of the same series as the notes offered hereby.
S-11
As of the date of this prospectus supplement, $9.58 billion of debt
securities in fifteen series are outstanding that were issued under the
indenture by the Company and are guaranteed by Tyco. The interest rate,
aggregate principal amounts and maturity dates of each of such series of debt
securities are as follows:
2003
2002 2003 Floating Fixed 2004 2005
Notes Rate Notes Rate Notes Notes Notes
----------------- -------------- ----------------- ---------------- -----------------
Interest Rate............. 6- 7/8% 3 Month 4.95% 5 7/8% 6 3/8%
LIBOR +
0.45%
Aggregate Principal Amount $1 billion $500 million $600 million $400 million $750 million
Maturity Date............. September 5, 2002 July 30, 2003 August 1, 2003 November 1, 2004 June 15, 2005
2006 2006 2007 2008 2009
Notes Notes Notes Notes Notes
----------------- -------------- ----------------- ---------------- -----------------
Interest Rate............. 6.375% 5.80% 6 1/8% 6 1/8% 6 1/8%
Aggregate Principal Amount $1 billion $700 million (Euro)600 million $400 million $400 million
Maturity Date............. February 15, 2006 August 1, 2006 April 4, 2007 November 1, 2008 January 15, 2009
Dealer
remarketable
2011 securities/SM/ 2028 2029 2030
Notes ("Drs./SM/")* Notes Notes Notes
----------------- -------------- ----------------- ---------------- -----------------
Interest Rate............. 6.750% 6 1/4%** 7% 6 7/8% 3 1/2%
Aggregate Principal Amount $1 billion $750 million $500 million $800 million (Yen)30 billion
Maturity Date............. February 15, 2011 June 15, 2013 June 15, 2028 January 15, 2029 November 22, 2030
---------------------
* "Dealer remarketable securities/SM/" and "Drs./SM/" are service marks of
Chase Securities Inc.
** The Dealer remarketable securities bear interest at the rate of 6 1/4% per
year to June 15, 2003. If J.P. Morgan Securities Inc. elects to remarket the
Drs., the interest rate will be reset at a fixed rate until June 15, 2013 as
determined by the remarketing dealer. If J.P. Morgan Securities Inc. does
not elect to remarket the Drs., all Drs. must be repurchased by the Company
on June 15, 2003.
Optional Redemption
The notes will be redeemable, in whole or in part, at the option of the
Company at any time at a redemption price equal to the greater of (1) 100% of
the principal amount of such notes, and (2) as determined by the Quotation
Agent (as defined below), the sum of the present values of the remaining
scheduled payments of principal and interest on such notes to be redeemed (not
including any portion of such payments of interest accrued as of the date of
redemption) discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Redemption Treasury Rate (as defined below) plus 35 basis points, plus, in each
case, accrued interest thereon to the date of redemption.
Notice of any redemption will be mailed at least 30 days and not more than
60 days before the redemption date to each holder of the notes to be redeemed.
Unless the Company defaults in the payment of the redemption price, on or after
the redemption date, interest will cease to accrue on the notes or the portions
thereof called for redemption. See "Description of the Debt Securities and the
Guarantees--Redemption" in the accompanying prospectus.
"Adjusted Redemption Treasury Rate" means, with respect to any redemption
date, the annual rate equal to the semiannual equivalent yield to maturity or
interpolated (on a 30/360 day count basis) yield to maturity of the Comparable
Redemption Treasury Issue, assuming a price for the Comparable Redemption
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Redemption Treasury Price for such redemption date.
S-12
"Comparable Redemption Treasury Issue" means the United States Treasury
security selected by the Quotation Agent as having a maturity comparable to the
remaining term of the notes to be redeemed that would be utilized at the time
of selection and in accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable maturity to the remaining
term of such notes.
"Comparable Redemption Treasury Price" means, with respect to any redemption
date, (i) the average of the Redemption Reference Treasury Dealer Quotations
for such redemption date, after excluding the highest and lowest such
Redemption Reference Treasury Dealer Quotations (unless there is more than one
highest or lowest quotation, in which case only one such highest and/or lowest
quotation shall be excluded), or (ii) if the Quotation Agent obtains fewer than
four such Redemption Reference Treasury Dealer Quotations, the average of all
such Redemption Reference Treasury Dealer Quotations.
"Quotation Agent" means a Redemption Reference Treasury Dealer appointed as
such agent by the Company.
"Redemption Reference Treasury Dealer" means each of Bear, Stearns & Co.
Inc. and Credit Suisse First Boston Corporation and three other primary U.S.
Government securities dealers in The City of New York selected by the Company.
"Redemption Reference Treasury Dealer Quotations" means, with respect to
each Redemption Reference Treasury Dealer and any redemption date, the offer
price for the Comparable Redemption Treasury Issue (expressed in each case as a
percentage of its principal amount) for settlement on the redemption date
quoted in writing to the Quotation Agent by such Redemption Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such redemption date.
Redemption Upon Changes in Withholding Taxes
The Company may redeem all, but not less than all, of the notes offered
hereby under the following conditions:
1. If there is a change or an amendment in the laws or regulations of
Luxembourg or Bermuda or any political subdivisions or taxing authorities
thereof or therein having power to tax (a "Taxing Authority"), or any change
in the application or official interpretation of such laws or regulations.
2. As a result of such change, the Company or Tyco became or will become
obligated to pay Additional Amounts, as defined below in "--Payment of
Additional Amounts," on the next payment date with respect to the notes.
3. The obligation to pay Additional Amounts cannot be avoided through the
Company's or Tyco's reasonable measures.
4. The Company delivers to the trustee:
. a certificate signed by two directors of the Company or two officers
of Tyco, as the case may be, stating that the obligation to pay
Additional Amounts cannot be avoided by the Company or Tyco taking
reasonable measures available to it; and
. a written opinion of independent legal counsel to the Company or
Tyco, as the case may be, of recognized standing to the effect that
the Company or Tyco, as the case may be, has or will become
obligated to pay Additional Amounts as a result of a change,
amendment, official interpretation or application described above
and that the Company or Tyco, as the case may be, cannot avoid the
payment of such Additional Amounts by taking reasonable measures
available to it.
S-13
5. Following the delivery of the certificate and opinion described in
paragraph 4 above, the Company provides notice of redemption not less than
30 days, but not more than 60 days, prior to the date of redemption. The
notice of redemption cannot be given more than 60 days before the earliest
date on which the Company or Tyco would be otherwise required to pay
Additional Amounts, and the obligation to pay Additional Amounts must still
be in effect when the notice is given.
Upon the occurrence of each of 1 through 5 above, the Company may redeem the
notes at a redemption price equal to 100% of the principal amount thereof,
together with accrued interest, if any, to the redemption date, plus any
Additional Amounts.
Payment of Additional Amounts
Unless otherwise required by Luxembourg or Bermuda law, neither the Company
nor Tyco will deduct or withhold from payments made with respect to the notes
offered hereby and the related guarantees on account of any present or future
taxes, duties, levies, imposts, assessments or governmental charges of whatever
nature imposed or levied by or on behalf of any Taxing Authority ("Taxes"). In
the event that the Company or Tyco is required to withhold or deduct on account
of any Taxes from any payment made under or with respect to the notes or the
guarantees, as the case may be, the Company or Tyco, as the case may be, will
pay such additional amounts so that the net amount received by each holder of
notes, including those additional amounts, will equal the amount that such
holder would have received if such Taxes had not been required to be withheld
or deducted. The amounts that the Company or Tyco are required to pay to
preserve the net amount receivable by the holders of notes are referred to as
"Additional Amounts."
Additional Amounts will not be payable with respect to a payment made to a
holder of notes to the extent:
1. that any such Taxes would not have been so imposed but for the
existence of any present or former connection between such holder and the
relevant Taxing Authority imposing such Taxes, other than the mere receipt
of such payment, acquisition, ownership or disposition of such notes or the
exercise or enforcement of rights under such notes, their guarantees or the
indenture;
2. of any estate, inheritance, gift, sales, transfer, or personal
property Taxes imposed with respect to such notes, except as otherwise
provided in the indenture;
3. that any such Taxes would not have been imposed but for the
presentation of the notes or guarantees, where presentation is required, for
payment on a date more than 30 days after the date on which such payment
became due and payable or the date on which payment thereof is duly provided
for, whichever is later, except to the extent that the beneficiary or holder
thereof would have been entitled to Additional Amounts had the notes been
presented for payment on any date during such 30-day period; or
4. that such holder would not be liable or subject to such withholding or
deduction of Taxes but for the failure to make a valid declaration of
non-residence or other similar claim for exemption, if:
. the making of such declaration or claim is required or imposed by
statute, treaty, regulation, ruling or administrative practice of
the relevant Taxing Authority as a precondition to an exemption
from, or reduction in, the relevant Taxes; and
. at least 60 days prior to the first payment date with respect to
which the Company or Tyco shall apply this clause 4, the Company or
Tyco shall have notified all holders of notes in writing that they
shall be required to provide such declaration or claim.
Each of the Company and Tyco, as applicable, will also:
. withhold or deduct the Taxes as required;
. remit the full amount of Taxes deducted or withheld to the relevant Taxing
Authority in accordance with all applicable laws;
S-14
. use its reasonable best efforts to obtain from each relevant Taxing
Authority imposing such Taxes certified copies of tax receipts evidencing
the payment of any Taxes deducted or withheld; and
. upon request, make available to the holders of notes, within 60 days after
the date the payment of any Taxes deducted or withheld is due pursuant to
applicable law, certified copies of tax receipts evidencing such payment
by the Company or Tyco or, if, notwithstanding the Company's or Tyco's
efforts to obtain such receipts, the same are not obtainable, other
evidence of such payments.
At least 30 days prior to each date on which any payment under or with
respect to the notes or the guarantees is due and payable, if the Company or
Tyco will be obligated to pay Additional Amounts with respect to such payment,
the Company or Tyco will deliver to the trustee an officer's certificate
stating the fact that such Additional Amounts will be payable, the amounts so
payable and such other information as is necessary to enable the trustee to pay
such Additional Amounts to holders of such notes on the payment date.
The foregoing provisions shall survive any termination or the discharge of
the indenture and shall apply to any jurisdiction in which any successor to the
Company or Tyco, as the case may be, is organized or is engaged in business for
tax purposes or any political subdivisions or taxing authority or agency
thereof or therein.
In addition, the Company will pay any stamp, issue, registration,
documentary or other similar taxes and duties, including interest, penalties
and Additional Amounts with respect thereto, payable in Luxembourg, Bermuda or
the United States or any political subdivision or taxing authority of or in the
foregoing in respect of the creation, issue, offering, enforcement, redemption
or retirement of any notes or guarantees.
Whenever in the indenture, the notes, the guarantees or in this "Description
of the Notes and the Guarantees" there is mentioned, in any context, the
payment of principal, redemption price, interest or any other amount payable
under or with respect to any note or guarantee, such mention shall be deemed to
include the payment of Additional Amounts to the extent payable in the
particular context.
S-15
CERTAIN LUXEMBOURG, BERMUDA AND UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended to be a general summary of Luxembourg,
Bermuda and United States federal income tax consequences to holders of notes.
Due to the complexity of the tax laws of these and other taxing jurisdictions,
the uncertainty, in some instances, as to the manner in which such laws apply
to holders and possible changes in law, it is particularly important that each
holder consult with its own tax advisor regarding the tax treatment of the
acquisition, ownership and disposition of notes under the laws of any U.S.
federal, state, local or other taxing jurisdiction.
Luxembourg
Under current law, no withholding or deduction is imposed in Luxembourg in
respect of any payment to be made by the Company in respect of the notes.
Holders of notes who are neither resident in Luxembourg nor engaged in a trade
or business through a permanent establishment or permanent representative in
Luxembourg will not be subject to taxes or duties in Luxembourg with respect to
interest payments on, or gains realized on the disposition of, the notes. No
stamp, registration or similar taxes, duties or charges are payable in
Luxembourg in connection with the issuance of the notes.
Bermuda
Under current law, no withholding or deduction is imposed in Bermuda in
respect of any payment to be made by the Company in respect of the notes or
Tyco in respect of the guarantees. Holders of notes who are neither resident in
Bermuda nor engaged in a trade or business through a permanent establishment or
permanent representative in Bermuda will not be subject to taxes or duties in
Bermuda with respect to interest payments on, or gains realized on the
disposition of, the notes. No stamp, registration or similar taxes, duties or
charges are payable in Bermuda in connection with the issuance of the notes or
the related guarantees.
United States
The following is a general discussion of certain U.S. federal income tax
consequences of the ownership and disposition of the notes to initial holders
purchasing notes at their "issue price." The "issue price" of the notes will
equal the first price at which a substantial amount of the notes is sold for
cash to the public (not including the underwriters or other persons acting in
the capacity of underwriters, placement agents or wholesalers). This summary is
based upon laws, regulations, rulings and decisions currently in effect, all of
which are subject to change or differing interpretations at any time, possibly
with retroactive effect. Moreover, it deals only with purchasers who hold notes
as "capital assets" within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended, and does not purport to deal with persons in special
tax situations, such as financial institutions, insurance companies, regulated
investment companies, tax exempt investors, dealers in securities or
currencies, U.S. expatriates, persons holding notes as a position in a
"straddle," "hedge," "conversion" or another integrated transaction for U.S.
federal income tax purposes, persons who own (directly or indirectly) 10
percent or more of the voting power of the Company, or U.S. holders (defined
below) whose functional currency is not the U.S. dollar. Further, this
discussion does not address the consequences under U.S. federal estate or gift
tax laws or the laws of any U.S. state or locality.
Prospective purchasers of the notes are urged to consult their own tax
advisors concerning the consequences, in their particular circumstances, of
ownership of the notes under the U.S. federal income tax laws and the laws of
any relevant state, local or non-U.S. taxing jurisdiction.
The term "U.S. holder" means a beneficial owner of notes that is, for U.S.
federal income tax purposes:
. a citizen or resident of the United States;
S-16
. a corporation or other entity that has elected to be treated as a
corporation, created or organized in or under the laws of the United
States or of any political subdivision thereof;
. an estate whose income is subject to U.S. federal income tax regardless of
its source; or
. a trust if, in general, a court within the United States is able to
exercise primary jurisdiction over its administration and one or more U.S.
persons have authority to control all of its substantial decisions.
The term "non-U.S. holder" means a beneficial owner, other than a
partnership, of notes that is not a U.S holder for U.S. federal income tax
purposes.
If a partnership, including for this purpose any entity treated as a
partnership for U.S. federal income tax purposes, is a beneficial owner of
notes, the treatment of a partner in the partnership will generally depend upon
the status of the partner and upon the activities of the partnership. A holder
of notes that is a partnership, and partners in such a partnership, should
consult their tax advisors about the U.S. federal income tax consequences of
holding and disposing of notes.
U.S. Holders
Interest
The gross amount of interest paid on the notes (including any Additional
Amounts paid in respect of withholding taxes) will be taxable as ordinary
income when received or accrued by a U.S. holder in accordance with such U.S.
holder's method of accounting for U.S. federal income tax purposes. Such
interest will be income from sources outside the United States and, with
certain exceptions, will be treated as "passive" income for purposes of
computing the foreign tax credit allowable under U.S. federal income tax laws.
The rules relating to foreign tax credits and the timing thereof are extremely
complex, and U.S. holders should consult their own tax advisors with regard to
the availability of foreign tax credits and the application of the foreign tax
credit limitations to their particular situations.
Disposition
Upon the sale, redemption or other taxable disposition of a note, a U.S.
holder will recognize capital gain or loss equal to the difference between the
amount realized (excluding any amount attributable to accrued interest not
previously included in income, which will be taxable as ordinary interest
income) and the U.S. holder's tax basis in the notes (generally the U.S.
holder's cost). Such gain or loss will be long term capital gain or loss if the
notes are held for more than one year. The deductibility of capital losses is
subject to certain limitations. For purposes of foreign tax credits under U.S.
federal income tax laws, capital gain recognized by a U.S. holder generally
will be treated as U.S. source income, but any capital loss recognized by a
U.S. holder may be allocable to foreign source income. U.S. holders should
consult their own tax advisors as to the foreign tax credit implications of the
disposition of notes under U.S. federal income tax laws.
Information Reporting and Backup Withholding
Non-exempt U.S. holders may be subject to information reporting with respect
to payments of interest on, and the proceeds of the disposition of, notes.
Non-exempt U.S. holders who are subject to information reporting and who do not
provide appropriate information when requested may be subject to backup
withholding at a rate of up to 30.5%. U.S. holders should consult their tax
advisors concerning the application of the information reporting and backup
withholding rules.
S-17
Non-U.S. Holders
Interest and Disposition
In general (and subject to the discussion below under "Information Reporting
and Backup Withholding"), a non-U.S. holder will not be subject to U.S. federal
income or withholding tax with respect to payments of interest on, or gain upon
the disposition of, notes, unless:
. the interest or gain is effectively connected with the conduct by the
non-U.S. holder of a trade or business in the United States; or
. in the case of gain upon the disposition of notes, the non-U.S. holder is
an individual who is present in the U.S. for 183 days or more in the
taxable year and certain other conditions are met.
Interest or gain that is effectively connected with the conduct by the
non-U.S. holder of a trade or business in the United States will generally be
subject to regular U.S. income tax in the same manner as if it were realized by
a U.S. holder. In addition, if such non-U.S. holder is a non-U.S. corporation,
such interest or gain may be subject to a branch profits tax at a rate of 30%
(or such lower rate as is provided by an applicable income tax treaty).
Information Reporting and Backup Withholding
If the notes are held by a non-U.S. holder through a non-U.S. (and non-U.S.
related) broker or financial institution, information reporting and backup
withholding generally would not be required. Information reporting, and
possibly backup withholding, may apply if the notes are held by a non-U.S.
holder through a U.S. (or U.S. related) broker or financial institution and the
non-U.S. holder fails to provide appropriate information. Non-U.S. holders
should consult their tax advisors concerning the application of the information
reporting and backup withholding rules.
S-18
UNDERWRITING
The Company is selling the notes to the underwriters named below under an
underwriting agreement dated October 23, 2001. Bear, Stearns & Co. Inc. and
Credit Suisse First Boston Corporation are acting as joint book-running
managers. Subject to certain conditions, the Company has agreed to sell to each
of the underwriters, and each of the underwriters has agreed to purchase, the
principal amount of the notes set forth opposite its name below:
Principal Amount
Underwriter of Notes
----------- ----------------
Bear, Stearns & Co. Inc........................... $ 562,500,000
Credit Suisse First Boston Corporation............ 562,500,000
ABN AMRO Incorporated............................. 47,500,000
Banc of America Securities LLC.................... 47,500,000
J.P. Morgan Securities Inc........................ 47,500,000
Lehman Brothers Inc............................... 47,500,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 47,500,000
Morgan Stanley & Co. Incorporated................. 47,500,000
BNY Capital Markets, Inc.......................... 22,500,000
McDonald Investments Inc.......................... 22,500,000
Scotia Capital (USA) Inc.......................... 22,500,000
TD Securities (USA) Inc........................... 22,500,000
--------------
Total.......................................... $1,500,000,000
==============
Under the terms and conditions of the underwriting agreement, if the
underwriters take any of the notes offered hereby, then the underwriters are
obligated to take and pay for all of the notes offered hereby.
The notes are a new issue of securities with no established trading market
and will not be listed on any national securities exchange. The underwriters
have advised the Company and Tyco that they intend to make a market for the
notes, but they have no obligation to do so and may discontinue market making
at any time without providing any notice. No assurance can be given as to the
liquidity of any trading market for the notes.
The underwriters initially propose to offer the notes directly to the public
at the offering price described on the cover page and to certain dealers at a
price that represents a concession not in excess of 0.40% of the principal
amount of the notes. Any underwriter may allow, and any such dealer may
reallow, a concession not in excess of 0.25% of the principal amount of the
notes to certain other dealers. After the initial offering of the notes, the
underwriters may from time to time vary the offering price and other selling
terms.
The Company and Tyco have also agreed to indemnify the underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, or to contribute to payments which the underwriters may be required to
make in respect of any such liabilities.
In connection with the offering of the notes, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
notes. Specifically, the underwriters may overallot in connection with the
offering of the notes, creating a syndicate short position. In addition, the
underwriters may bid for and purchase notes in the open market to cover
syndicate short positions or to stabilize the price of the notes. Finally, the
underwriting syndicate may reclaim selling concessions allowed for distributing
the notes in the offering of the notes, if the syndicate repurchases previously
distributed notes in syndicate covering transactions, stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the notes above independent market levels. The underwriters
are not required to engage in any of these activities, and may end any of them
at any time.
Expenses associated with this offering to be paid by the Company, excluding
underwriting discounts, are estimated to be $2.0 million.
S-19
In the ordinary course of their respective businesses, certain of the
underwriters and their affiliates have engaged, and may in the future engage,
in commercial banking and/or investment banking transactions with the Company,
Tyco and their affiliates.
LEGAL MATTERS
Certain U.S. legal matters regarding the notes and guarantees will be passed
upon for Tyco by Wilmer, Cutler & Pickering, Washington, D.C., counsel to Tyco
and the Company. Certain matters under the laws of Bermuda related to the
guarantees will be passed upon for Tyco by Appleby Spurling & Kempe, Hamilton,
Bermuda, Bermuda counsel to Tyco. Michael L. Jones, Secretary of Tyco, is a
partner of Appleby Spurling & Kempe. Certain matters under the laws of
Luxembourg related to the notes will be passed upon by Beghin & Feider in
association with Allen & Overy, Luxembourg counsel to the Company. Certain U.S.
legal matters regarding the notes will be passed upon for the underwriters by
Milbank, Tweed, Hadley & McCloy LLP, New York, New York. Milbank, Tweed, Hadley
& McCloy LLP acts as counsel from time to time in matters for Tyco and certain
of its subsidiaries. Wilmer, Cutler & Pickering and Milbank, Tweed, Hadley &
McCloy LLP will rely on the opinion of Appleby Spurling & Kempe with respect to
matters of Bermuda law and on the opinion of Beghin & Feider in association
with Allen & Overy, with respect to matters of Luxembourg law.
EXPERTS
The consolidated financial statements and financial statement schedule of
Tyco as of September 30, 2000 and 1999, and for each of the three years in the
period ended September 30, 2000, included in Tyco's Annual Report on Form 10-K
filed on December 21, 2000, and incorporated by reference in this document,
have been audited by PricewaterhouseCoopers, independent accountants, as set
forth in their report included therein. In its report, that firm states that
with respect to a certain subsidiary its opinion is based upon the report of
other independent accountants, namely Arthur Andersen LLP (as it relates to the
consolidated balance sheet of AMP Incorporated and its subsidiaries as of
September 30, 1998, and the related consolidated statements of income,
shareholders' equity and cash flows for the year ended September 30, 1998). The
consolidated financial statements and financial statement schedule referred to
above have been incorporated herein in reliance on said reports given on the
authority of such firms as experts in auditing and accounting.
The consolidated balance sheets as of December 31, 2000 and 1999 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows of The CIT Group, Inc. (subsequently renamed Tyco Capital
Corporation) and its subsidiaries for each of the years in the three-year
period ended December 31, 2000 have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent certified public accountants,
also incorporated by reference herein, and upon the authority of KPMG LLP as
experts in accounting and auditing.
S-20
PROSPECTUS
$6,000,000,000
-----------------
TYCO INTERNATIONAL GROUP S.A.
-----------------
Debt Securities
-----------------
Fully and Unconditionally Guaranteed by
[LOGO OF TYCO]
Tyco International Group S.A. (the "Company") may offer from time to time
unsecured debt securities.
The debt securities are unsecured obligations of the Company, which may be
either senior or subordinated. The debt securities are fully and
unconditionally guaranteed on an unsecured basis by Tyco International Ltd.
("Tyco"), the Company's corporate parent. Tyco's guarantee may be either senior
or subordinate.
Specific terms of the debt securities will be fully described in the
prospectus supplement that will accompany this prospectus. Please read both the
prospectus supplement and this prospectus carefully before you invest.
This prospectus may not be used to sell debt securities unless accompanied
by a prospectus supplement.
-----------------
Neither the Securities and Exchange Commission nor any state securities
commission nor the Registrar of Companies or the Bermuda Monetary Authority in
Bermuda has approved or disapproved of these securities or determined if this
document is truthful or complete. Any representation to the contrary is a
criminal offense.
-----------------
The date of this Prospectus is August 31, 2001
TABLE OF CONTENTS
Page
----
Where You Can Find More Information...................................... ii
Forward Looking Information.............................................. iv
Tyco..................................................................... 1
The Company.............................................................. 1
Use of Proceeds.......................................................... 1
Ratio of Earnings to Fixed Charges of Tyco............................... 2
Description of the Debt Securities and the Guarantees.................... 3
Description of the Common Shares......................................... 21
Enforcement of Civil Liabilities......................................... 24
Plan of Distribution..................................................... 24
Legal Matters............................................................ 26
Experts.................................................................. 26
-----------------
The Bermuda Stock Exchange takes no responsibility for the contents of this
document, makes no representations as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon any part of the contents of this document.
i
WHERE YOU CAN FIND MORE INFORMATION
In connection with this offering of debt securities, the Company and Tyco
have filed with the United States Securities and Exchange Commission a
registration statement under the United States Securities Act of 1933 relating
to the debt securities. As permitted by SEC rules, this document omits certain
information included in the registration statement. For a more complete
understanding of the debt securities and this offering, you should refer to the
registration statement, including its exhibits.
Tyco also files annual, quarterly and current reports, proxy statements and
other information with the SEC under the Securities Exchange Act of 1934. You
may read and copy this information at the following locations of the SEC:
Public Reference Room Northeast Regional Office
450 Fifth Street, N.W. 7 World Trade Center
Room 1024 Suite 1300
Washington, DC 20549 New York, New York 10048
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Tyco's common shares are listed on the New York Stock
Exchange, as well as on the London and Bermuda Stock Exchanges. You can obtain
information about Tyco from the New York Stock Exchange at 20 Broad Street, New
York, New York 10005.
Tyco's filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
http://www.sec.gov.
The SEC allows the Company and Tyco to "incorporate by reference"
information in documents filed with the SEC, which means that they can disclose
important information to you by referring you to those documents. These
incorporated documents contain important business and financial information
about the Company and Tyco that is not included in or delivered with this
document. The information incorporated by reference is considered to be part of
this document, and later information filed with the SEC may update and
supersede this information. The Company and Tyco incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the United States Securities Exchange Act of 1934
prior to the end of the offering of debt securities under this document.
Tyco SEC Filings (File No. 001-13836) Period
------------------------------------- ------
Annual Report on Form 10-K Fiscal year ended September 30, 2000
Quarterly Reports on Form 10-Q Quarterly periods ended December 31, 2000,
March 31, 2001 and June 30, 2001
Current Reports on Form 8-K Filed on November 1, 2000, November 15,
2000, February 9, 2001, March 15, 2001,
March 29, 2001, April 3, 2001, May 24, 2001,
June 15, 2001, July 25, 2001, August 3, 2001
and August 16, 2001
The description of Tyco common shares as set Filed on March 1, 1999
forth in its Registration Statement on Form
8-A/A
ii
You may request a copy of these filings at no cost, by writing or calling
Tyco at the following address or telephone number:
Tyco International Ltd.
The Zurich Centre, Second Floor
90 Pitts Bay Road
Pembroke HM 08, Bermuda
(441) 292-8674
Exhibits to the documents will not be sent, however, unless those exhibits
have specifically been incorporated by reference in this document.
You should rely only on the information provided or incorporated by
reference in this document. Neither the Company nor Tyco has authorized anyone
else to provide you with different information. You should not assume that the
information in this document is accurate as of any date other than the date on
the front of this document.
References to "$" in this prospectus are to United States dollars.
iii
FORWARD LOOKING INFORMATION
Certain statements contained or incorporated by reference into this document
are "forward looking statements" within the meaning of the United States
Private Securities Litigation Reform Act of 1995. All forward looking
statements involve risks and uncertainties. All statements contained herein
that are not clearly historical in nature are forward looking, and the words
"anticipate," "believe," "expect," "estimate" and similar expressions are
generally intended to identify forward looking statements. Any forward looking
statement contained in this document or any document incorporated by reference
into this document regarding the consummation and benefits of future
acquisitions, as well as expectations with respect to future sales, earnings,
cash flows, operating efficiencies, product expansion, backlog, financings and
share repurchases, are subject to known and unknown risks, uncertainties and
contingencies, many of which are beyond the control of the Company and Tyco,
which may cause actual results, performance or achievements to differ
materially from anticipated results, performance or achievements. Factors that
might affect such forward looking statements include, among other things:
. overall economic and business conditions;
. the demand for the Company's and Tyco's goods and services;
. competitive factors in the industries in which the Company and Tyco
compete;
. changes in government regulations;
. changes in tax requirements (including tax rate changes, new tax laws and
revised tax law interpretations);
. results of litigation;
. interest rate fluctuations and other capital market conditions, including
foreign currency rate fluctuations;
. economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer capital
across borders;
. the timing of construction and the successful operation of the TyCom
Global Network by Tyco's majority owned subsidiary, TyCom Ltd., Tyco's
undersea cable communications business;
. the ability to achieve anticipated synergies in connection with Tyco's
recent acquisition of The CIT Group, Inc. and other acquisitions; and
. the timing, impact and other uncertainties of future acquisitions by Tyco.
iv
TYCO
Tyco is a diversified manufacturing and service company that, through its
subsidiaries:
. designs, manufactures and distributes electrical and electronic components
and multi-layer printed circuit boards;
. designs, manufactures and distributes disposable medical supplies and
other specialty products;
. designs, manufactures, installs and services fire detection and
suppression systems, installs, monitors and maintains electronic security
systems, and designs, manufactures, distributes and services specialty
valves;
. designs, engineers, manufactures, installs, operates and maintains
undersea cable communications systems; and
. offers vendor, equipment, commercial, factoring, consumer and structured
financing and leasing capabilities through its indirect wholly-owned
subsidiary, The CIT Group, Inc., acquired on June 1, 2001.
Tyco operates in more than 100 countries around the world and expects
revenues for its fiscal year ending September 30, 2001 to exceed $38 billion.
Tyco's strategy is to be the low-cost, high-quality producer and provider in
each of its markets. It promotes its leadership position by investing in its
existing businesses, developing new markets and acquiring complementary
businesses and products. Combining the strengths of its existing operations and
its business acquisitions, Tyco seeks to enhance shareholder value through
increased earnings per share and strong cash flows.
Tyco reviews acquisition opportunities in the ordinary course of business,
some of which may be material and some of which are currently under
investigation, discussion or negotiation. There can be no assurance that any of
such acquisitions will be consummated.
Tyco's common shares are listed on the New York Stock Exchange and the
Bermuda Stock Exchange under the symbol "TYC" and on the London Stock Exchange
under the symbol "TYI."
Tyco is a Bermuda company whose registered and principal executive offices
are located at The Zurich Centre, Second Floor, 90 Pitts Bay Road, Pembroke HM
08, Bermuda, telephone number (441) 292-8674. The executive offices of Tyco's
principal United States subsidiaries are located at One Tyco Park, Exeter, New
Hampshire 03833, and the telephone number there is (603) 778-9700.
For additional information regarding the business of Tyco, please see Tyco's
Form 10-K and other filings of Tyco with the SEC, which are incorporated by
reference into this document. See "Where You Can Find More Information" on page
ii.
THE COMPANY
Tyco International Group S.A. was formed as a Luxembourg company on March
30, 1998, as a wholly-owned subsidiary of Tyco. The registered and principal
offices of the Company are located at 6, avenue Emile Reuter, 2nd Floor, L-2420
Luxembourg, and its telephone number is (352) 464-340-1. The Company is a
holding company whose only business is to own indirectly a substantial portion
of the operating subsidiaries of Tyco and to perform treasury operations for
Tyco companies. Otherwise, it conducts no independent business.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the
Company intends to use the net proceeds from the sale of the debt securities to
refinance, in part, existing indebtedness, to finance recently announced
acquisitions and for general corporate purposes. Funds not required immediately
for these purposes may be invested temporarily in short-term marketable
securities.
1
RATIO OF EARNINGS TO FIXED CHARGES OF TYCO
The following table sets forth the ratio of earnings to fixed charges of
Tyco for the nine months ended June 30, 2001, the fiscal years ended September
30, 2000, 1999 and 1998, the nine month transition period ended September 30,
1997 and the year ended December 31, 1996.
Nine Months Year Ended Nine Months
Ended September 30, Ended Year Ended
June 30, -------------- September 30, December 31,
2001 2000 1999 1998 1997(4) 1996
----------- ---- ---- ---- ------------- ------------
Ratio of earnings to fixed charges(1)(2)(3) 5.66 7.51 3.53 5.07 1.00 2.54
--------
(1) For purposes of determining the ratio of earnings to fixed charges,
earnings consist of income (loss) before income taxes, minority interest,
extraordinary items, cumulative effect of accounting change and fixed
charges, less interest capitalized. Fixed charges consist of interest on
indebtedness, amortization of debt expenses, minority interest expense
related to Tyco's mandatorily redeemable preference shares, one-third of
rent expense which is deemed representative of an interest factor and
interest capitalized.
(2) On April 2, 1999, October 1, 1998, August 29, 1997 and August 27, 1997,
Tyco consummated mergers with AMP Incorporated, United States Surgical
Corporation, Keystone International, Inc. and Inbrand Corporation,
respectively. On July 2, 1997, Tyco, formerly called ADT Limited, merged
with Tyco International Ltd., a Massachusetts corporation at the time
("Former Tyco"). Each of the five merger transactions qualified for the
pooling of interests method of accounting. As such, the ratios of earnings
to fixed charges presented include the effect of mergers, except that the
calculation presented above for the period prior to January 1, 1997 does
not include Inbrand due to immateriality.
(3) Earnings for the nine months ended June 30, 2001, the years ended September
30, 2000, 1999 and 1998, the nine months ended September 30, 1997 and the
year ended December 31, 1996 include net merger, restructuring and other
non-recurring charges of $86.9 million (of which $78.8 million is included
in cost of sales), $176.3 million (of which $1.0 million is included in
cost of sales), $1,035.2 million (of which $106.4 million is included in
cost of sales), $256.9 million, $947.9 million and $344.1 million,
respectively. Earnings also include charges for the impairment of
long-lived assets of $27.9 million, $99.0 million, $507.5 million, $148.4
million and $744.7 million in the nine months ended June 30, 2001, the
years ended September 30, 2000 and 1999, the nine months ended September
30, 1997 and the year ended December 31, 1996, respectively. Earnings for
the nine months ended June 30, 2001 also include a net gain of $276.6
million on the sale of businesses and investments and a net gain of $64.1
million on the sale of shares of a subsidiary. Earnings for the year ended
September 30, 2000 also include a gain of $1.76 billion on the issuance of
common shares by a subsidiary. Earnings for the nine months ended June 30,
2001 and the nine months ended September 30, 1997 also include a write-off
of purchased in-process research and development of $184.3 million and
$361.0 million, respectively.
On a pro forma basis, the ratio of earnings to fixed charges excluding net
merger, restructuring and other non-recurring charges, charges for the
impairment of long-lived assets, net gain on the sale of businesses and
investments, net gain on the sale of shares of a subsidiary, gain on the
issuance of common shares by a subsidiary and the write-off of purchased
in-process research and development would have been 5.61x, 6.02x, 5.82x,
5.68x, 6.81x and 5.76x for the nine months ended June 30, 2001, the fiscal
years ended September 30, 2000, 1999 and 1998, the nine months ended
September 30, 1997 and the year ended December 31, 1996, respectively.
(4) In September 1997, Tyco changed its fiscal year end from December 31 to
September 30. Accordingly, the nine-month transition period ended September
30, 1997 is presented.
2
DESCRIPTION OF THE DEBT SECURITIES AND THE GUARANTEES
The debt securities will be either senior debt securities or subordinated
debt securities. The senior debt securities will be issued under an indenture
dated as of June 9, 1998 among the Company, Tyco and The Bank
of New York, as trustee. This indenture is referred to as the "senior
indenture." The subordinated debt securities will be issued under an indenture
to be entered into among the Company, Tyco and the trustee named in a
prospectus supplement. This indenture is referred to as the "subordinated
indenture." The senior indenture and the subordinated indenture together are
called the "indentures." The following description is subject to the detailed
provisions of the indentures, copies of which can be obtained upon request from
Tyco. See "Where You Can Find More Information" on page ii. The indentures are
subject to, and governed by, the Trust Indenture Act of 1939. The statements
made in this section relating to the indentures and to the debt securities and
guarantees of the debt securities to be issued under the indentures are
summaries, and do not purport to be complete. For a full description of the
terms of the debt securities and their guarantees, you should refer to the
indentures, as supplemented by any applicable supplemental indentures.
The following is a description of the general terms and provisions of the
debt securities set forth in the indentures and which may apply to any series
of debt securities. The particular terms of a series of debt securities and the
extent, if any, to which these general terms do not apply to such debt
securities, will be set forth in a supplemental indenture and described in a
prospectus supplement relating to the particular series of debt securities. See
"Prospectus Supplements" below. Accordingly, for a description of the terms and
provisions of any particular series of debt securities, you must refer to both
this description and the description of the particular series contained in the
applicable prospectus supplement.
General
The debt securities will be direct, unsecured obligations of the Company in
the form of either senior or subordinated debt. The senior debt securities and
the subordinated debt securities are together referred to in this prospectus as
the "debt securities." The senior debt securities will rank equally with other
unsecured and unsubordinated obligations of the Company for money borrowed. The
subordinated debt securities will be entitled to payment only after payment has
been made on the senior indebtedness.
The debt securities will be effectively subordinated to all existing and
future indebtedness and other liabilities of the Company's subsidiaries. The
Company's rights and the rights of its creditors, including holders of debt
securities, to participate in any distribution of assets of any subsidiary upon
a liquidation or reorganization or otherwise of such subsidiary will be
effectively subordinated to the claims of the subsidiary's creditors, except to
the extent that the Company or any of its creditors may itself be a creditor of
that subsidiary.
Except as described under "Certain Restrictive Covenants in the Senior
Indenture," the indentures do not limit other indebtedness or securities which
may be incurred or issued by the Company or any of its subsidiaries or contain
financial or similar restrictions on the Company or any of its subsidiaries.
There are no covenants or provisions contained in the indentures which afford
the holders of debt securities protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company or Tyco. The consummation of any highly leveraged
transaction, reorganization, restructuring, merger or similar transaction could
cause a material decline in the credit quality of any outstanding debt
securities.
Debt securities may be issued either in certificated, fully registered form,
without coupons, or as global notes under a book-entry system. See "Book-Entry,
Delivery and Form" below. Upon receipt of an authentication order from the
Company together with any other documentation required by the indentures, the
trustee will authenticate debt securities in the form and amount required by
the supplemental indenture relating to the series of debt securities.
3
Principal and premium, if any, will be payable, and the debt securities will
be transferable and exchangeable without any service charge, at the office of
the trustee. The Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection with any such transfer
or exchange.
The indentures do not limit the aggregate principal amount of debt
securities which may be issued thereunder.
Prospectus Supplements
The following terms of and information relating to a particular series of
debt securities offered pursuant to this document will be set forth in the
applicable prospectus supplement:
. the title of the debt securities
. the aggregate principal amount of the debt securities
. the date or dates on which principal of, and premium, if any, on the debt
securities is payable
. the rate at which the debt securities shall bear interest, if any, or the
method by which the interest rate will be determined
. the date or dates from which interest will accrue
. the date or dates on which interest will be payable and any related record
dates
. any redemption, repayment or sinking fund provisions
. the terms, if any, upon which the debt securities may be convertible into
or exchanged for securities of any kind of Tyco, the Company or of any
other issuer or obligor and the terms and conditions upon which such
conversion or exchange shall be effected
. the denominations in which the debt securities will be issuable
. any applicable material income tax considerations
. if other than the principal amount of the debt securities, the portion of
the principal amount due upon acceleration
. whether the debt securities will be issued in the form of a global
security or securities
. any subordination provisions if different from those described below under
"Subordinated Debt Securities"
. any other specific terms of the debt securities
. any specific terms and provisions of any guarantees of the debt securities
. if other than the trustee named in the senior indenture, the identity of
any trustees, paying agents or registrars with respect to the debt
securities
Guarantees
Tyco will unconditionally guarantee the due and punctual payment of the
principal of and interest on the debt securities and any other obligations of
the Company under the indentures, as supplemented, when and as the same shall
become due and payable, whether at maturity, upon redemption, by acceleration
or otherwise. Tyco's guarantees are unsecured. With respect to debt securities
issued under the senior indenture, Tyco's guarantee will be an unsubordinated
obligation of Tyco and will rank equally with all other unsecured and
unsubordinated obligations of Tyco. With respect to debt securities issued
under the subordinated indenture,
4
Tyco's guarantee will be a subordinated obligation of Tyco. The guarantees
provide that in the event of a default in payment on a debt security, the
holder of the debt security may institute legal proceedings directly against
Tyco to enforce the guarantees without first proceeding against the Company. In
addition, as described below under "Certain Restrictive Covenants in the Senior
Indenture--Limitation on Indebtedness of Subsidiaries," subsidiaries of the
Company may execute and deliver additional guarantees.
The obligations of Tyco and any other guarantor of the debt securities, if
any, under their guarantees are limited to the maximum amount which will not
result in the obligations of such guarantors under their guarantees
constituting a fraudulent conveyance or fraudulent transfer under applicable
law. Each guarantor of debt securities that makes a payment or distribution
under its guarantee shall be entitled to a contribution from each other
guarantor of such debt securities to the extent permitted by applicable law.
Redemption
In addition to any other redemption provisions that may be included in any
supplemental indenture, the debt securities may be redeemed as described below.
Redemption Upon Changes in Withholding Taxes
The Company may redeem all, but not less than all, of the debt securities of
any series if the following occurs:
1. After the date that the debt securities to be redeemed were issued,
there is a change in the laws or regulations of Luxembourg or Bermuda or any
of their respective political subdivisions or taxing authorities, or any
change in the application or official interpretation of such laws or
regulations.
2. As a result of this change, the Company or Tyco became or will become
obligated to pay Additional Amounts, as defined below under "Payment of
Additional Amounts," on the next payment date with respect to the debt
securities to be redeemed.
3. The obligation to pay Additional Amounts cannot be avoided through the
Company's or Tyco's reasonable measures.
4. The Company delivers to the trustee:
. a certificate signed by two directors or by two officers of the
Company or Tyco, or by a
combination of officers and directors as described in the indentures,
stating that the obligation to
pay Additional Amounts cannot be avoided by the Company or Tyco taking
reasonable measures available to it; and
. a written opinion of independent legal counsel to the Company or Tyco,
as the case may be, of recognized standing, to the effect that the
Company or Tyco, as the case may be, has or will become obligated to
pay Additional Amounts as a result of a change, amendment, official
interpretation or application described above and that the Company or
Tyco, as the case may be, cannot avoid the payment of such Additional
Amounts by taking reasonable measures available to it.
5. Following the delivery of the certificate and opinion described in
clause 4 above, the Company provides notice of redemption not less than 30
days, but not more than 60 days, prior to the date of redemption. The notice
of redemption cannot be given more than 60 days before the earliest date on
which the Company or Tyco would be otherwise required to pay Additional
Amounts, and the obligation to pay Additional Amounts must still be in
effect when the notice is given.
Upon the occurrence of all of 1 through 5 above, the Company may redeem the
debt securities at a redemption price equal to 100% of the principal amount
thereof, together with accrued interest, if any, to the redemption date, plus
any Additional Amounts.
5
Notice of Redemption
In the event of a redemption of debt securities, the Company must deliver by
first-class mail, postage prepaid, to the holders of the debt securities to be
redeemed, a notice of redemption specifying the following:
. the redemption price,
. the amount of the debt securities held by the holder to be redeemed,
. the redemption date,
. the place of payment,
. that payment will be made when the debt securities are surrendered to the
trustee,
. that interest accrued to the date of redemption will be paid as specified
in the notice, and
. that after the redemption date, and unless the Company defaults in the
payment of the redemption price, interest will stop accruing on the debt
securities or portions thereof to be redeemed.
In connection with redemption, the Company will deposit with the trustee or
with one or more paying agents an amount of money sufficient to redeem on the
redemption date all the debt securities called for redemption. If less than all
the debt securities of a series are to be redeemed, the trustee will select, in
such manner as it deems appropriate and fair, debt securities of such series to
be redeemed. Unless the Company defaults on the redemption payments, on and
after the redemption date specified in the notice of redemption:
. interest on the debt securities called for redemption will cease to
accrue, and
. the holders of such debt securities will have no right in respect of such
debt securities except the right to receive the redemption price thereof
and unpaid interest to the date fixed for redemption.
Payment of Additional Amounts
Unless otherwise required by Luxembourg or Bermuda law, neither the Company,
Tyco nor any other guarantor of the debt securities will deduct or withhold
from payments made with respect to the debt securities and the guarantees on
account of any present or future taxes, duties, levies, imposts, assessments or
governmental charges of whatever nature imposed or levied by or on behalf of
any Luxembourg or Bermuda taxing authority ("Taxes"). In the event that the
Company, Tyco or any other guarantor is required to withhold or deduct on
account of any Taxes from any payment made under or with respect to any debt
securities or the guarantees, the Company, Tyco or such other guarantor, as the
case may be, will pay such additional amounts so that the net amount received
by each holder of debt securities, including the additional amounts, will equal
the amount that such holder would have received if such Taxes had not been
required to be withheld or deducted. The amounts that the Company, Tyco or such
other guarantor are required to pay to preserve the net amount receivable by
holders of debt securities are referred to as "Additional Amounts."
Additional Amounts will not be payable with respect to a payment made to a
holder of debt securities to the extent:
1. that any such Taxes would not have been so imposed but for the
existence of any present or former connection between such holder and the
Luxembourg or Bermuda taxing authority imposing such Taxes, other than the
mere receipt of such payment, acquisition, ownership or disposition of such
debt securities or the exercise or enforcement of rights under such debt
securities, their guarantees or the related indenture;
2. of any estate, inheritance, gift, sales, transfer, or personal
property Taxes imposed with respect to such debt securities, except as
otherwise provided in the related indenture;
3. that any such Taxes would not have been imposed but for the
presentation of such debt securities, where presentation is required, for
payment on a date more than 30 days after the date on which such
6
payment became due and payable or the date on which payment thereof is duly
provided for, whichever is later, except to the extent that the beneficiary
or holder thereof would have been entitled to Additional Amounts had the
debt securities been presented for payment on any date during such 30-day
period; or
4. that such holder would not be liable or subject to such withholding or
deduction of Taxes but for the failure to make a valid declaration of
non-residence or other similar claim for exemption, if:
. the making of such declaration or claim is required or imposed by
statute, treaty, regulation, ruling or administrative practice of the
relevant Luxembourg or Bermuda taxing authority as a precondition to
an exemption from, or reduction in, the relevant Taxes, and
. at least 60 days prior to the first payment date with respect to which
the Company, Tyco or such other guarantor shall apply this clause 4,
the Company, Tyco or such other guarantor has notified all holders of
debt securities in writing that they are required to provide such
declaration or claim.
Each of the Company, Tyco and any other guarantor of the debt securities, as
applicable, will also:
. withhold or deduct Taxes as required,
. remit the full amount of Taxes deducted or withheld to the relevant
Luxembourg or Bermuda taxing authority in accordance with all
applicable laws,
. use its reasonable best efforts to obtain from each Luxembourg or
Bermuda taxing authority imposing such Taxes certified copies of tax
receipts evidencing the payment of any Taxes deducted or withheld, and
. upon request, make available to the holders of the debt securities,
within 60 days after the date the payment of any Taxes deducted or
withheld is due pursuant to applicable law, certified copies of tax
receipts evidencing such payment by the Company, Tyco or such other
guarantor or if, notwithstanding the Company's, Tyco's or such other
guarantor's efforts to obtain such receipts, the same are not
obtainable, other evidence of such payments by the Company, Tyco or
such other guarantor of the debt securities.
At least 30 days prior to each date on which any payment under or with
respect to a series of debt securities is due and payable, if the Company, Tyco
or such other guarantor will be obligated to pay Additional Amounts with
respect to such payment, the Company, Tyco or such other guarantor will deliver
to the trustee an officer's certificate stating the fact that such Additional
Amounts will be payable, the amounts so payable and such other information as
is necessary to enable the trustee to pay such Additional Amounts to holders of
such debt securities on the payment date.
The foregoing provisions shall survive any termination or the discharge of
the related indenture and shall apply mutatis mutandis to any jurisdiction in
which any successor to the Company, Tyco or any other guarantor of the debt
securities, as the case may be, is organized or is engaged in business for tax
purposes or any political subdivisions or taxing authority or agency thereof or
therein.
In addition, the Company will pay any stamp, issue, registration,
documentary or other similar taxes and duties, including interest, penalties
and Additional Amounts with respect thereto, payable in Luxembourg, Bermuda or
the United States or any political subdivision or taxing authority of or in the
foregoing in respect of the creation, issue, offering, enforcement, redemption
or retirement of any of the debt securities.
Whenever in the indentures, the debt securities, their guarantees and in
this "Description of the Debt Securities and the Guarantees" there is
mentioned, in any context, the payment of principal, and premium, if any,
redemption price, interest or any other amount payable under or with respect to
any debt security, such mention shall be deemed to include mention of the
payment of Additional Amounts to the extent payable in the particular context.
7
Book-Entry, Delivery and Form
The Global Notes
A series of debt securities may be issued in whole or in part in the form of
one or more global securities under a book-entry system. Each global security:
. will be deposited with, or on behalf of, The Depository Trust Company, and
registered in the name of Cede & Co., as DTC's nominee, or
. will remain in the custody of the trustee pursuant to a FAST Balance
Certificate Agreement between DTC and the trustee.
Depositary Procedures
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream Banking, societe anonyme, Luxembourg ("Clearstream, Luxembourg")
set forth below are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. The
Company takes no responsibility for these operations and procedures, and urges
investors to contact the system or their participants directly to discuss these
matters.
DTC has advised the Company and Tyco that it is a limited purpose trust
company organized under the laws of the State of New York.
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between its
participants through electronic book-entry changes to the accounts of its
participants. DTC's participants include securities brokers and dealers, banks
and trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Investors who
are not participants may beneficially own securities held by or on behalf of
DTC only through DTC participants or indirect participants. The ownership
interests in, and transfers of ownership interests in, each security held by or
on behalf of DTC are recorded on the records of the participants.
DTC has also advised the Company and Tyco that pursuant to procedures
established by DTC:
1. upon the deposit of global notes representing debt securities with
DTC, DTC will credit the accounts of its participants with an interest in
the global notes. The accounts to be credited will be designated by the
underwriters or agents, if any, or by the Company, if such debt securities
were offered and sold directly by the Company; and
2. ownership of the debt securities will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by DTC,
with respect to the interests of its participants, and the records of DTC's
participants and indirect participants, with respect to the interests of
other owners of beneficial interest in the debt securities.
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in debt securities represented
by global notes to such persons may be limited. In addition, because DTC can
act only on behalf of its participants, who in turn act on behalf of persons
who hold interests through a DTC participant, the ability of a person having an
interest in debt securities represented by a global note to pledge or transfer
such interest to persons or entities that do not participate in DTC's system,
or to otherwise take actions in respect of such interest, may be affected by
the lack of a physical definitive security in respect of such interest.
8
So long as DTC or its nominee is the registered owner of a global note, DTC
or such nominee, as the case may be, will be considered the sole owner or
holder of the debt securities represented by the global note for all purposes
under the indentures. Except as provided below, owners of beneficial interests
in a global note will not be entitled to have debt securities represented by
such global note registered in their names, will not receive or be entitled to
receive physical delivery of certificated debt securities, and will not be
considered the owners or holders thereof under the indentures for any purpose,
including with respect to the giving of any direction, instruction or approval
to the trustee under the related indenture. Accordingly, each holder owning a
beneficial interest in a global note must rely on the procedures of DTC and, if
such holder is not a DTC participant or an indirect participant, on the
procedures of the participant through which such holder owns its interest, to
exercise any rights of a holder of debt securities under the related indenture
or such global note. The Company understands that under existing industry
practice, in the event that the Company requests any action of holders of debt
securities, or a holder that is an owner of a beneficial interest in a global
note desires to take any action that DTC, as the holder of such global note, is
entitled to take, DTC would authorize its participants to take such action and
the participants would authorize holders owning through participants to take
such action or would otherwise act upon the instruction of such holders.
Payments with respect to the principal of, and premium, if any, and interest
on, any debt securities represented by a global note registered in the name of
DTC or its nominee on the applicable record date will be payable by the trustee
to DTC or its nominee in its capacity as the registered holder of the global
note representing the debt securities under the indentures. Under the terms of
the indentures, the Company, Tyco and the trustee may treat the persons in
whose names the global notes are registered as the owners thereof for the
purpose of receiving payments thereon and for any and all other purposes
whatsoever. Consequently, none of the Company, Tyco or the trustee nor any
agent of the Company, Tyco or the trustee has or will have any responsibility
or liability for:
. any aspect of DTC's records or any participant's or indirect participant's
records relating to, or payments (including principal, premium, if any,
and interest) made on account of, any beneficial ownership interest in the
global notes of any series, or for maintaining, supervising or reviewing
any of DTC's records or any participant's or indirect participant's
records relating to the beneficial ownership interests of the global notes
of such series; or
. any other matter relating to the actions and practices of DTC or any of
its participants or indirect participants.
DTC has advised the Company and Tyco that its current practice, upon receipt
of any payment in respect of securities such as the debt securities including
principal and interest, is to credit the accounts of the relevant participants
with the payment on the payment date, in amounts proportionate to their
respective holdings in the principal amount of beneficial interest in the
relevant security as shown on the records of DTC, unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
participants and the indirect participants to the beneficial owners of any
series of debt securities will be governed by standing instructions and
customary practices and will be the responsibility of the participants or the
indirect participants and will not be the responsibility of DTC, the trustee,
the Company or Tyco. None of the Company, Tyco or the trustee will be liable
for any delay by DTC or any of its participants in identifying the beneficial
owners of the debt securities, and the Company and the trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its
nominee for all purposes.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and transfers between participants in Euroclear and
Clearstream, Luxembourg will be effected in accordance with their respective
notes and operating procedures.
Transfers between the participants in DTC, on the one hand, and Euroclear or
Clearstream, Luxembourg participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, Luxembourg, as the case may be, by its respective depositary;
however, such cross-
9
market transactions will require delivery of instructions to Euroclear or
Clearstream, Luxembourg, as the case may be, by the counterparty in such system
in accordance with the rules and procedures and within the established
deadlines (Brussels time) of such system. Euroclear or Clearstream, Luxembourg,
as the case may be, will, if the transaction meets its settlement requirements,
deliver instructions to its respective depositary to take action to effect
final settlement on its behalf by delivering or receiving interests in the
global note in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream, Luxembourg participants may not deliver
instructions directly to the depositories for Euroclear or Clearstream,
Luxembourg.
DTC has advised the Company and Tyco that it will take any action permitted
to be taken by a holder of notes of any series only at the direction of one or
more participants to whose account DTC has credited the interests in the global
notes of such series and only in respect of such portion of the aggregate
principal amount of the notes as to which such participant or participants has
or have given such direction. However, if there is an event of default under
the notes, DTC reserves the right to exchange the global notes for legended
notes in certificated form, and to distribute such notes to its participants.
Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the
foregoing procedures to facilitate transfers of interests in the global notes
among participants in DTC, Euroclear and Clearstream, Luxembourg, they are
under no obligation to perform or to continue to perform such procedures, and
such procedures may be discontinued at any time. None of the Company, Tyco or
the trustee or any of their respective agents will have any responsibility for
the performance by DTC, Euroclear or Clearstream, Luxembourg or their
respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
Certificated Debt Securities
If:
1. the Company notifies the trustee in writing that DTC is no longer
willing or able to act as a depositary or DTC ceases to be registered as a
clearing agency under the Exchange Act and a successor depositary is not
appointed within 90 days of such notice or cessation, or
2. the Company, at its option, notifies the trustee in writing that it
elects to cause the issuance of debt securities in definitive form under the
indenture, or
3. upon the occurrence of certain other events as provided in any
supplemental indenture, then,
upon surrender by DTC of the global notes representing the debt securities,
certificated debt securities will be issued in the names and denominations
requested by DTC in accordance with its customary procedures. Upon any such
issuance, the trustee is required to register the certificated debt securities
in the requested names and cause the certificates to be delivered to the
registered holders.
None of the Company, Tyco or the trustee shall be liable for any delay by
DTC or any DTC participant or indirect participant in identifying the
beneficial owners of the related debt securities and the Company, Tyco and the
trustee may conclusively rely on, and shall be protected in relying on,
instructions from DTC for all purposes.
Merger, Consolidation, Sale or Conveyance
The indentures provide that neither the Company, Tyco nor any other
guarantor of any debt securities issued under the indentures will merge or
consolidate with any other person and will not sell or convey all or
substantially all of its assets to any person, unless:
1. the Company, Tyco or such other guarantor, as the case may be, shall
be the continuing corporation, or
10
2. the successor corporation or person that acquires all or substantially
all of the assets of the Company, Tyco or such other guarantor, as the case
may be, shall expressly assume,
. the payment of principal of, premium, if any, and interest on all debt
securities issued under the indentures or the obligations under the
guarantees thereof, as the case may be, and
. the observance of all the covenants and agreements under the
indentures to be performed or observed by the Company, Tyco or such
other guarantor, as the case may be,
and in either case, immediately after such merger, consolidation, sale or
conveyance, the Company, Tyco or such other guarantor, as the case may be, or
such successor corporation or person, as the case may be, shall not be in
default in the performance of the covenants and agreements of the indentures to
be performed or observed by the Company, Tyco or such other guarantor, as the
case may be; provided that the foregoing shall not apply to a guarantor other
than Tyco if in connection with any such merger, consolidation, sale or
conveyance the guarantee of such guarantor is released and discharged pursuant
to paragraph 2 of the "Limitation on Indebtedness of Subsidiaries" covenant
related to the senior indenture described below.
Events of Default
An event of default with respect to a series of debt securities issued under
either indenture is defined in the related indenture as being:
. default for 30 days in payment of any interest on or any additional
amounts related to any debt securities of such series;
. default in any payment of principal of or premium, if any, on any debt
securities of such series, including any sinking fund payment;
. default by the Company, Tyco or any other guarantor in performance of any
other of the covenants or agreements in respect of the debt securities of
such series and related guarantees that continues for 90 days after the
Company receives notice of such failure in accordance with the indentures;
. any guarantee of the debt securities ceases to be, or the Company or any
guarantor of the debt securities asserts in writing that such guarantee is
not, in full force and effect and enforceable in accordance with its
terms;
. certain events involving bankruptcy, insolvency or reorganization of the
Company or Tyco or, with respect to debt securities issued under the
senior indenture, any Significant Subsidiary Guarantor;
. any other event of default provided in a supplemental indenture, a
resolution of the Board of Directors, or in the form of the security
related to the issuance of a series of debt securities; or
. with respect to debt securities issued under the senior indenture, default
by the Company, Tyco or any other guarantor of the debt securities in the
payment at the final maturity thereof, after the expiration of any
applicable grace period, of principal of, premium, if any, or interest on
indebtedness for money borrowed, other than non-recourse indebtedness, in
the principal amount then outstanding of $50,000,000 or more, or
acceleration of any indebtedness in such principal amount so that it
becomes due and payable prior to the date on which it would otherwise have
become due and payable and such acceleration is not rescinded within ten
business days after notice to the Company in accordance with the senior
indenture.
The indentures provide that the trustee shall transmit notice of any uncured
default under the indentures known to the trustee with respect to any series of
debt securities issued thereunder, within 90 days after the occurrence of such
default, to the holders of the debt securities of each affected series, except
that the trustee may withhold notice to the holders of any series of debt
securities of any default, except in payment of principal of, premium, if any,
or interest on such series, or in the payment of any sinking fund or purchase
installment with respect to the series, if the trustee determines in good faith
in accordance with procedures set forth in the indenture that it is in the
interest of the holders of such series of debt securities to do so.
11
If an event of default due to:
. the default in payment of interest, principal or sinking fund installment
with respect to any series of debt securities issued under the indentures;
. the default in the performance or breach of any other covenant or
agreement of the Company, Tyco or any guarantor applicable to the debt
securities of such series but not applicable to all outstanding debt
securities issued under the indentures;
. a guarantee of a series of debt securities ceasing to be, or the Company
or any guarantor asserting that a guarantee of a series of debt securities
no longer is, in full force and effect and enforceable in accordance with
its terms; or
. any other event of default described in a supplemental indenture, board
resolution, or in the form of security related to the issuance of a series
of debt securities
shall have occurred and be continuing, either the trustee or the holders of not
less than 25% in principal amount of the debt securities of such series then
outstanding may declare the principal of all debt securities of such series and
interest accrued thereon to be due and payable immediately.
If an event of default due to:
. a default in the performance of any other of the covenants or agreements
applicable to all outstanding debt securities issued under the related
indenture and then outstanding;
. certain events of bankruptcy, insolvency and reorganization of the Company
or Tyco or, with respect to debt securities issued under the senior
indenture, any Significant Subsidiary Guarantor;
. with respect to debt securities issued under the senior indenture, a
default in payment at final maturity or upon acceleration of indebtedness
for money borrowed in the principal amount then outstanding of $50,000,000
or more; or
. any other event of default described in a supplemental indenture, board
resolution, or in the form of security related to the issuance of a series
of debt securities
shall have occurred and be continuing, either the trustee or the holders of not
less than 25% in principal amount of all debt securities issued under the
related indenture and then outstanding, treated as one class, may declare the
principal of all such debt securities and interest accrued thereon to be due
and payable immediately.
In certain circumstances, such declarations may be annulled and past
defaults may be waived by the holders of a majority in principal amount of the
outstanding debt securities of an affected series, voting as a separate class,
or all debt securities outstanding under the related indenture, voting as a
single class, as the case may be.
The holders of a majority in principal amount of the outstanding debt
securities of each affected series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee with respect to the debt securities of such series, subject to certain
limitations specified in the related indenture.
The indentures provide that no holder of debt securities of any series may
institute any action against the Company under the indentures, except actions
for payment of overdue principal, premium, if any, or interest, unless such
holder previously shall have given to the trustee written notice of default and
continuance thereof and unless the holders of not less than 25% in principal
amount of the debt securities of such series then outstanding shall have
requested the trustee to institute such action and shall have offered the
trustee reasonable indemnity, the trustee shall not have instituted such action
within 60 days of such request, and the trustee shall not have received
direction inconsistent with such request by the holders of a majority in
principal amount of the debt securities of such series then outstanding.
12
Each of the indentures requires the annual filing by the Company with the
trustee of a written statement as to compliance with the covenants and
agreements contained in the related indenture.
With respect to the senior indenture, "Significant Subsidiary Guarantor"
means any one or more guarantors, other than Tyco, which, at the date of
determination, together with its or their respective subsidiaries in the
aggregate,
. for the most recently completed fiscal year of the Company accounted for
more than 10% of the consolidated revenues of the Company, or
. at the end of such fiscal year, was the owner, beneficial or otherwise, of
more than 10% of the consolidated assets of the Company, as determined in
accordance with United States generally accepted accounting principles and
reflected on the Company's consolidated financial statements.
Discharge, Defeasance and Covenant Defeasance
The Company may discharge or defease its obligations under each of the
indentures as set forth below.
Under terms satisfactory to the trustee, the Company or any guarantor of the
debt securities issued under the related indenture may discharge the related
indenture with respect to any series of debt securities issued under that
indenture if all securities in the series have not already been delivered to
the trustee for cancellation and have either become due and payable or are by
their terms due and payable within one year, or may be called for redemption
within one year, by irrevocably depositing with the trustee cash or direct
obligations of the United States as trust funds in an amount certified to be
sufficient to pay at maturity, or upon redemption, the principal of, premium,
if any, and interest and any other sums payable, if any, on such debt
securities. However, the Company maintains any rights to optional redemption
and may not avoid
. its duty to register the transfer or exchange of debt securities of such
series, or to replace any mutilated, destroyed, lost or stolen debt
securities of such series,
. the rights of holders of such debt securities to receive from the funds
deposited with the trustee payments of principal and interest and sinking
fund payments, if any, on such securities, on the stated due dates for
such payments, or
. the rights, obligations and immunities of the trustee under the related
indenture.
In the case of any series of debt securities in respect of which the exact
amounts of principal of and interest due on such series can be determined at
the time of making the deposit referred to below, the Company at its option at
any time may also:
1. discharge any and all of its obligations to holders of such series of
debt securities ("defeasance"), but may not thereby avoid the obligations
enumerated in the previous paragraph; or
2. be released with respect to such series of senior debt securities from
the obligations imposed by the covenants described under the caption
"Certain Restrictive Covenants in the Senior Indenture" below and with
respect to both the senior and subordinated debt securities from the
obligation under the caption "Merger, Consolidation, Sale or Conveyance"
above and omit to comply with such covenants without creating an event of
default ("covenant defeasance").
Defeasance or covenant defeasance may be effected only if, among other
things:
1. the Company or Tyco irrevocably deposits with the trustee cash and/or
direct obligations of the United States, as trust funds in an amount
certified by a nationally recognized firm of independent public accountants
or a nationally recognized investment banking firm to be sufficient to pay
each installment of principal and interest and any mandatory sinking fund
payments, if any, on all outstanding debt securities of the relevant series
on the dates such installments of principal, premium, if any, and interest
are due;
13
2. no default or event of default shall have occurred and be continuing
on the date of the deposit referred to in clause 1 or, in respect of certain
events of bankruptcy, insolvency or reorganization, during the period ending
on the 91st day after the date of such deposit, or any longer applicable
preference period; and
3. the Company delivers to the trustee:
(A) an opinion of counsel to the effect that the holders of such series
of debt securities
. will not recognize any income, gain or loss for United States federal
income tax purposes as a result of such deposit and defeasance or
covenant defeasance, as applicable, and
. will be subject to United States federal income tax on the same
amounts and in the same manner and at the same times as would have
been the case if such deposit and defeasance or covenant defeasance,
as applicable, had not occurred.
In the case of defeasance, such opinion must be based on a ruling of
the Internal Revenue Service or a change in United States federal
income tax law occurring after the date of the related indenture; and
(B) an opinion of counsel to the effect that
. payments from the defeasance trust will be free and exempt from any
and all withholding and other taxes imposed or levied by or on behalf
of Luxembourg or any political subdivision thereof having the power to
tax, and
. holders of such series of debt securities will not recognize any
income, gain or loss for Luxembourg income tax and other Luxembourg
tax purposes as a result of such deposit and defeasance or covenant
defeasance, as applicable, and will be subject to Luxembourg income
tax and other Luxembourg tax on the same amounts, in the same manner
and at the same times as would have been the case if such deposit and
defeasance or covenant defeasance, as applicable, had not occurred.
Modification of the Indentures
Each indenture contains provisions permitting the Company, Tyco and the
trustee, with the consent of the holders of not less than a majority of the
principal amount of the debt securities issued under the related indenture at
the time outstanding of all series affected, voting as one class, to modify the
related indenture or any supplemental indenture or the rights of the holders of
the debt securities. Without the consent of the holder of each debt security
affected, the related indenture cannot be modified to:
1. extend the final maturity of any of the debt securities or reduce the
principal amount thereof, reduce the rate or extend the time of payment of
interest thereon, reduce any amount payable on redemption thereof, reduce
the amount of any original issue discount security payable upon acceleration
or provable in bankruptcy, impair or affect the right of any holder of the
debt securities to institute suit for the payment thereof or, if debt
securities so provide, any optional right of repayment, or
2. reduce the aforesaid percentage in principal amount of debt securities
of any series, the consent of the holders of which is required for any such
supplemental indenture.
Each indenture contains provisions permitting the Company, Tyco and the
trustee, without the consent of any holders of debt securities, to enter into a
supplemental indenture, among other things, for purposes of
. curing any ambiguity,
. correcting or supplementing any provision contained in the indenture or in
any supplemental indenture or making other provisions in regard to the
matters or questions arising under the indenture or any
14
supplemental indenture as the Board of Directors of the Company deems
necessary or desirable and which does not adversely affect the interests
of the holders of debt securities in any material respect, or
. establishing the form or terms of any series of debt securities as are not
otherwise inconsistent with any of the provisions of the affected
indenture.
Certain Restrictive Covenants in the Senior Indenture
The senior indenture contains, among others, the covenants described below.
Some capitalized terms used in this section are defined under "Definitions in
the Senior Indenture" below. These covenants do not apply to debt securities
issued under the subordinated indenture.
Limitations on Liens
The Company covenants that, so long as any debt securities issued under the
senior indenture remain outstanding, but subject to defeasance, as provided in
the indenture, it will not, and will not permit any Restricted Subsidiary to,
incur any indebtedness which is secured by a mortgage, pledge, security
interest, lien or encumbrance (each a "lien") upon:
. any Principal Property, or
. any shares of stock of any Restricted Subsidiary, or indebtedness issued by
any Restricted Subsidiary,
whether now owned or hereafter acquired, without effectively providing that,
for so long as such lien shall continue in existence with respect to such
secured indebtedness, the debt securities issued under the senior indenture,
together with, if the Company shall so determine, any other indebtedness of the
Company ranking equally with such debt securities, shall be equally and ratably
secured with a lien ranking ratably with or equal to, or at the Company's
option prior to, such secured indebtedness.
The foregoing restriction shall not apply to:
1. liens that exist when the applicable debt securities are issued;
2. liens on the stock, assets or indebtedness of a person that exist when
such person becomes a Restricted Subsidiary unless created in contemplation
of such Restricted Subsidiary becoming such;
3. liens on any assets or indebtedness of a person that exist:
. when such person is merged into the Company or a Restricted
Subsidiary of the Company or
. at the time the Company or a Restricted Subsidiary purchases,
leases or otherwise acquires as an entirety or substantially as an
entirety the assets of such person;
4. liens on any Principal Property that exist:
. when the Company or any Restricted Subsidiary acquired such
property,
. to secure the payment or indebtedness for the financing of the
purchase price of such property, or
. to secure indebtedness incurred for the purpose of the financing of
all or any part of improvements or construction on such property,
which indebtedness in each case is incurred before, at the time of,
or within one year after the acquisition of such property, or in
the case of real property, completion of such improvement or
construction or commencement of full operation of such property,
whichever is later;
5. liens that secure indebtedness owed by any Restricted Subsidiary to
the Company, Tyco or a subsidiary of the Company or by the Company to Tyco;
6. liens in favor of any country or state, or political subdivision
thereof:
. to secure payments pursuant to any contract, statute, rule or
regulation or
15
. to secure any indebtedness incurred for the purpose of financing
all or any part of the purchase price, or, in the case of real
property, the cost of construction or improvement, of the Principal
Property subject to such liens, including, but not limited to,
liens incurred in connection with pollution control, industrial
revenue or similar financings;
7. liens or deposits under worker's compensation or similar legislation,
or in connection with bids, tenders, contracts, other than for the payment
of money, or leases to which the Company or any Restricted Subsidiary is a
party, or to secure the public or statutory obligations of the Company or
any Restricted Subsidiary, or in connection with obtaining or maintaining
self-insurance, or to obtain the benefits of any law, regulation or
arrangement pertaining to unemployment insurance, old age pensions, social
security or similar matters, or to secure surety, performance, appeal or
customs bonds to which the Company or any Restricted Subsidiary is a party,
or in litigation or other proceedings in connection with the matters
heretofore referred to in this clause, such as, but not limited to,
interpleader proceedings, and other similar pledges, liens or deposits made
or incurred in the ordinary course of business;
8. certain liens in connection with legal proceedings, as provided in the
senior indenture;
9. liens for certain taxes or assessments, governmental charges or
levies, landlord's liens and liens and charges incidental to the conduct of
the business of the Company or any Restricted Subsidiary, or the ownership
of their respective assets, which were not incurred in connection with the
borrowing of money or the obtaining of advances or credit and which do not,
in the opinion of the Board of Directors of the Company, materially impair
the use of such assets in the operation of the business of the Company or
such Restricted Subsidiary or the value of such Principal Property for the
purposes thereof;
10. liens to secure the Company's or any Restricted Subsidiary's
obligations under agreements with respect to spot, forward, future and
option transactions, entered into in the ordinary course of business;
11. liens not permitted by the foregoing clauses 1 to 10, inclusive, if
at the time of, and after giving effect to, the creation or assumption of
such lien, the aggregate amount of all outstanding indebtedness of the
Company and its Restricted Subsidiaries, without duplication, secured by all
liens not permitted by the foregoing clauses 1 through 10, inclusive,
together with the Attributable Debt in respect of Sale and Lease-Back
Transactions permitted by clause 1 under "Limitation on Sale and Lease-Back
Transactions" below does not exceed the greater of $100,000,000 and 10% of
Consolidated Net Worth; and
12. any total or partial extension, renewal or replacement of any lien
permitted pursuant to exceptions 1 through 11, inclusive, except that the
principal amount of indebtedness secured by such extension, renewal or
replacement, unless otherwise excepted under clauses 1 through 11, shall not
exceed the principal amount of indebtedness of the original permitted lien,
and that such extension, renewal or replacement shall be limited to all or
part of the assets, or any replacement therefor, which secured the original
lien, plus improvements and construction on real property.
Limitation on Sale and Lease-Back Transactions
Under the senior indenture, the Company will not, and will not permit any
Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction with
respect to a Principal Property unless:
1. the Company or such Restricted Subsidiary would, at the time of
entering into a Sale and Lease-Back Transaction, be entitled to incur
indebtedness secured by a lien on the Principal Property to be leased in an
amount at least equal to the Attributable Debt in respect of such
transaction, without equally and ratably securing the debt securities issued
under the senior indenture pursuant to the provisions described under
"Limitations on Liens" above, or
2. the direct or indirect proceeds of the sale of the Principal Property
to be leased are at least equal to their fair value, as determined by the
Company's Board of Directors, and an amount equal to the net proceeds is
applied, within 180 days of the effective date of such transaction, to the
purchase or acquisition, or, in the case of real property, commencement of
the construction, of property or assets or to
16
the retirement of the debt securities issued under the senior indenture,
other than at maturity or pursuant to a mandatory sinking fund or a
mandatory redemption provision, or of Funded Indebtedness of the Company or
a consolidated subsidiary of the Company that ranks on a parity with or
senior to the debt securities issued under the senior indenture, subject to
credits for certain voluntary retirement of Funded Indebtedness and certain
delivery of debt securities issued under the senior indenture to the trustee
for retirement and cancellation.
Limitation on Indebtedness of Subsidiaries
Under the senior indenture:
1. The Company will not cause or permit any subsidiary of the Company,
which is not a guarantor of the debt securities issued under the senior
indenture, directly or indirectly, to create, assume, guarantee or otherwise
in any manner become liable for the payment of or otherwise incur
(collectively, "incur"), any indebtedness, including any Acquired
Indebtedness but excluding any Permitted Subsidiary Indebtedness, unless
such subsidiary simultaneously executes and delivers a supplemental
indenture providing for a guarantee of the debt securities issued under the
senior indenture.
2. Notwithstanding the foregoing, any guarantee by a subsidiary of the
Company of the debt securities issued under the senior indenture shall
provide by its terms that it, and all liens securing the same, shall be
automatically and unconditionally released and discharged upon
. any sale, exchange or transfer, to any person not an Affiliate of the
Company, of all of the Company's equity interests in, or all or
substantially all the assets of, such subsidiary, which transaction is in
compliance with the terms of the senior indenture and such subsidiary is
released from all guarantees, if any, by it of other indebtedness of the
Company or any subsidiaries of the Company,
. the payment in full of all obligations under the indebtedness described in
clause 1 above giving rise to such guarantee, or
. with respect to indebtedness described in clause 1 above constituting
guarantees of indebtedness, the release by the holders of such
indebtedness of the guarantee by such subsidiary, including any deemed
release upon payment in full of all obligations under such indebtedness,
provided that:
. no other indebtedness, other than Permitted Subsidiary Indebtedness, has
been guaranteed by such subsidiary, or
. the holders of all other indebtedness which is guaranteed by such
subsidiary also release the guarantee by such subsidiary, including any
deemed release upon payment in full of all obligations under such
indebtedness.
3. For purposes of this covenant, any Acquired Indebtedness shall not be
deemed to have been incurred until 180 days from the date
. the person obligated on such Acquired Indebtedness becomes a subsidiary of
the Company, or
. the acquisition of assets in connection with which such Acquired
Indebtedness was assumed is consummated.
Definitions in the Senior Indenture
"Acquired Indebtedness" means indebtedness of a person:
. existing at the time such person becomes a Restricted Subsidiary, or
. assumed in connection with the acquisition of assets by such person,
in each case, other than indebtedness incurred in connection with, or in
contemplation of, such person becoming a Restricted Subsidiary or such
acquisition, as the case may be.
17
"Affiliate" means, with respect to any specified person:
. any other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified person;
. any other person that owns, directly or indirectly, 10% or more of such
specified person's capital stock or any officer or director of any such
specified person or other person; or
. any other person 10% or more of the voting stock of which is beneficially
owned or held directly or indirectly by such specified person.
For the purposes of this definition, "control" when used with respect to any
specified person means the power to direct the management and policies of such
person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Attributable Debt" means in connection with a Sale and Lease-Back
Transaction, as of any particular time, the aggregate of present values,
discounted at a rate per annum equal to the average interest borne by all
outstanding debt securities issued under the senior indenture determined on a
weighted average basis and compounded semi-annually, of the obligations of the
Company or any Restricted Subsidiary for net rental payments during the
remaining term of the applicable lease, including any period for which such
lease has been extended or may, at the option of the lessor, be extended. The
term "net rental payments" under any lease of any period shall mean the sum of
the rental and other payments required to be paid in such period by the lessee
thereunder, not including, however, any amounts required to be paid by such
lessee, whether or not designated as rental or additional rental, on account of
maintenance and repairs, reconstruction, insurance, taxes, assessments, water
rates or similar charges required to be paid by such lessee thereunder or any
amounts required to be paid by such lessee thereunder contingent upon the
amount of sales, maintenance and repairs, reconstruction, insurance, taxes,
assessments, water rates or similar charges.
"Consolidated Net Worth" means, at any date, the total assets less the total
liabilities, in each case appearing on the most recently prepared consolidated
balance sheet of the Company and its subsidiaries as of the end of a fiscal
quarter of the Company, prepared in accordance with United States generally
accepted accounting principles as in effect on the date of calculation.
"Consolidated Tangible Assets" means, at any date, the total assets less all
intangible assets appearing on the most recently prepared consolidated balance
sheet of the Company and its subsidiaries as of the end of a fiscal quarter of
the Company, prepared in accordance with United States generally accepted
accounting principles as in effect on the date of calculation. "Intangible
Assets" means the amount, if any, which would be stated under the heading
"Costs in Excess of Net Assets of Acquired Companies" or under any other
heading relating to intangible assets separately listed, in each case on the
face of the aforesaid consolidated balance sheet.
"Funded Indebtedness" means any indebtedness maturing by its terms more than
one year from the date of the determination thereof, including any indebtedness
renewable or extendible at the option of the obligor to a date later than one
year from the date of the determination thereof.
"Permitted Subsidiary Indebtedness" means any of the following:
1. indebtedness in an aggregate amount, without duplication, not to
exceed, as of the date of determination, 5% of the Consolidated Tangible
Assets of the Company, excluding any indebtedness described in clauses 2
through 8 below;
2. indebtedness owed to the Company, Tyco or any subsidiary of the
Company;
3. obligations under standby letters of credit or similar arrangements
supporting the performance of a person under a contract or agreement in the
ordinary course of business;
18
4. obligations as lessee in the ordinary course of business which are
capitalized in accordance with United States generally accepted accounting
principles;
5. indebtedness that was Permitted Subsidiary Indebtedness at the time
that it was first incurred;
6. Acquired Indebtedness that by its terms is not, at the time it became
Acquired Indebtedness or within 180 days thereafter, callable or redeemable
prior to its stated maturity and that remains outstanding following such
time as the subsidiary of the Company obligated under such Acquired
Indebtedness in good faith has made or caused to be made an offer to acquire
all such indebtedness, including, without limitation, an offer to exchange
such indebtedness for securities of the Company, on terms which, in the
opinion of an independent investment banking firm of national reputation and
standing, are consistent with market practices in existence at the time for
offers of a similar nature, provided that the initial expiration date of any
such offer shall be not be later than the expiration of the time period set
forth in clause 3 of the "Limitation on Indebtedness of Subsidiaries"
covenant;
7. indebtedness outstanding on the date of the senior indenture; and
8. any renewals, extensions, substitutions, refundings, refinancings or
replacements (collectively, a "refinancing") of any indebtedness referred to
in clause 7 of this definition of "Permitted Subsidiary Indebtedness" of a
subsidiary organized under a jurisdiction other than the United States or
any State thereof or the District of Columbia, including any successive
refinancings, so long as the borrower under such refinancing is such
subsidiary and the aggregate principal amount of indebtedness represented
thereby, or if such indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the original issue price of such
indebtedness plus any accreted value attributable thereto since the original
issuance of such indebtedness, is not increased by such refinancing plus the
lesser of (A) the stated amount of any premium or other payment required to
be paid in connection with such a refinancing pursuant to the terms of the
indebtedness being refinanced or (B) the amount of premium or other payment
actually paid at such time to refinance the indebtedness, plus, in either
case, the amount of expenses of such subsidiary incurred in connection with
such refinancing.
"Principal Property" means any manufacturing, processing or assembly plant
or facility or any warehouse or distribution facility which is used by any U.S.
subsidiary of the Company after the date of the senior indenture, other than
any such plants, facilities, warehouses or portions thereof, which in the
opinion of the Board of Directors of the Company, are not collectively of
material importance to the total business conducted by the Company and its
Restricted Subsidiaries as an entirety, or which, in each case, has a book
value, on the date of the acquisition or completion of the initial construction
thereof by the Company, of less than 1.5% of Consolidated Tangible Assets.
"Restricted Subsidiary" means any subsidiary of the Company which owns or
leases a Principal Property.
"Sale and Lease-Back Transaction" means an arrangement with any person
providing for the leasing by the Company or a Restricted Subsidiary of any
Principal Property whereby such Principal Property has been or is to be sold or
transferred by the Company or a Restricted Subsidiary to such person; provided,
however, that the foregoing shall not apply to any such arrangement involving a
lease for a term, including renewal rights, for not more than three years.
Subordinated Debt Securities
The indebtedness evidenced by the subordinated debt securities is
subordinated to the extent provided in the subordinated indenture to the prior
payment in full of all senior indebtedness, including any senior debt
securities. Senior indebtedness generally includes all indebtedness for money
borrowed of the Company, except indebtedness that is expressly stated to not be
superior to the subordinated debt securities or to rank equal to the
subordinated debt securities.
19
Upon any distribution of the Company's assets upon any dissolution, winding
up, liquidation or reorganization, payments on the subordinated debt securities
will be subordinated in right of payment to the prior payment in full in cash
of all senior indebtedness.
In the event of any acceleration of the subordinated debt securities because
of an event of default, holders of any senior indebtedness would be entitled to
payment in full in cash of all senior indebtedness before the holders of
subordinated debt securities are entitled to receive any payment or
distribution.
The Company is required to promptly notify holders of senior indebtedness if
payment of the subordinated debt securities is accelerated because of an event
of default. The Company may not make payment on the subordinated debt
securities if a default in the payment of senior indebtedness occurs and is
continuing.
As a result of these subordination provisions, in the event of the Company's
bankruptcy, dissolution or reorganization, holders of senior indebtedness may
receive more, ratably, and holders of the subordinated debt securities may
receive less, ratably, than the Company's other creditors. The subordination
provisions will not prevent the occurrence of any event of default under the
subordinated indenture.
If the trustee or any holder receives any payment that should not have been
made to them in contravention of subordination provisions before all senior
indebtedness is paid in full, then such payment will be held in trust for the
holders of senior indebtedness.
Tyco's guarantee of subordinated debt securities will be subordinated to
Tyco's senior indebtedness. Tyco's senior indebtedness includes Tyco's
guarantee of debt securities issued under the senior indenture.
Concerning the Trustee
The trustee may hold debt securities issued under each indenture, act as a
depository for funds of, make loans to, or perform other services for, Tyco,
the Company and their subsidiaries as if it were not the trustee.
20
DESCRIPTION OF THE COMMON SHARES
The Company's debt securities may be convertible into or exchangeable for
shares of Tyco's common shares. The following description is a summary of the
terms of Tyco's common shares. This description is not complete and is subject
to the applicable provisions of Bermuda law and Tyco's Memorandum of
Association and Bye-Laws, which are filed as exhibits to the registration
statement related to this prospectus. Tyco has authorized 2,500,000,000 common
shares. As of August 9, 2001, there were 1,937,114,215 common shares
outstanding, including shares issuable upon exchange of exchangeable shares of
CIT Exchangeco Inc., an indirect wholly-owned subsidiary of Tyco.
Dividends
Tyco's Board of Directors may declare dividends out of Tyco's available
profits as long as there are no reasonable grounds for believing that:
. Tyco is, or after payment of the dividend would be, unable to pay its
liabilities as they become due, or
. the realizable value of Tyco's assets would thereby be less than the
aggregate of its liabilities and its issued share capital and share premium
accounts.
Subject to special rights of any other Tyco shares, all dividends are payable
according to the amounts paid or credited as paid on common shares. Dividends
are normally payable in U.S. dollars, but holders with a registered address in
the United Kingdom and other countries outside the United States may receive
payment in another currency. Any dividend that is unclaimed may be invested or
otherwise made use of by Tyco's Board, and after a period of 12 years is
forfeited and reverts to Tyco.
Voting rights
At any general meeting, votes may be given in person or by proxy. Tyco's
Bye-Laws require that any proxy must be a registered shareholder of Tyco. Under
Tyco's Bye-Laws, not less than two holders of common shares present, in person
or by proxy, constitute a quorum at a general meeting except as provided under
"Variation of Rights" below.
Under Bermuda law, questions proposed for consideration at a company's
general meeting are decided by a simple majority vote or by the vote required
by the bye-laws, except where a larger majority is required by law. Any
question proposed for consideration at a general meeting may be decided on a
show of hands, in which each shareholder present in person or by proxy is
entitled to one vote and casts this vote by raising his or her hand, unless,
before or on the declaration of the result of a show of hands, a poll is
demanded by
. the Chairman of the meeting;
. at least three shareholders present in person or represented by proxy;
. any shareholder or shareholders present in person or represented by proxy
holding individually or between them at least 10% of the total voting rights
of all shareholders having the right to vote at the meeting; or
. a shareholder or shareholders present in person or by proxy holding shares
conferring the right to vote at the meeting and on which an aggregate sum
has been paid equal to at least 10% of the total sum paid up on all shares
entitled to vote.
Tyco's Bye-Laws provide that a shareholder is not entitled, except as proxy
for another shareholder, to be present or vote at any meeting, either
personally or by proxy, in respect of any share held by the shareholder
(whether alone or jointly with any other person) on which there shall not have
been paid all calls due and payable, together with interest and expenses.
Tyco's Bye-Laws also provide that any person who is known or believed by Tyco
to be interested in common shares, and who has failed to comply with a notice
from Tyco
21
requesting specified information regarding that person's interest in common
shares, will lose voting rights for the period the shareholder fails to comply
with the notice, plus an additional 90 days. In addition, a shareholder loses
voting rights,
. if the shareholder has failed to comply with a notice under Tyco's Bye-Laws
requiring the shareholder to make an offer in accordance with the City Code
on Takeovers and Mergers of the United Kingdom, as applied by Tyco's
Bye-Laws, or, as the case may be, in accordance with Tyco's Bye-Laws,
. for a period of 180 days if the shareholder acquires three percent or more
of the issued share capital of any class of Tyco, either alone or in concert
with others, and fails to notify Tyco of the acquisition within two days,
or, already possessing three percent or more of the issued share capital of
any class of Tyco, fails to notify Tyco of a change in the shareholder's
interests amounting to one percent or more of the share capital of any
class, provided that Tyco notifies the shareholder of the loss of the voting
rights.
Liquidation
On a liquidation of Tyco, holders of common shares are entitled to receive
any assets remaining after the payment of Tyco's debts and the expenses of the
liquidation, subject to special rights of any other class of shares.
Suspension of rights
In certain circumstances, the rights of a shareholder to vote and to receive
any payment or income or capital in respect of a common share may be suspended.
Those circumstances include failure to provide information about ownership of
and other interests in common shares, if so required in accordance with Tyco's
Bye-Laws, as discussed above under "Voting Rights."
Variation of rights
If, at any time, the share capital of Tyco is divided into different classes
of shares, the rights attached to any class (unless otherwise provided by the
terms of issue of the shares of that class) may be varied with written consent
of the holders of three-fourths of the issued shares of that class, or by
resolution passed at a separate general meeting by a majority of three-fourths
of the holders of the shares of that class voting in person or by proxy. Under
Tyco's Bye-Laws, three shareholders holding not less than one-third of the
issued shares of a class, in person or by proxy, constitute a quorum at a
general meeting held for this purpose. At any adjournment of this meeting, two
shareholders of that class, in person or by proxy, constitute a quorum,
irrespective of the amount of their holdings.
Sale, lease or exchange of assets and mergers
Under Bermuda law, there is no requirement for a company's shareholders to
approve a sale, lease or exchange of all or substantially all of a company's
property and assets. Bermuda law provides that a company may enter into a
compromise or arrangement in connection with a scheme for the reconstruction of
the company on terms that include, among other things, the transfer of all or
part of the undertaking or the property of the company to another company. Any
compromise or arrangement of this kind requires the approval of a majority in
number representing three-fourths in value of the creditors or shareholders or
class of shareholders, as the case may be, present and voting either in person
or by proxy at the meeting, and the sanction of the Bermuda Supreme Court.
Under Bermuda law, unless the company's bye-laws provide otherwise, an
amalgamation requires the approval of the holders of at least three-fourths of
those voting at a meeting of shareholders at which a requisite quorum is
present. Tyco's Bye-Laws do not contain any contrary provisions. For purposes
of approval of an amalgamation, all shares, whether or not otherwise entitled
to vote, carry the right to vote. A separate vote of a class of shares is
required if the rights of that class would be altered by virtue of the
amalgamation.
22
Share acquisitions, business combinations and related provisions
Under Tyco's Bye-Law 104(1)(A), if any person, whether as a result of one
transaction or a series of transactions, would be obligated to make an offer to
Tyco's security holders under the Rules of the City Code, Tyco's Board may
require that person to make an offer as if the City Code applied to Tyco. The
City Code provides that, when any person (and persons acting in concert with
that person) acquires shares which carry 30% or more of the voting rights of a
company, that person must make an offer for all shares of any class of equity
share capital (whether voting or non-voting) and also any voting non-equity
share capital in which that person or persons hold shares. The offer must be
for cash or offer a cash alternative, in each case at not less than the highest
price paid (in cash or otherwise) by the offeror, or anyone acting in concert
with the offeror, for shares of the same class during the offer period and
within the 12 months before commencement of the offer.
Tyco's Bye-Law 104(3) further provides that, where any person is interested
in 30% or more of Tyco's outstanding common shares, Tyco's Board may serve a
notice requiring that person to make an offer for all of the outstanding
securities of Tyco if Tyco's Board determines that an offer under Tyco's
Bye-Law 104(1)(A) is not expedient, or if a person required to make the offer
fails to do so. This offer must be made within 30 days of the demand on terms
that payment in full therefor will be made within 21 days of the offer becoming
unconditional in all respects. If Tyco's Board serves a notice under this
provision, the directors may also require that the offeror offer to purchase
securities of Tyco convertible into voting or non-voting shares of Tyco on
terms considered "fair and reasonable" by the directors in their sole
discretion. Unless Tyco's Board otherwise agrees, the offer must be for cash or
must offer a cash alternative at not less than the highest price paid by the
offeror, or any person acting in concert with the offeror, for shares of that
class within the preceding 12 months or, if that price is unavailable or
inappropriate, at a price fixed by the directors. Any offer of this kind must
remain open for at least 14 days after the date on which it becomes
unconditional as to acceptances.
Tyco's Bye-Law 104(1)(B) provides that when any person has acquired, is in
the process of acquiring, or appears to Tyco's Board likely to acquire an
interest in shares of Tyco in circumstances in which that person would be
subject to the "Rules Governing Substantial Acquisitions of Shares" issued by
the Takeover Panel of the United Kingdom, the directors may give notice
requiring that person to comply with these rules. If that person fails to
comply, the directors may give further notice requiring that person, within 28
days of the date of the notice, to dispose, or to procure the disposal by any
person with whom the person has acted in concert, of any interest in shares
acquired. These rules provide that a person may not, in any period of seven
days, acquire shares representing 10% or more of the voting rights in a company
if these shares, aggregated with shares already held by the purchaser, would
carry 15% or more, but less than 30%, of the voting rights of the company. The
rules do not apply to an acquisition from a single shareholder if the
acquisition is the only acquisition within a seven-day period and do not apply
to a person who acquires 30% or more of the voting rights in a company.
Under Tyco's Bye-Laws, any person who acquires an interest in three percent
or more of the issued share capital of any class of Tyco is required to notify
Tyco of that interest and of any change in that person's interest amounting to
one percent or more of the issued capital of any class. This notification must
be made within two days (Saturday and Sundays excluded) after the relevant
event. In determining the percentage interest of any person for these purposes
and for the purposes of Bye-Law 104, interests of persons acting in concert may
be aggregated.
23
ENFORCEMENT OF CIVIL LIABILITIES
The Company and Tyco have consented in each of the indentures to
jurisdiction in the United States federal and state courts in the City of New
York and to service of process in the City of New York in any legal suit,
action or proceeding brought to enforce any rights under or with respect to the
indentures, the debt securities and their guarantees. However, substantially
all of the Company's directly held assets consists of shares in its
wholly-owned subsidiary Tyco Group S.a.r.l., a Luxembourg company which,
through its subsidiaries, owns a substantial majority of the assets of the
Company. A substantial majority of Tyco's directly held assets consists of
shares in the Company. Accordingly, any judgment against the Company or Tyco in
respect of the related indenture, the debt securities or their guarantees,
including for civil liabilities under the United States federal securities
laws, obtained in any United States federal or state court may have to be
enforced in the courts of Luxembourg. Investors should not assume that the
courts of Luxembourg would enforce judgments of United States courts obtained
against the Company or Tyco predicated upon the civil liability provisions of
the United States federal securities laws or that such courts would enforce, in
original actions, liabilities against the Company or Tyco predicated solely
upon such laws.
PLAN OF DISTRIBUTION
The Company may sell debt securities to or through underwriters or dealers,
through underwriting syndicates led by one or more managing underwriters,
through or in connection with hedging transactions, or directly to other
purchasers or through agents. Each prospectus supplement will describe the
method of distribution of the offered securities, the purchase price and the
proceeds the Company will receive from such sale, any initial public offering
price and any securities exchanges on which the securities of such series may
be listed.
The distribution of the debt securities may be effected in one or more
transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
If underwriters are utilized in the sale, the debt securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The debt securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by one
or more investment banking firms or others, as designated. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of the
underwriters or agents to purchase the debt securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all the debt securities if any are purchased. Any initial public offering price
and any underwriting commissions or other items constituting underwriters'
compensation may be changed from time to time.
If a dealer is utilized in the sale of any debt securities, the Company will
sell those debt securities to the dealer, as principal. The dealer may then
resell the debt securities to the public at varying prices to be determined by
the dealer at the time of resale.
The Company may sell debt securities directly to one or more institutional
purchasers, or through agents at a fixed price or prices, which may be changed,
or at varying prices determined at the time of sale. Unless otherwise indicated
in the prospectus supplement, any agent will be acting on a best efforts basis
for the period of its appointment.
In connection with the sale of debt securities, underwriters may receive
compensation from the Company or from purchasers of debt securities for whom
they may act as agents in the form of discounts, concessions, or commissions.
Underwriters may sell debt securities to or through dealers, and such dealers
may receive
24
compensation in the form of discounts, concessions, or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution
of debt securities may be deemed to be underwriters, and any discounts or
commissions received by them from the Company and any profit on the resale of
debt securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Company will be
described, in the prospectus supplement.
Underwriters and agents who participate in the distribution of debt
securities may be entitled under agreements which may be entered into by the
Company to indemnification by the Company and Tyco against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make relating
to such liabilities.
If so indicated in the applicable prospectus supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase offered debt securities from
the Company pursuant to contracts providing for payment and delivery on a
future date. The applicable prospectus supplement will also set forth the
conditions to these contracts and the commissions payable for solicitation of
such contracts. Institutions with which such contracts may be made include:
. commercial and savings banks,
. insurance companies,
. pension funds,
. investment companies, and
. educational and charitable institutions and others,
but in all cases such institutions must be approved by the Company. The
obligations of any purchaser under any such contract will be subject to the
condition that the purchase of the offered debt securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
All of the debt securities will be new issue with no established trading
market. Unless otherwise indicated in a prospectus supplement, the Company does
not currently intend to list any debt securities on any securities exchange. No
assurance can be given that the underwriters, dealers or agents, if any,
involved in the sale of the debt securities will make a market in such debt
securities. Whether or not any of the debt securities are listed on a national
securities exchange or the underwriters, dealers or agents, if any, involved in
the sale of the debt securities make a market in such debt securities, no
assurance can be given as to the liquidity of the trading market for such debt
securities.
To facilitate an offering of securities, certain persons participating in
the offering may engage in transactions that stabilize, maintain, or otherwise
affect the price of the securities. This may include over-allotments or short
sales of the securities, which involves the sale by persons participating in
the offering of more securities than have been sold to them by the Company. In
addition, to cover such over-allotments or short positions, the persons may
purchase in the open market or exercise the over-allotment option granted to
such persons. In addition, such persons may stabilize or maintain the price of
the securities by bidding for or purchasing securities in the open market or by
imposing penalty bids, whereby selling concessions allowed to dealers
participating in any such offering may be reclaimed if securities sold by them
are repurchased in connection with stabilization transactions. The effect of
these transactions may be to stabilize or maintain the market price of the
securities above independent market levels. The persons participating in any
offering are not required to engage in these activities, and may end any of
these activities at any time.
25
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with and perform services for the Company, Tyco and
their subsidiaries and affiliates in the ordinary course of business for which
they receive customary compensation.
LEGAL MATTERS
Certain U.S. legal matters regarding the debt securities, Tyco's guarantees
of the debt securities and the common shares will be passed upon for Tyco and
the Company by Wilmer, Cutler & Pickering, Washington, D.C., counsel to Tyco
and the Company. Certain matters under the laws of Bermuda related to the
guarantees of Tyco of the debt securities and the Tyco common shares will be
passed upon for Tyco by Appleby Spurling & Kempe, Hamilton, Bermuda, Bermuda
counsel to Tyco. Michael L. Jones, Secretary of Tyco, is a partner of Appleby
Spurling & Kempe. Certain matters under the laws of Luxembourg related to the
debt securities will be passed upon by Beghin & Feider in association with
Allen & Overy, Luxembourg counsel to the Company. Wilmer, Cutler & Pickering
will rely on the opinion of Appleby Spurling & Kempe with respect to matters of
Bermuda law and on the opinion of Beghin & Feider in association with Allen &
Overy, with respect to matters of Luxembourg law.
EXPERTS
The consolidated financial statements and financial statement schedule of
Tyco International Ltd. as of September 30, 2000 and 1999, and for each of the
three years in the period ended September 30, 2000, included in Tyco
International Ltd.'s Annual Report on Form 10-K filed on December 21, 2000, and
incorporated by reference into this document, have been audited by
PricewaterhouseCoopers, independent accountants, as set forth in their report
included therein. In its report, that firm states that with respect to a
certain subsidiary its opinion is based upon the report of other independent
accountants, namely Arthur Andersen LLP (as it relates to the consolidated
balance sheet of AMP Incorporated and its subsidiaries as of September 30,
1998, and the related consolidated statements of income, shareholders' equity
and cash flows for the year ended September 30, 1998). The consolidated
financial statements and financial statement schedule referred to above have
been incorporated herein in reliance on said reports given on the authority of
such firms as experts in auditing and accounting.
The consolidated balance sheets of The CIT Group, Inc., a Delaware
corporation ("CIT Delaware"), the predecessor to CIT, as of December 31, 2000
and 1999 and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 2000 have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent certified public accountants,
also incorporated by reference herein, and upon the authority of KPMG LLP as
experts in accounting and auditing. Immediately following the acquisition of
CIT Delaware by Tyco, CIT changed its independent accountants and engaged
PricewaterhouseCoopers.
26
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We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus supplement
and the accompanying prospectus. You must not rely on any unauthorized
information. This prospectus supplement and the accompanying prospectus is not
an offer to sell or buy any securities in any jurisdiction where it is
unlawful. The information in this prospectus supplement is current as of
October 23, 2001 and the information in the accompanying prospectus is current
as of August 31, 2001.
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Forward Looking Information............... S-2
Tyco...................................... S-3
The Company............................... S-4
Recent Developments of Tyco............... S-4
Use of Proceeds........................... S-5
Capitalization of Tyco.................... S-6
Selected Consolidated Historical Financial
Data of Tyco............................ S-8
Description of the Notes and the
Guarantees.............................. S-11
Certain Luxembourg, Bermuda and
United States Federal Income Tax
Consequences............................ S-16
Underwriting.............................. S-19
Legal Matters............................. S-20
Experts................................... S-20
Prospectus
Where You Can Find More Information....... ii
Forward Looking Information............... iv
Tyco...................................... 1
The Company............................... 1
Use of Proceeds........................... 1
Ratio of Earnings to Fixed Charges of Tyco 2
Description of the Debt Securities and the
Guarantees.............................. 3
Description of the Common Shares.......... 21
Enforcement of Civil Liabilities.......... 24
Plan of Distribution...................... 24
Legal Matters............................. 26
Experts................................... 26
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$1,500,000,000
Tyco International Group S.A.
$1,500,000,000 6.375% Notes due 2011
Fully and Unconditionally Guaranteed by
[LOGO OF TYCO]
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PROSPECTUS SUPPLEMENT
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Joint Book-Running Managers
Bear, Stearns & Co. Inc.
Credit Suisse First Boston
ABN AMRO Incorporated
Banc of America Securities LLC
JPMorgan
Lehman Brothers
Merrill Lynch & Co.
Morgan Stanley
BNY Capital Markets, Inc.
McDonald Investments Inc.
Scotia Capital
TD Securities
October 23, 2001
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