Rule 424(b)(5)
Registration No. 33-61237
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THIS PROSPECTUS SUPPLEMENT RELATES TO AN EFFECTIVE REGISTRATION STATEMENT +
+UNDER THE SECURITIES ACT OF 1933, AND IS SUBJECT TO COMPLETION OR AMENDMENT. +
+THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE +
+SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 13, 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 10, 1995
$
[LOGO OF GIDDINGS & LEWIS(R)]
% Notes Due 2005
Interest payable and Due , 2005
--------
The % Notes Due 2005 (the "Notes") are unsecured debt obligations of Giddings
& Lewis, Inc.
(the "Company"). The Notes may not be redeemed by the Company prior to
maturity.
The Notes will be represented by one or more Global Securities (as defined
herein) registered in the name of the nominee of The Depository Trust
Company ("DTC"). Except as provided herein and in the accompanying
Prospectus, Notes in definitive form will not be issued. Settlement for
the Notes will be made in immediately available funds. The Notes will
trade in DTC's Same-Day Funds Settlement System until maturity, and
secondary market trading activity for the Notes will therefore
settle in immediately available funds. See "Description of the
Notes". The Company does not intend to list the Notes on any
securities exchange.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Company (1)(2)
---------- ------------- --------------
Per Note.............................. % % %
Total................................. $ $ $
(1) Plus accrued interest, if any, from , 1995.
(2) Before deduction of expenses payable by the Company estimated at
$ .
--------
The Notes are offered by the Underwriter when, as and if issued by the
Company, delivered to and accepted by the Underwriter and subject to its right
to reject orders in whole or in part. It is expected that delivery of the
Notes, in book-entry form, will be made through the facilities of DTC on or
about , 1995, against payment in immediately available funds.
CS First Boston
The date of this Prospectus Supplement is , 1995.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
The Company is a leading global designer and producer of large, highly-
engineered, high-precision, industrial automation systems, including automated
machine tools, smart manufacturing systems, flexible transfer lines, assembly
automation systems, measuring systems, industrial controls, and related
products and services. These products are supplied primarily to the automotive,
construction, aerospace, defense, appliance, energy and electronics industries.
Through its April 1995 acquisition of Fadal Engineering Company, Inc.
("Fadal"), the Company expanded its product offerings to include smaller
computer numerically controlled vertical machining centers used in industrial
machine shops. See "Recent Development." The Company manufactures its products
at fourteen facilities located in the United States, Canada, England and
Germany.
The Giddings & Lewis name has been continuously present in the Company's
domestic markets for over 100 years. The Company's overall business strategy is
to continue to strengthen its position within the global industrial automation
marketplace by providing customers with a creative, single source for a broad
range of manufacturing products and services. The key ongoing elements of the
Company's business strategy are to (i) continue to implement a focused
customer-oriented marketing approach, (ii) expand and extend the Company's
product lines, and (iii) expand its international franchise.
The Company operates in a single business segment, industrial automation
products, and is organized into four major operating groups: Automation
Technology, Integrated Automation, Automation Measurement and Control, and
European Operations. Net sales attributed to each of the Company's operating
groups for each of the last three years are shown in the following table.
REVENUE BY OPERATING GROUP
(IN THOUSANDS)
YEAR ENDED DECEMBER 31,
----------------------------------------------
1992 1993 1994
-------------- -------------- --------------
% OF % OF % OF
OPERATING GROUP AMOUNT TOTAL AMOUNT TOTAL AMOUNT TOTAL
--------------- -------- ----- -------- ----- -------- -----
Automation Technology.......... $202,206 32.5% $168,662 32.6% $162,895 26.3%
Integrated Automation.......... 251,897 40.4 195,032 37.7 267,778 43.2
Automation Measurement and
Control ...................... 51,265 8.2 56,347 10.9 62,213 10.0
European Operations............ 117,566 18.9 97,421 18.8 126,585 20.5
-------- ----- -------- ----- -------- -----
Total........................ $622,934 100.0% $517,462 100.0% $619,471 100.0%
======== ===== ======== ===== ======== =====
PRODUCTS
The Automation Technology Group, the Integrated Automation Group and the
Automation Measurement and Control Group sell products from the automation
technology, integrated automation and automation measurement and control
product lines, respectively. The European Operations Group sells products from
all three product lines. Each of the Company's product lines is described
below.
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Automation Technology. The Company's automation technology product line
consists primarily of large, highly-engineered, high-precision, computer
numerically controlled machine tools and associated products and services.
Revenues from this product line were 32.0%, 35.6% and 37.4% of total revenues
for 1994, 1993 and 1992, respectively. The following are the most significant
products in this product line:
Horizontal and Vertical Machining Centers, which, through the use of
automatic tool changers, can mill, drill, bore, tap and ream primarily
metal parts of various shapes and sizes, in programmable sequences;
Horizontal and Vertical Lathes, which cut round parts from metal and
other materials;
Horizontal Boring, Drilling, and Milling Machines, which perform the same
functions as horizontal machining centers, but do not have automatic tool
changers;
Cellular and Flexible Manufacturing Systems, which utilize material
handling systems and Company-produced computer numerical controls and
software, and prefixtured pallets to integrate several machine tools to
form a cellular system or to integrate many machine tools to form a
flexible manufacturing system;
Fixtures and Cutting Tools, which are used to hold and to cut, drill, or
bore metal and other parts; and
Drill Point Grinders, which grind specialized drill points including a
helical point which has superior drilling capabilities.
Substantially all of the Company's major machine tools and fixtures are
custom engineered to meet specific customer requirements and, accordingly, have
a high engineering component in their selling prices. Although the Company's
products are produced in a variety of sizes, the historic focus and strength of
its automation technology product line has been large, highly-engineered, high-
precision metal-cutting machine tools such as those used to manufacture major
parts for jet engines and construction equipment. Trading on the Company's name
and reputation, these products occupy the premium-priced segment of the market.
The Company produces the majority of the computer numerical controls and
related software incorporated into its products. The Company's cutting tools
and drill point grinders are primarily sold to standard specifications.
Virtually all of the Company's automated machine tools are computer
numerically controlled. They are designed to operate largely unattended and are
programmable to perform machining functions on a wide variety of metal parts
and other materials. Such standalone machines may be combined with several
pallets (on which parts in process are positioned for machining) and pallet
changers to increase production flow. The next step in automation is to permit
a part to be processed by one machine and automatically transferred to another
machine for further work. The Company provides this capability through cellular
and flexible manufacturing systems that integrate the functions of several
standalone machines with the use of automated transport systems and Company-
produced cell managers and software. Since 1982, the Company has designed its
machine tools and their pallets to be compatible with each other so that its
established customer base can integrate new machines with existing machines.
Standalone machines have historically dominated the Company's machine tool
sales, accounting for approximately 37%, 48% and 51% of automation technology
product line revenues in 1994, 1993 and 1992, respectively. Cellular and
flexible manufacturing systems accounted for approximately 21%, 14% and 14% of
automation technology product line revenues in the same respective years.
Included in such cellular and flexible manufacturing percentages is a certain
volume of standalone sales to customers which create or enlarge machining cells
by integrating the new machines with existing machines.
The Company's revenues from post-sale services and parts are primarily
associated with its automation technology product line. Services include
training, maintenance, repair, remanufacturing and retrofitting, and accounted
for approximately 33%, 32% and 32% of automation technology product line sales
in 1994, 1993
S-3
and 1992, respectively. Sales of such services and parts are at higher gross
margins than the machine tools themselves and have historically been less
sensitive to industry cyclicality than the sale of new equipment.
The other products in the automation technology product line primarily
consist of gray iron and ductile castings which are produced for the Company's
requirements as well as for sales to outside customers. Through its foundry in
Menominee, Michigan, the Company produces gray iron and ductile castings of up
to 35 tons, typically cast from unique patterns supplied by the Company and its
customers and maintained at the foundry.
Integrated Automation. The Company engineers, manufactures and sells flexible
transfer lines, flexible machining systems and special machining systems. The
Company is also a leading domestic designer and manufacturer of custom
automated assembly systems, including dials, synchronous and non-synchronous
transport systems and special handling, testing and measuring systems and
complete multi-unit automatic production systems. These products are for use in
the automotive industry, as well as the major appliance and other high volume
industries. Integrated automation product line revenues for 1994, 1993 and 1992
accounted for 57.9%, 53.5% and 54.3%, respectively, of total revenues for the
Company.
The Company's flexible transfer lines are a combination of individual work
stations arranged in the required sequence, connected by work transfer devices
and integrated with interlocked controls. All types of machining operations,
such as drilling, tapping, reaming, boring and milling are efficiently and
economically combined on transfer machines. Dial, rotary, in-line and pallet-
type are among the different types of flexible transfer line equipment supplied
by the Company. Flexible transfer lines have traditionally been used in the
automotive industry for producing identical components at high production rates
with minimal manual part handling and are applicable to other industries with
high volume requirements. Flexible transfer lines accounted for approximately
65.9%, 64.2% and 61.7% of integrated automation product line revenues in 1994,
1993 and 1992, respectively.
The Company's automated assembly systems are used to assemble a variety of
products, including automotive airbags, household appliances, wing spars for
commercial airlines, and automotive engines and transmissions. The
nonsynchronous assembly systems are used to integrate independent self-powered
assembly stations with a continuous conveyor line and consist of three
principal types of stations: manual stations, which only require that a part be
placed on a pallet; dedicated stations, which perform multiple actions on a
family of parts; and robotic stations, which can be programmed to perform many
functions on a number of parts. Robotics incorporated in the Company's
automated assembly systems are not produced by the Company. Each automated
assembly system is custom engineered by the Company to meet a customer's
specific requirements, with standardized components normally accounting for
only 10% to 15% of any system. Automated assembly systems accounted for
approximately 27.2%, 23.1% and 30.2% of integrated automation product line
revenues in 1994, 1993 and 1992, respectively.
The integrated automation product line also includes broach and piston
turning machines. Both are metalcutting machines. Broach machines are used to
push or pull a multi-tooth cutting tool or the workpiece in relation to each
other to remove material. Broach machines have the ability to rough and finish
in one pass thereby increasing productivity. As the name implies, piston
turning machines are used to manufacture pistons. The machine is unique in that
it is capable of producing the complex shapes required in piston manufacturing.
Automation Measurement and Control. The Company designs and manufactures a
comprehensive line of dimensional measurement products. These include
coordinate measurement machines, gaging products and metrological instruments.
The Company is a leader in the implementation of flexible measurement systems,
which can be supplied either on a standalone basis or as an integral part of
manufacturing systems. The Company also provides a wide range of services,
including gage certification services. In addition, the Company supplies a
broad range of industrial control products, including programmable industrial
computers, computer numerical controls, servo drive systems, operator interface
systems and specialized
S-4
software solutions. These products are designed for use both with the Company's
products and the products of other manufacturers. Automation measurement and
control product line revenues were 10.1%, 10.9% and 8.3% of total revenues for
the Company in 1994, 1993 and 1992, respectively.
CUSTOMERS, SALES AND DISTRIBUTION
The Company's products and manufacturing systems are sold primarily to the
automotive, construction, aerospace, defense, appliance, energy and electronics
industries. Typically, the ten largest customers are large multi-national
companies that account for approximately 50% to 60% of the Company's total
sales, although the composition of these customers varies from year to year.
One customer, Ford Motor Company, accounted for approximately 15.9%, 29.7% and
20.2% of the Company's sales in 1994, 1993 and 1992, respectively. For the same
periods, Chrysler Corporation accounted for approximately 14.2%, 4.4% and 5.9%
of sales, respectively.
A network of sales representatives/distributors is used to sell the Company's
products on a worldwide basis. The sales representative/distributor network is
assisted and supervised by Company sales managers located in key market areas.
The Company's direct sales force is paid a salary plus commission and its
distributors are paid on a commission-only basis.
SALES ARRANGEMENTS
The Company sells substantially all of its products under fixed price
contracts. These contracts are priced after the Company analyzes, among other
things, material, labor, overhead and custom engineering costs involved in the
contract.
Fixed price contracts entail the risk of cost overruns. The risk of such
overruns typically increases in proportion to the complexity and uniqueness of
the engineering and manufacturing tasks involved under any particular contract.
There can be no assurance that the Company will not be adversely affected by
significant cost overruns on its fixed price contracts.
A substantial portion of the products manufactured by the Company involves
long lead times from receipt of a customer order to the shipment of a completed
machine. Under the terms of its sales contracts, and consistent with industry
practice, the Company receives most of its sales price upon shipment of the
product.
RECENT DEVELOPMENT
On April 24, 1995, the Company acquired the stock of Fadal, a worldwide
designer, manufacturer and distributor of computer numerically controlled
vertical machining centers used in industrial machine shops, as well as the
land and buildings used by Fadal in the operation of its business. The total
cash consideration paid at closing by the Company was approximately $180.2
million. The acquisition of Fadal, a leader in the computer numerically
controlled vertical machining center market, expanded and extended the
Company's product offerings and provided the Company with access to new
industrial automation markets. For the year ended December 31, 1994, Fadal had
$137.8 million in net sales (10.6% of which were international sales).
USE OF PROCEEDS
The net proceeds from the sale of the Notes (approximately $ million) will
be used to repay borrowings incurred under the Company's two domestic credit
agreements in connection with the acquisition of Fadal. At August 31, 1995, the
average weighted interest rate on the borrowings to be repaid was approximately
6.50% per annum. Of the borrowings to be repaid, $47.0 million has a scheduled
maturity of April 1996 and the remainder has a scheduled maturity of December
1997.
S-5
CAPITALIZATION
The following table sets forth the capitalization of the Company as of July
2, 1995, and as adjusted to reflect the issuance of the Notes and the
application of the net proceeds therefrom to repay borrowings as described
under "Use of Proceeds."
JULY 2, 1995
--------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN
THOUSANDS)
Short-term debt(a)...................................... $183,938 $
Long-term debt.......................................... --
-------- --------
Total debt............................................ 183,938
-------- --------
Shareholders' equity.................................... 504,505 504,505
-------- --------
Total short-term debt and capitalization.............. $688,443 $
======== ========
--------
(a) Reflects application of the net proceeds of the Notes to the repayment of
borrowings under the Company's two domestic credit agreements.
S-6
SELECTED FINANCIAL DATA
The following historical financial data for the periods indicated have been
derived from the consolidated financial statements of the Company. Financial
data for each of the five years in the period ended December 31, 1994 have been
derived from financial statements audited by Ernst & Young LLP, independent
auditors. The selected financial data for the six months ended July 3, 1994 and
July 2, 1995 have been derived from the unaudited financial statements of the
Company. In the opinion of management of the Company, such unaudited data for
these periods include all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of such data. Results for the
six months ended July 2, 1995 are not necessarily indicative of results that
may be expected for the full year. The unaudited pro forma data reflect the
Company's acquisition of Fadal. See "Recent Development." The pro forma data
for the year ended December 31, 1994 reflect the 1994 historical results of
both the Company and Fadal with pro forma acquisition adjustments as though the
acquisition had occurred on January 1, 1994. The pro forma data for the six
months ended July 3, 1994 and July 2, 1995 have been prepared as though the
acquisition had occurred on January 1, 1994 and 1995, respectively. The
information below should be read in conjunction with the consolidated financial
statements of the Company, the financial statements of Fadal, the pro forma
consolidated financial statements of the Company, related notes and other
financial information incorporated herein by reference.
HISTORICAL PRO FORMA
----------------------------------------------------------------- --------------------------
FISCAL
YEAR
YEARS ENDED DECEMBER 31, SIX MONTHS ENDED ENDED SIX MONTHS ENDED
--------------------------------------------- ------------------ -------- -----------------
JULY 3, JULY 2, JULY 3, JULY 2,
1990 1991 1992 1993 1994 1994 1995 1994 1994 1995
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS
DATA
Net sales............... $242,962 $326,609 $622,934 $517,462 $619,471 $267,835 $325,701 $757,299 $327,900 $378,695
Operating income........ 23,582 30,744 51,826 74,776 75,826 22,946 29,997 102,668 32,636 39,615
Interest expense
(income), net.......... (444) 94 8,158 2,898 (1,025) (619) 3,016 11,839 5,813 6,957
Net income.............. 19,723 22,002 35,532 43,706 47,880 14,100 16,415 55,920 15,925 19,744
Net income available to
common shareholders.... 19,723 21,044 32,896 43,706 47,880 14,100 16,415 55,920 15,925 19,744
Net income per common
share.................. 0.92 0.95 1.16 1.31 1.40 0.41 0.48 1.63 0.46 0.57
STATEMENT OF CASH FLOWS
DATA
Depreciation and
amortization........... $ 6,572 $ 7,457 $ 14,239 $ 14,768 $ 15,399 $ 8,187 $ 9,359 N/A N/A N/A
Expenditures for
property, plant and
equipment.............. 10,118 10,559 13,580 18,849 16,747 8,574 7,307 N/A N/A N/A
DECEMBER 31,
--------------------------------------------- JULY 3, JULY 2,
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS)
BALANCE SHEET DATA
Cash and cash
equivalents............ $ 23,818 $ 12,066 $ 8,501 $ 53,877 $ 24,072 $ 73,579 $ 4,950
Total assets............ 181,573 560,167 627,485 614,016 687,226 620,259 867,879
Short-term debt......... -- 21,400 18,628 -- -- -- 183,938
Long-term debt.......... -- 50,583 68,215 -- -- -- --
Total debt.............. -- 71,983 86,843 -- -- -- 183,938
Shareholders' equity.... 134,503 272,195 325,924 436,010 485,298 452,355 504,505
S-7
RATIOS OF EARNINGS TO FIXED CHARGES
Set forth below are the ratios of earnings to fixed charges (unaudited) for
the Company for the six months ended July 2, 1995 and for the last five years.
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
SIX MONTHS ENDED
JULY 2, 1995 1994 1993 1992 1991 1990
---------------- ---- ---- ---- ---- ----
8.0 32.6 15.4 5.2 15.9 61.4
For the purpose of computing the ratios of earnings to fixed charges,
earnings have been calculated by adding fixed charges to income before income
taxes. Fixed charges represent interest expense and the interest component of
rentals.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes supplements
the description of the general terms of the Debt Securities set forth under the
heading "Description of the Debt Securities" in the accompanying Prospectus, to
which description reference is hereby made.
GENERAL
The Notes will be unsecured general obligations of the Company, and will
constitute a separate series of securities to be issued under the Indenture
referred to in the accompanying Prospectus. The Notes will mature on
, 2005. The Notes will bear interest at the rate set forth on the
cover page of this Prospectus Supplement from , 1995, or the most
recent date to which interest has been paid or provided for, payable semi-
annually on and of each year, commencing ,
1996, to the persons in whose names the Notes are registered at the close of
business on the preceding or , as the case may be. The
Company has initially designated the Trustee as the Paying Agent for the Notes.
Principal of and interest on the Notes will be payable in Milwaukee, Wisconsin.
REDEMPTION
The Notes are not redeemable by the Company prior to maturity and are not
subject to any sinking fund.
DEFEASANCE AND CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF DEFEASANCE
The Notes are subject to legal defeasance and discharge and covenant
defeasance, as described under the caption "Description of the Debt
Securities--Defeasance and Covenant Defeasance" in the accompanying Prospectus.
Under current federal income tax law, the deposit and defeasance described in
the accompanying Prospectus under "Defeasance of Certain Covenants" under the
caption "Description of the Debt Securities--Defeasance and Covenant
Defeasance" will not result in a taxable event to any Holder of the Notes or
otherwise affect the federal income tax consequences of an investment in the
Notes.
The federal income tax treatment of the deposit, defeasance and discharge
described in the accompanying Prospectus under "Defeasance and Discharge" under
the caption "Description of the Debt Securities--Defeasance and Covenant
Defeasance" is not clear. A deposit and discharge may be treated as a taxable
exchange of the Notes for beneficial interests in the trust consisting of the
deposited money or securities. In that event, a Holder of the Notes may be
required to recognize gain or loss equal to the difference between the Holder's
adjusted basis in the Notes and the fair market value of the Holder's
beneficial interest in such trust. Thereafter, such Holder may be required to
include in income a share of the income, gain and loss of
S-8
the trust. As described in the accompanying Prospectus, it is a condition to
such a deposit, defeasance and discharge that the Company must obtain an
opinion of counsel to the effect that such deposit, defeasance and discharge
will not alter the Holders' tax consequences that would have been applicable in
the absence of the deposit, defeasance and discharge. Purchasers of the Notes
should consult their own advisors with respect to the tax consequences to them
of such deposit, defeasance and discharge, including the applicability and
effect of tax laws other than federal income tax law.
GLOBAL SECURITIES
Upon issuance, the Notes will be represented by one or more fully registered
global securities (the "Global Securities"). Each such Global Security will be
deposited with, or on behalf of, DTC, as Depositary, registered in the name of
the nominee of DTC. Unless and until it is exchanged in whole or in part for
Notes in definitive form, no Global Security may be transferred except as a
whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds
securities that its participants ("Participants") deposit with it. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participant's accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.
The Underwriter (as hereinafter defined) is a Direct Participant. Access to the
DTC book-entry system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Purchases of Notes must be made by or through Direct Participants, which will
receive a credit for the Notes on DTC's records. The ownership interest of each
actual purchaser of each Note ("Beneficial Owner") is in turn to be recorded on
the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Ownership of beneficial interests in such Global Security will be
shown only on, and the transfer of such ownership interests will be effected
only through, records maintained by DTC (with respect to interests of Direct
Participants) and on the records of Participants (with respect to interests of
persons held through Participants). The laws of some jurisdictions may require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws may impair the ability to own, transfer or pledge
beneficial interests in Global Securities.
So long as DTC, or its nominee, is the registered owner of a Global Security,
DTC or its nominee, as the case may be, will be considered the sole owner or
Holder of such Global Security and the Notes represented thereby for all
purposes under the Notes and the Indenture. Except in limited circumstances as
described below, Beneficial Owners in a Global Security will not be entitled to
have such Global Security or the Notes represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificates representing the Notes in exchange therefor and will not be
considered the owners or Holders thereof under the Notes or the Indenture.
Accordingly, each Person owning a beneficial interest in a Global Security must
rely on the procedures of DTC and, if such Person is not a Direct Participant,
on the procedures of the Participant
S-9
through which such person owns its interest, to exercise any rights of a Holder
under the Indenture. The Company understands that under existing industry
practices, in the event that the Company requests any action of Holders or that
an owner of a beneficial interest in such a Global Security desires to give or
take any action which a Holder is entitled to give or take under the Indenture,
DTC would authorize the Participants holding the relevant beneficial interests
to give or take such action, and such Participants would authorize Beneficial
Owners owning through such Participants to give or take such action or would
otherwise act upon the instructions of Beneficial Owners. Conveyance of notices
and other communications by DTC to Direct Participants, by Direct Participants
to Indirect Participants, and by Direct Participants and Indirect Participants
to Beneficial Owners will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to time.
Payment of the principal of, and amounts payable on any interest payment date
with respect to, Notes registered in the name of DTC or its nominee will be
made to DTC or its nominee, as the case may be, as the Holder of the Global
Securities representing such Notes. None of the Company, the Trustee, the
Security Registrar, the Paying Agent or any other agent of the Company or the
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
the Global Securities or for supervising or reviewing any records relating to
such beneficial ownership interests. The Company expects that DTC, upon receipt
of any payment of principal or amounts payable on any interest payment date in
respect of a Global Security, will credit the accounts of the Direct
Participants with payment in amounts proportionate to their respective holdings
in principal amount of beneficial interest in such Global Security as shown on
the records of DTC. The Company also expects that payments by Participants to
Beneficial Owners will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name", and will be the
responsibility of such Participants.
If (i) DTC notifies the Company that it is at any time unwilling or unable to
continue as Depositary for such Global Security or if at any time the Company
determines that DTC is unable to continue as Depositary and the Company
thereupon fails to appoint a successor Depositary, (ii) the Company executes
and delivers to the Trustee a Company Order that such Global Security shall be
exchangeable and the transfer thereof registrable or (iii) there shall have
occurred and be continuing an Event of Default with respect to the Notes
evidenced by such Global Security, the Global Securities will be exchangeable
for Notes in definitive form of like tenor and of an equal aggregate principal
amount, in denominations of $1,000 and integral multiples thereof. Such
definitive Notes shall be registered in such name or names as DTC shall
instruct the Trustee. It is expected that such instructions would be based upon
directions received by DTC from Participants with respect to ownership of
beneficial interests in such Global Security.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriter in immediately
available funds. All payments of principal and interest on Notes held by DTC
will be made by the Company to DTC in immediately available funds. Payment of
principal and interest on Notes not held by DTC will be made in clearinghouse
or next-day funds.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearinghouse (next-day) funds. In contrast, the Notes will trade in
DTC's Same-Day Funds Settlement System until maturity, and secondary market
trading activity in the Notes will therefore settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlements in
immediately available funds on trading activity in the Notes.
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1995 (the "Underwriting Agreement"), CS First
Boston Corporation (the "Underwriter") has agreed to purchase from the Company
all of the Notes.
S-10
The Underwriting Agreement provides that the obligations of the Underwriter
are subject to certain conditions precedent and that the Underwriter will be
obligated to purchase all of the Notes, if any are purchased.
The Company has been advised by the Underwriter that it proposes to offer the
Notes to the public initially at the public offering price set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession of % of the principal amount per Note and the Underwriter
and such dealers may allow a discount of % of such principal amount per Note
on sales to certain other dealers. After the initial public offering, the
public offering price and concession and discount to dealers may be changed by
the Underwriter.
The Notes are a new issue of securities with no established trading market.
The Underwriter has advised the Company that it intends to act as a market
maker for the Notes. However, the Underwriter is not obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Notes.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended, or contribute to payments which the Underwriter may be required to
make in respect thereof.
The Underwriter and its affiliates engage in transactions with, and perform
services for, the Company in the ordinary course of business, including various
investment banking services.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to any
resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Company and the dealer from whom such purchase
confirmation is received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Notes without the benefit of a
prospectus qualified under such securities laws, (ii) where required by law,
such purchaser is purchasing as principal and not as agent, and (iii) such
purchaser has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada upon
the issuer or such persons. All or a substantial portion of the assets of the
issuer and such
S-11
persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against the issuer or such persons in Canada or
to enforce a judgment obtained in Canadian courts against the issuer or such
persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies is
advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes
acquired by such purchaser pursuant to this offering. Such report must be in
the form attached to British Columbia Securities Commission Blanket Order BOR
#88/5, a copy of which may be obtained from the Company. Only one such report
must be filed in respect of Notes acquired on the same date and under the same
prospectus exemption.
S-12
PROSPECTUS
$250,000,000
[LOGO OF GIDDINGS & LEWIS(R)]
DEBT SECURITIES
----------------
Giddings & Lewis, Inc. (the "Company") may from time to time offer up to $250
million aggregate principal amount, or, if applicable, the equivalent thereof
in one or more foreign currencies or currency units, of its unsecured debt
securities consisting of notes, debentures or other evidences of indebtedness
(the "Debt Securities"). The Debt Securities may be offered as separate series
in amounts, at prices and on terms to be determined at the time or times of
sale. An accompanying supplement to this Prospectus (the "Prospectus
Supplement") will set forth the specific terms and conditions of the Debt
Securities offered thereby, including, where applicable, the specific
designation, aggregate principal amount, denominations, maturity, rate or rates
and time or times of payment of interest, any terms for redemption, any terms
for sinking or analogous fund payment(s), the initial public offering price,
the proceeds to the Company and any other specific terms in connection with the
offering and sale of such Debt Securities.
The Company may sell the Debt Securities to or through underwriters or
dealers, and may also sell Debt Securities directly to other purchasers or
through agents designated from time to time by the Company. See "Plan of
Distribution." The names of such underwriters, dealers or agents, any
applicable commissions or discounts and the net proceeds to the Company from
the sale of the Debt Securities will be set forth in the accompanying
Prospectus Supplement.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is August 10, 1995.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Midwest Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and Northeast Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a Registration Statement on Form S-
3 (together with any amendments thereto, the "Registration Statement") (of
which this Prospectus is a part) under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Debt Securities. This Prospectus
does not contain all of the information set forth in such Registration
Statement, certain parts of which have been omitted in accordance with the
rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed or incorporated by reference as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference and the exhibits and schedules thereto. For
further information regarding the Company and the Debt Securities, reference is
hereby made to the Registration Statement and such exhibits and schedules,
which may be inspected without charge at the office of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and copies of which may be obtained
from the Commission upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1994.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended April
2, 1995.
3. The Company's Current Reports on Form 8-K dated April 24, 1995 and July
19, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made by this Prospectus shall be deemed to
be incorporated in this Prospectus by reference and to be a part hereof from
the respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents that have been or
may be incorporated in this Prospectus by reference (not including exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to Richard C. Kleinfeldt,
Vice President-Finance and Secretary, Giddings & Lewis, Inc., 142 Doty Street,
Fond du Lac, Wisconsin 54935 (Telephone: (414) 921-9400).
----------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$", "dollars",
"U.S. dollars" or "U.S. $").
2
THE COMPANY
The Company is a leading global designer and producer of large, highly-
engineered, high-precision, industrial automation systems, including automated
machine tools, smart manufacturing systems, flexible transfer lines, assembly
automation systems, measuring systems, industrial controls, and related
products and services. These products are supplied primarily to the automotive,
construction, aerospace, defense, appliance, energy and electronics industries.
Through its April 1995 acquisition of Fadal Engineering Company, Inc., the
Company expanded its product offerings to include smaller computer numerically
controlled vertical machining centers used in industrial machine shops. The
Company manufactures its products at fourteen facilities located in the United
States, Canada, England and Germany.
The Giddings & Lewis name has been continuously present in the Company's
domestic markets for over 100 years. The Company's overall business strategy is
to continue to strengthen its position within the global industrial automation
marketplace by providing its customers with a creative, single source for a
broad range of manufacturing products and services. The key ongoing elements of
the Company's business strategy are to (i) continue to implement a focused
customer-oriented marketing approach, (ii) expand and extend the Company's
product lines, and (iii) expand its international franchise.
The Company is incorporated in the State of Wisconsin and its principal
offices are located at 142 Doty Street, Fond du Lac, Wisconsin 54935. The
Company's telephone number is (414) 921-9400.
USE OF PROCEEDS
The Company currently intends to use the net proceeds from the sale of any
Debt Securities for general corporate purposes, which may include the reduction
of indebtedness, possible acquisitions and such other purposes as will be
stated in any Prospectus Supplement. Pending such use, the net proceeds may be
temporarily invested in short-term investment securities or deposited in
interest-bearing accounts. The precise amounts and timing of the application of
proceeds will depend upon the funding requirements of the Company and the
availability of other funds.
RATIOS OF EARNINGS TO FIXED CHARGES
Set forth below are the ratios of earnings to fixed charges (unaudited) for
the Company for the three months ended April 2, 1995 and for the last five
years.
THREE MONTHS ENDED APRIL 2, YEARS ENDED DECEMBER 31,
--------------------------- ------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
18.2 32.6 15.4 5.2 15.9 61.4
For the purpose of computing the ratios of earnings to fixed charges,
earnings have been calculated by adding fixed charges to income before income
taxes. Fixed charges represent interest expense and the estimated interest
component of rentals.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities will be issued under an Indenture (the "Indenture") by
and between the Company and Firstar Trust Company, as Trustee (the "Trustee").
The Indenture provides that Debt Securities may be issued from time to time in
one or more series pursuant to the terms of one or more Officer's Certificates
or supplemental indentures creating such series. The particular terms of each
series, or of Debt Securities forming a part of a series, which are offered by
a Prospectus Supplement ("Offered Debt Securities") will be described in such
Prospectus Supplement.
3
The following summaries of certain provisions of the Indenture and the Debt
Securities do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Indenture and any
Officer's Certificates or any supplemental indentures relating thereto,
including the definitions therein of certain terms. Wherever particular
Sections or defined terms of the Indenture are referred to herein or in a
Prospectus Supplement, such Sections or defined terms are incorporated by
reference herein or therein, as the case may be.
GENERAL
The Indenture provides that Debt Securities in separate series may be issued
thereunder from time to time without limitation as to aggregate principal
amount. The Company may specify a maximum aggregate principal amount for the
Debt Securities of any series. (Section 301) The Debt Securities are to have
such terms and provisions which are not inconsistent with the Indenture,
including terms and provisions relating to maturity, principal and interest, as
the Company may determine. The Debt Securities will be unsecured unsubordinated
obligations of the Company and will rank on a parity with all other unsecured
and unsubordinated indebtedness of the Company.
The applicable Prospectus Supplement will set forth the price or prices at
which the Offered Debt Securities will be issued and will describe the
following terms of such Offered Debt Securities: (i) the title of such Offered
Debt Securities; (ii) any limit on the aggregate principal amount of such
Offered Debt Securities or the series of which they are a part; (iii) if other
than the Trustee, the identity of each Security Registrar and Paying Agent;
(iv) the date or dates, or the method by which such date or dates are
determined or extended, on which the principal and premium (if any) of any of
such Offered Debt Securities will be payable; (v) the rate or rates (which may
be fixed or variable) at which any of such Offered Debt Securities will bear
interest, or the method, if any, by which such rates will be determined, the
date or dates from which any such interest will accrue, the Interest Payment
Dates on which any such interest will be payable, or the method by which such
date will be determined, and the basis on which interest shall be calculated,
if other than that of a 360-day year of twelve thirty-day months; (vi) if other
than the fifteenth day next preceding an Interest Payment Date, the Regular
Record Date with respect to an Interest Payment Date; (vii) the place or
places, if any, other than or in addition to the Corporate Trust Office, where
the principal of and any premium and interest on any of such Offered Debt
Securities will be payable; (viii) the period or periods within which, the
price or prices at which and the terms and conditions on which any of such
Offered Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (ix) the obligation, if any, of the Company to redeem, repay or
purchase any of such Offered Debt Securities pursuant to any sinking fund or
analogous provision or at the option of the Holder thereof, and the period or
periods within which, the price or prices at which and the terms and conditions
on which any of such Offered Debt Securities will be redeemed, repaid or
purchased, in whole or in part, pursuant to any such obligation; (x) the
denominations in which any of such Offered Debt Securities will be issuable, if
other than denominations of $1,000 and any integral multiple thereof; (xi) if
other than the currency of the United States of America, the currency,
currencies or currency units in which the principal of or any premium or
interest on any of such Offered Debt Securities will be payable (and the manner
in which the equivalent of the principal amount thereof in the currency of the
United States of America is to be determined for purposes of determining the
principal amount deemed to be Outstanding at any time); (xii) if the amount of
principal of or any premium or interest on any of such Offered Debt Securities
may be determined with reference to an index, the manner in which such amounts
will be determined; (xiii) if the principal of or any premium or interest on
any of such Offered Debt Securities is to be payable, at the election of the
Company or the Holder thereof, in one or more currencies or currency units
other than those in which such Offered Debt Securities are stated to be
payable, the currency, currencies or currency units in which payment of any
such amount as to which such election is made will be payable, and the periods
within which and the terms and conditions upon which such election is to be
made; (xiv) if other than the principal amount thereof, the portion of the
principal amount of any of such Offered Debt Securities which will be payable
upon declaration of acceleration of the Maturity thereof; (xv) if applicable,
that such Offered Debt Securities, in whole or any specified part, are
defeasible pursuant to the provisions of the Indenture described under
"Defeasance--Defeasance and Discharge" or "Defeasance--Covenant
4
Defeasance", or under both such captions; (xvi) any addition to or change in
the Events of Default applicable to any of such Offered Debt Securities and any
change in the right of the Trustee or the Holders to declare the principal of
and any premium or interest on any of such Offered Debt Securities due and
payable; (xvii) any addition to or change in the covenants and definitions in
the Indenture or in the provisions of the Indenture described under
"Consolidation, Merger, Conveyance or Transfer" and under "Covenants"; (xviii)
whether any of such Offered Debt Securities will be issuable in whole or in
part in the form of one or more Global Securities and, if so, the respective
Depositaries for such Global Securities and, if different from those described
under the Indenture caption entitled "Registration, Registration of Transfer
and Exchange," any circumstances under which any such Global Security may be
exchanged for Offered Debt Securities registered, and any transfer of such
Global Security may be registered, in the names of Persons other than the
Depositary for such Global Security or its nominee; and (xix) any other terms
of such Offered Debt Securities not inconsistent with the provisions of the
Indenture. (Section 301) If specified in any applicable Prospectus Supplement,
the Debt Securities of any series may be issued in bearer form, and if so
issued, the applicable Prospectus Supplement will describe any additions to or
changes in any of the provisions of the Indenture which are necessary to permit
or facilitate such issuance. (Section 901)
Debt Securities, including Original Issue Discount Securities, may be sold at
a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt Securities
sold at an original issue discount will be described in the applicable
Prospectus Supplement. In addition, certain special United States federal
income tax or other considerations (if any) applicable to any Debt Securities
which are denominated in a currency or currency unit other than United States
dollars will be described in the applicable Prospectus Supplement.
Except to the extent that the covenants described under the caption
"Restrictive Covenants" may otherwise provide, neither the Indenture nor the
Debt Securities will contain any covenants or other provisions designed to
afford Holders of the Debt Securities protection in the event of a highly
leveraged transaction, change in credit rating or other similar occurrence
involving the Company or any Subsidiary.
FORM, EXCHANGE AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the Debt
Securities of each series will be issuable only in fully registered form,
without coupons, and only in denominations of $1,000 and integral multiples
thereof. (Section 302)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Debt Securities of each series
will be exchangeable for other Debt Securities of the same series of any
authorized denomination and of a like tenor and aggregate principal amount.
(Section 305)
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with a written
instrument of transfer duly executed) at the office of the Security Registrar
or at one or more offices or agencies designated by the Company for such
purpose. No service charge will be made for any registration of transfer or
exchange of Debt Securities, but the Company or the Trustee will require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Such transfer or exchange will be effected
upon the Security Registrar being satisfied with the documents of title and
identity of the person making the request. Unless otherwise set forth in the
applicable Prospectus Supplement, the Company has appointed the Trustee as
Security Registrar for each series of Debt Securities for the purpose of
registering Debt Securities and transfers of Debt Securities at its Corporate
Trust Office in Milwaukee, Wisconsin. (Section 305) Any other office or agency
(in addition to the Security Registrar) initially designated by the Company for
the registration and transfer of any Debt Securities will be named in the
applicable Prospectus Supplement. The Company may at any time designate
additional offices and agencies for the registration and transfer or exchange
of any Debt Securities or rescind such designations, except that the Company
will be required to maintain an office or agency in each Place of Payment for
the Debt Securities of each series. (Section 1002)
5
If the Debt Securities of any series are to be redeemed in part, the Company
will not be required to (i) issue, register the transfer of or exchange any
Debt Security of that series during a period beginning at the opening of
business 15 days before the selection of such Debt Securities of that series to
be redeemed and ending at the close of business on the day of the mailing of a
notice of redemption; or (ii) register the transfer of or exchange any Debt
Security so selected for redemption, in whole or in part, except the unredeemed
portion of any such Debt Security being redeemed in part. (Section 305)
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in whole
or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities represented thereby. Each
Global Security will be registered in the name of a Depositary or a nominee
thereof identified in the applicable Prospectus Supplement, and will be
deposited with such Depositary or nominee or a custodian therefor.
Notwithstanding any provision of the Indenture or any Debt Security described
herein, no Global Security may be exchanged for Debt Securities registered in
the name of, and no transfer of a Global Security may be registered to, any
Person other than the Depositary for such Global Security or any nominee of
such Depositary unless (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if
the Company determines that the Depositary is unable to continue as Depositary
and the Company thereupon fails to appoint a successor Depositary; (ii) the
Company executes and delivers to the Trustee a Company Order that such Global
Security shall be so exchangeable and the transfer thereof so registerable;
(iii) the Company provides for such exchange in creating such Global Security
(which will be described in any applicable Prospectus Supplement); (iv) there
shall have occurred and be continuing an Event of Default with respect to the
Debt Securities evidenced by such Global Security; or (v) there shall exist
such circumstances, if any, in addition to or in lieu of those described above
as may be described in the applicable Prospectus Supplement. All securities
issued in exchange for a Global Security or any portion thereof will be
registered in such names as the Depositary may direct. (Section 305)
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indenture. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificates representing Debt Securities in exchange therefor and will not be
considered to be the owners or Holders of such Global Security or any Debt
Securities represented thereby for any purpose under the Debt Securities or the
Indenture. All payments of principal of and any premium and interest on a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) or any such participant (with respect
to interests of persons held by such participants on their behalf). Payments,
transfers, exchanges and other matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by
the Depositary from time to time. None of the Company, the Trustee, the
Security Registrar, the Paying Agent or any agent of the Company or the Trustee
will have any responsibility or liability for (i) any
6
aspects of the Depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in a Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
interests; (ii) the payments to the beneficial owners of the Global Security of
amounts paid to the Depositary or its nominee; or (iii) any other matter
related to the actions and practices of the Depositary. (Section 305)
Secondary trading of notes and debentures of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, beneficial interests
in a Global Security, in some cases, may trade in the Depositary's same-day
funds settlement system, in which secondary market trading activity in those
beneficial interests would be required by the Depositary to settle in
immediately available funds. There is no assurance as to the effect, if any,
that settlement in immediately available funds would have on trading activity
in such beneficial interests. Also, settlement for purchases of beneficial
interests in a Global Security upon the original issuance thereof may be
required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest. (Section 307)
Principal and any premium and interest due on a Debt Security upon Maturity
or upon redemption or repurchase will be paid by wire transfer (if appropriate
instructions are received) against presentation and surrender of the Debt
Security by the Holder thereof at the office of the Paying Agent. Interest
payments on any Debt Security (other than interest due at Maturity or on
redemption or repurchase) will be made by check mailed to the address of the
Person entitled thereto as such address appears in the Security Register;
provided that a Holder of Debt Securities of any series which pay interest on
the same day and which are in an aggregate principal amount in excess of
$10,000,000 may elect to receive payments of interest with respect to such
series via wire transfer. (Section 307) The Paying Agent or Agents initially
designated by the Company for the Debt Securities of a particular series will
be named in the applicable Prospectus Supplement. The Company may at any time
designate additional Paying Agents or one or more other offices or agencies
where the Debt Securities may be presented or surrendered for payment and from
time to time rescind such designations, except that the Company will be
required to maintain an office or agency in each Place of Payment for the Debt
Securities of a particular series. (Section 1002)
All moneys paid by the Company to a Paying Agent or the Trustee for the
payment of the principal of or any premium or interest on any Debt Security
which remain unclaimed at the end of one year after such principal, premium or
interest has become due and payable will be repaid to the Company, and the
Holder of such Security thereafter may, as an unsecured creditor, look only to
the Company for payment thereof, and all liability of the Paying Agent and the
Trustee with respect thereto, and all liability of the Company as a trustee
thereof, shall thereupon cease. (Section 1003)
RESTRICTIVE COVENANTS
Limitations on Liens
The Indenture provides that the Company may not, nor may it permit any
Restricted Subsidiary to, issue, assume or guarantee any indebtedness for
borrowed money (herein referred to as "Debt") if such Debt is secured by a
mortgage or lien (herein referred to as a "Mortgage") upon any Principal
Property of the Company or any Restricted Subsidiary or on any shares of stock
or Debt of any Restricted Subsidiary without in any such case effectively
providing that the Debt Securities of any series Outstanding (together with, if
the Company so determines, any other Debt of the Company or such Restricted
Subsidiary then existing or thereafter created that is not subordinated to the
Debt Securities) must be secured equally and ratably with
7
or prior to such secured Debt, unless the aggregate amount of all such Debt
plus all Attributable Debt (other than Attributable Debt the proceeds of which
are applied to reduce certain indebtedness) would not exceed 10% of
Consolidated Net Tangible Assets. The foregoing restriction will not, however,
apply to (i) Mortgages existing on the date of the Indenture; (ii) Mortgages on
property, shares of stock or Debt of any corporation or other entity existing
at the time such corporation or other entity becomes a Restricted Subsidiary or
an obligor under the Indenture; (iii) Mortgages in favor of the Company or any
Restricted Subsidiary by a Restricted Subsidiary; (iv) Mortgages in favor of
the United States of America or any state thereof, or any agency or
instrumentality thereof, to secure progress, advance or other payments pursuant
to any contract with any such entity or provision of any statute; (v) Mortgages
on property, shares of stock or Debt existing at the time of acquisition
thereof, Mortgages on property which secure the payment of the purchase price
of such property, or Mortgages on property which secure Debt incurred for the
purpose of financing the purchase price of such property or the construction or
development of such property, which Debt is incurred within 360 days after such
acquisition or completion of such construction or development; (vi) Mortgages
to secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vii) any extension, renewal or refinancing (or
successive extensions, renewals or refinancings), in whole or in part, of any
Mortgage referred to in the foregoing clauses (i) to (vi), inclusive, provided,
however, that such extension, renewal or refinancing Mortgage is limited to all
or a part of the same property (plus improvements thereon), shares of stock or
Debt that secured the Mortgage extended, renewed or refinanced and the amount
of Debt secured by such Mortgage is not increased; or (viii) Mortgages for
taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided, that any reserve or
other appropriate provision as shall be required in conformity with generally
accepted accounting principles shall have been made therefor. (Section 1005)
Limitations on Sale and Leaseback Transactions
The Company will not, and will not permit any Restricted Subsidiary to, enter
into any arrangement with any bank, insurance company or other lender or
investor (not including the Company or any Restricted Subsidiary), or to which
any such lender or investor is a party, providing for the leasing by the
Company or a Restricted Subsidiary for a period, including renewals, in excess
of three years of any Principal Property that has been sold or transferred,
more than 360 days after the completion of construction and commencement of
full operation thereof, by the Company or a Restricted Subsidiary to such
lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such Principal Property
(a "Sale and Leaseback Transaction") unless either (i) the Company or such
Restricted Subsidiary would be entitled to issue, assume or guarantee Debt
secured by a Mortgage on the Principal Property to be leased back at least
equal in amount to the Attributable Debt in respect of such transaction without
equally and ratably securing the Debt Securities of any series Outstanding
which are entitled to the benefits of such provision of the Indenture, provided
that such Attributable Debt shall thereupon be deemed to be Debt subject to the
provisions of the "Limitations on Liens" covenant; or (ii) an amount equal to
the net proceeds of the sale of the Principal Property sold and leased back
pursuant to such arrangement is applied to the retirement of Debt Securities or
Debt of the Company or a Restricted Subsidiary having a remaining maturity of
one year or more and which is not subordinated to the Debt Securities of any
series Outstanding. (Section 1006)
"Attributable Debt" means as to any particular Sale and Leaseback
Transaction, at any date as of which the amount thereof is to be determined,
the total amount determined by multiplying (i) the greater of (a) the fair
value of the Principal Property subject to such arrangement or (b) the net
proceeds of the sale of such Principal Property to the lender or investor; by
(ii) a fraction, the numerator of which is the number of months in the
unexpired initial term of the lease of such Principal Property and the
denominator of which is the number of months in the full initial term of such
lease; provided, however, that Sale and Leaseback Transactions with respect to
Principal Property financed by obligations issued by a state or local
government unit will not be included in any calculation of Attributable Debt.
8
"Consolidated Net Tangible Assets" means the aggregate amount of assets less
(a) all current liabilities (excluding any current liabilities for money
borrowed having a maturity of less than 12 months but by its terms being
renewable or extendible beyond 12 months from such date at the option of the
borrower) and (b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles, all as set forth on the
most recent consolidated balance sheet of the Company prepared in accordance
with generally accepted accounting principles.
"Principal Property" means any land, building, machinery or equipment, or
leasehold interests and improvements in respect of the foregoing owned by the
Company or a Restricted Subsidiary, which would be reflected on a consolidated
balance sheet of the Company and its Subsidiaries prepared in accordance with
generally accepted accounting principles and which on the date as of which the
determination is being made exceeds one percent of the Consolidated Net
Tangible Assets, but excluding all such tangible property located outside the
United States of America and excluding any property which, in the opinion of
the Board of Directors set forth in a Board Resolution, is not of material
importance to the total business conducted by the Company and its Subsidiaries,
taken as a whole.
"Restricted Subsidiary" means any Subsidiary that in accordance with
generally accepted accounting principles is consolidated with the Company in
the Company's consolidated financial statements and that generated 5% or more
of the revenues, generated 5% or more of the operating income, or held 5% or
more of the assets of the Company and its consolidated Subsidiaries for or at
the end of the most recently completed fiscal year of the Company for which an
Annual Report on Form 10-K or proxy statement of the Company containing audited
financial results has been filed with the Commission; provided, however, that
"Restricted Subsidiary" shall not include a Subsidiary that is engaged
primarily in financing the operations of the Company or its Subsidiaries, or
both, outside of the United States, and (i) more than 50% of whose net sales
and operating revenues during the preceding four calendar quarters was derived
from, or more than 50% of whose operating property is located in, the United
States or (ii) more than 50% of whose assets consist of securities of other
Restricted Subsidiaries.
"Subsidiary" means any corporation or other entity of which more than 80% of
the outstanding voting stock shall at the time be owned by the Company or by
the Company and one or more Subsidiaries or by one or more Subsidiaries.
(Section 101)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with, or sell or convey all or substantially
all of its assets to, or merge with or into any other person or entity unless
(i) either the Company is the continuing corporation, or the successor is a
corporation organized and existing under the laws of the United States or a
state thereof and the successor corporation expressly assumes by an indenture
supplement the Company's obligations on the Debt Securities and under the
Indenture; (ii) the Company or the successor corporation, as the case may be,
is not immediately after the merger or consolidation, or the sale or
conveyance, in default in the performance of any covenant or condition under
the Indenture; and (iii) after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred or be continuing. (Section 801)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the Indenture
with respect to Debt Securities of any series: (i) default in the payment of
any interest upon any Debt Security of that series when it became due and
payable, and continuance of that default for a period of 30 days; (ii) default
in the payment of the principal of (or premium, if any, on) any Debt Security
of that series when it became due and payable at its Maturity; (iii) default in
the deposit of any sinking fund payment, when due by the terms of a Debt
Security of that series; (iv) default in the performance, or breach, of any
covenant or warranty of the Company in the Indenture with respect to any Debt
Security of that series (other than a covenant or warranty a default
9
in the performance of which or the breach of which is specifically dealt with
elsewhere or that has expressly been included in the Indenture solely for the
benefit of a series other than that series), and continuance of that default or
breach for a period of 30 days after written notice has been given by the
Trustee, or by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series, as provided in the Indenture; (v)
default, after any applicable grace period, by the Company under any instrument
evidencing indebtedness of the Company for borrowed money, if the effect of
such default is to cause more than $10,000,000 in principal amount of such
indebtedness to become due prior to its stated maturity and that acceleration
shall not be rescinded or annulled, or that indebtedness shall not have been
discharged, within 10 days after written notice has been given by the Trustee
or the Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series, as provided in the Indenture; and (vi) certain
events in bankruptcy, insolvency or reorganization. (Section 501)
If an Event of Default with respect to the Debt Securities of any series at
the time Outstanding shall occur and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series by notice as provided in the Indenture may declare
the principal amount of the Debt Securities of that series (or, in the case of
any Debt Security that is an Original Issue Discount Security, such portion of
the principal amount of such Debt Security, as may be specified in the terms of
such Debt Security) to be due and payable immediately. After any such
acceleration, but before a judgment or decree based on acceleration, the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series may, under certain circumstances, rescind and annul
such acceleration if (i) the Company has paid or deposited with the Trustee a
sum sufficient to pay (a) all overdue interest on all Outstanding Securities of
that series, (b) the principal and premium, if any, on any Debt Securities of
that series which have become due otherwise than by such acceleration and any
interest thereon at the rate or rates prescribed therefor in such Debt
Securities, (c) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such Debt
Securities, and (d) certain fees of the Trustee; and (ii) all Events of
Default, other than the non-payment of accelerated principal (or premium, if
any) or interest on Debt Securities of that series, have been cured or waived
as provided in the Indenture. (Section 502) For information as to waiver of
defaults, see "Modification and Waiver".
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable security or indemnity.
(Section 603) Subject to such provisions for the giving of security or the
indemnification of the Trustee, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of any series will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee with respect to the Debt Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing Event
of Default with respect to the Debt Securities of that series; (ii) the Holders
of at least 25% in aggregate principal amount of the Outstanding Securities of
that series have made written request, and such Holder or Holders have offered
reasonable indemnity, to the Trustee to institute such proceeding as Trustee;
and (iii) the Trustee has failed to institute such proceeding, and has not
received from the Holders of a majority in aggregate principal amount of the
Outstanding Securities of that series a direction inconsistent with such
request, within 60 days after such notice, request and offer. (Section 507)
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal of or any premium
or interest on such Security on or after the applicable due date specified in
such Debt Security. (Section 508)
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their
knowledge, is in default in the performance or observance of any of the terms,
provisions and conditions of the Indenture and, if so, specifying all such
known defaults. (Section 1004)
10
MODIFICATION AND WAIVER
Without the consent of any Holders of Outstanding Securities, the Company and
the Trustee may enter into one or more supplemental indentures for any of the
following purposes: (i) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of the
Company in the Indenture and in the Debt Securities; (ii) to add to the
covenants of the Company for the benefit of the Holders of all or any series of
Debt Securities (and if such covenants are to be for the benefit of less than
all series of Debt Securities, stating that such covenants are expressly being
included solely for the benefit of such series) or to surrender any right or
power conferred upon the Company by the Indenture; (iii) to add to or change
any of the provisions of the Indenture to such extent as shall be necessary to
permit or facilitate the issuance of Debt Securities of any series in bearer
form, registrable or not registrable as to principal, and with or without
interest coupons, or to permit or facilitate the issuance of Debt Securities of
any series in uncertificated form; (iv) to add to, change or eliminate any of
the provisions of the Indenture in respect of one or more series of Debt
Securities; provided, however, that any such addition, change or elimination
shall either (a) not adversely affect the rights of the Holders of Outstanding
Securities of any series in any material respect, or (b) not apply to any
Outstanding Securities of any series created prior to the execution of such
supplemental indenture where such addition, change or elimination has an
adverse effect on the rights of the Holders of such Outstanding Securities in
any material respect; (v) to secure the Debt Securities of any series; (vi) to
establish the form or terms of Debt Securities of any series as permitted by
the Indenture; (vii) to evidence and provide for the acceptance of appointment
of a successor Trustee under the Indenture with respect to the Debt Securities
of one or more series and to add to or change any of the provisions of the
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts under the Indenture by more than one Trustee; (viii) to cure any
ambiguity or defect in and to correct or supplement any provision in the
Indenture or any Debt Security of any series that may be inconsistent with any
other provision in the Indenture or in the Debt Security of such series, or to
make any other provisions with respect to matters or questions arising under
the Indenture; provided, however, that any such action shall not adversely
affect the rights of the Holders of Outstanding Securities of any series in any
material respect; (ix) to modify, eliminate or add to the provisions of the
Indenture to such extent as shall be necessary to effect qualification of the
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), or under any similar federal statute hereafter enacted, and to
add to the Indenture such other provisions as may be expressly permitted by the
Trust Indenture Act; or (x) to amend or supplement the restrictions on the
procedures for resale, attempted resale and other transfers of any series of
Debt Securities (whether or not Outstanding) to reflect any change in
applicable law or regulation (or interpretation thereof) or in practices
relating to the resale or transfer of Restricted Securities generally. (Section
901)
Except as described above, the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of each series
affected by a modification or amendment (voting as one class) is required for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, the Indenture pursuant to a supplemental
indenture; provided, however, that no such modification or amendment may,
without the consent of the Holder of each Outstanding Security affected
thereby, (i) extend the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, (ii) reduce the principal amount
of, or any premium or interest on, any Debt Security, (iii) reduce the amount
of principal of an Original Issue Discount Security payable upon acceleration
of the Maturity thereof, (iv) change the place or currency of payment of
principal of, or any premium or interest on, any Debt Security, (v) impair the
right to institute suit for the enforcement of any payment on or with respect
to any Debt Security, (vi) reduce the percentage in principal amount of
Outstanding Securities of any series, the consent of whose Holders is required
for modification or amendment of the Indenture, (vii) reduce the percentage in
principal amount of Outstanding Securities of any series necessary for waiver
of compliance with certain provisions of the Indenture or for waiver of certain
defaults or (viii) modify such provisions with respect to modification and
waiver. (Section 902)
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series may waive compliance by the Company with certain
restrictive provisions of the Indenture. (Section 1007) The
11
Holders of a majority in aggregate principal amount of the Outstanding
Securities of any series may waive any past default under the Indenture, except
a default in the payment of principal, premium or interest and certain
covenants and provisions of the Indenture which cannot be amended without the
consent of the Holder of each Outstanding Security of such series affected.
(Section 513)
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given or taken
any direction, notice, consent, waiver or other action under the Indenture as
of any date, (i) the principal amount of an Original Issue Discount Security
that will be deemed to be Outstanding will be the amount of the principal
thereof that would be due and payable as of such date upon acceleration of the
Maturity thereof to such date, and (ii) the principal amount of a Security
denominated in one or more foreign currencies or currency units that will be
deemed to be Outstanding will be the U.S. dollar equivalent, determined as of
such date in the manner prescribed for such Debt Security, of the principal
amount of such Debt Security (or, in the case of a Debt Security described in
clause (i) above, of the amount described in such clause). Certain Debt
Securities, including those for whose payment or redemption money has been
deposited or set aside in trust for the Holders and those that have been fully
defeased pursuant to Section 1302, will not be deemed to be Outstanding.
(Section 101)
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give or take any direction,
notice, consent, waiver or other action under the Indenture, in the manner and
subject to the limitations provided in the Indenture. In certain limited
circumstances, the Trustee also will be entitled to set a record date for
action by Holders. If a record date is set for any action to be taken by
Holders of a particular series, such action may be taken only by persons who
are Holders of Outstanding Securities of that series on that record date,
whether or not such Holders remain Holders after such record date. To be
effective, such action must be taken by Holders of the requisite principal
amount of such Debt Securities within a specific period following the record
date. For any particular record date, this period will be 90 days. (Section
104)
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of Section
1302, relating to defeasance and discharge of indebtedness, or Section 1303,
relating to defeasance of certain restrictive covenants in the Indenture,
applied to the Debt Securities of any series, or to any specified part of the
series. (Section 1301)
Defeasance and Discharge. The Indenture provides that, upon the Company's
exercise of its option (if any) to have Section 1302 applied to any Debt
Securities, the Company will be discharged from all its obligations with
respect to such Debt Securities (except for certain obligations to exchange or
register the transfer of Debt Securities, to replace stolen, lost or mutilated
Debt Securities, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through the
payment of principal and interest, if any, in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay the
principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities in accordance with the terms of the Indenture and
such Debt Securities. Such defeasance or discharge may occur only if, among
other things, the Company has delivered to the Trustee an Opinion of Counsel to
the effect that Holders of such Debt Securities will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge were not to occur. (Sections 1302 and 1304)
Defeasance of Certain Covenants. The Indenture provides that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants, including those described under "Restrictive Covenants" and in
clause (v) of "Events of Default" and any that may be described in the
applicable Prospectus Supplement, and the
12
occurrence of certain Events of Default, which are described in clause (iv)
(with respect to such restrictive covenants) and clause (v) under "Events of
Default" and any that may be described in the applicable Prospectus Supplement,
will be deemed not to be or result in an Event of Default, in each case with
respect to such Debt Securities. The Company, in order to exercise such option,
will be required to deposit, in trust for the benefit of the Holders of such
Debt Securities, money or U.S. Government Obligations, or both, which, through
the payment of principal and interest, if any, in respect thereof in accordance
with their terms, will provide money in an amount sufficient to pay the
principal of and any premium and interest on such Debt Securities on the
respective Stated Maturities or on redemption in accordance with the terms of
the Indenture and such Debt Securities. The Company will also be required,
among other things, to deliver to the Trustee an Opinion of Counsel to the
effect that Holders of such Debt Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and defeasance
of certain obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
such deposit and defeasance were not to occur. (Sections 1303 and 1304)
NOTICES
Except as may be described in any Prospectus Supplement with respect to the
Holders of a particular series of Debt Securities, notices to Holders of Debt
Securities will be given by mail to the addresses of such Holders as they may
appear in the Security Register. (Sections 101 and 106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the owner
thereof (whether or not such Debt Security may be overdue) for the purpose of
making payment and for all other purposes. (Section 308)
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of Wisconsin. (Section 112)
RELATIONSHIPS WITH THE TRUSTEE
The Trustee is the transfer agent for the Company's common stock and the
Company maintains banking relationships with an affiliate of the Trustee. John
A. Becker, a director of the Company, is President, Chief Operating Officer and
a director of the Trustee's parent corporation, Firstar Corporation, and a
director of the Trustee.
13
FOREIGN CURRENCY RISKS
GENERAL
The principal of, or any premium or interest on, Debt Securities of a series
may be denominated in such foreign currencies or currency units as may be
designated by the Company at the time of offering (the "Foreign Currency
Securities").
THE INFORMATION SET FORTH BELOW DOES NOT DESCRIBE ALL RISKS OF AN INVESTMENT
IN FOREIGN CURRENCY SECURITIES THAT RESULT FROM SUCH DEBT SECURITIES BEING
DENOMINATED IN A FOREIGN CURRENCY OR CURRENCY UNIT EITHER AS SUCH RISKS EXIST
AT THE DATE OF THIS PROSPECTUS OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME.
ANY ADDITIONAL MATERIAL FOREIGN CURRENCY RISKS PERTAINING TO A PARTICULAR DEBT
SECURITY DENOMINATED IN A FOREIGN CURRENCY WILL BE DISCLOSED IN THE PROSPECTUS
SUPPLEMENT REGARDING SUCH DEBT SECURITY. PROSPECTIVE PURCHASERS SHOULD CONSULT
THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN
INVESTMENT IN FOREIGN CURRENCY SECURITIES. FOREIGN CURRENCY SECURITIES ARE NOT
AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise indicated in the applicable Prospectus Supplement, a Foreign
Currency Security will not be sold in, or to a resident of, the country of the
Specified Currency (as defined below) in which such Debt Security is
denominated. The information set forth below is by necessity incomplete and
prospective purchasers of Foreign Currency Securities should consult their own
financial and legal advisors with respect to any matters that may affect the
purchase or holding of a Foreign Currency Security or the receipt of payments
of principal of and any premium and interest on a Foreign Currency Security in
a Specified Currency.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Securities entails significant risks that
are not associated with a similar investment in a security denominated in U.S.
dollars. Such risks include, without limitation, the possibility of significant
changes in the rate of exchange between the U.S. dollar and the currency or
currency unit designated by the Company at the time of offering for payments of
principal or any premium or interest on the Foreign Currency Securities (the
"Specified Currency") and the possibility of the imposition or modification of
foreign exchange controls by either the United States or foreign governments.
Such risks generally depend on economic and political events and the supply of
and demand for the relevant currencies over which the Company has no control.
In recent years, rates of exchange between the U.S. dollar and certain foreign
currencies have been highly volatile and such volatility may be expected in the
future. Fluctuations in any particular exchange rate that have occurred in the
past are not necessarily indicative, however, of fluctuations in the rate that
may occur during the term of any Foreign Currency Security. Depreciation of the
Specified Currency applicable to a Foreign Currency Security against the U.S.
dollar would result in a decrease in the U.S. dollar-equivalent yield of such
Debt Security, in the U.S. dollar-equivalent value of the principal repayable
at Maturity or any premium or interest on such Debt Security and, generally, in
the U.S. dollar-equivalent market value of such Debt Security.
Governments have imposed from time to time exchange controls and may in the
future impose or revise exchange controls at or prior to a Foreign Currency
Security's Maturity. Even if there are not exchange controls, it is possible
that the Specified Currency for any particular Foreign Currency Security would
not be available at the time or times of payment on such Debt Security due to
circumstances beyond the control of the Company.
14
JUDGMENTS
In the event an action based on Foreign Currency Securities were commenced in
a court of the United States, it is likely that such court would grant judgment
relating to such Debt Securities only in U.S. dollars. It is not clear,
however, whether, in granting such judgment, the rate of conversion into U.S.
dollars would be determined with reference to the date of default, the date
judgment is rendered or some other date. Holders of Foreign Currency Securities
would bear the risk of exchange rate fluctuations between the time the amount
of the judgment is calculated and the time the Trustee converts U.S. dollars
into the Specified Currency for payment of the judgment.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities being offered hereby: (i) directly to
purchasers, (ii) through agents, (iii) through underwriters and (iv) through
dealers.
Offers to purchase Debt Securities may be solicited by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the
offer or sale of the Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If underwriters are utilized in the sale, the Company will execute an
underwriting agreement with such underwriters at the time of sale to such
underwriters and the names of the underwriters and the terms of the transaction
will be set forth in the Prospectus Supplement which will be used by the
underwriters to make resales of the Debt Securities in respect of which this
Prospectus is delivered to the public. Any underwriters will acquire Debt
Securities for their own account and may resell such Debt Securities from time
to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices determined at the time of
sale. Debt Securities may be offered to the public either through underwriting
syndicates represented by managing underwriters, or directly by the managing
underwriters. Only underwriters named in the Prospectus Supplement are deemed
to be underwriters in connection with the Debt Securities offered thereby. If
any underwriters are utilized in the sale of the Debt Securities, the
underwriting agreement will provide that the obligations of the underwriters
are subject to certain conditions precedent and that the underwriters with
respect to a sale of Debt Securities will be obligated to purchase all such
Debt Securities, if any are purchased.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
Agents, underwriters and dealers may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the agents, underwriters or dealers may be
required to make in respect thereof. Agents, underwriters and dealers may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
Offers to purchase Debt Securities may be solicited directly by the Company
and sales thereof may be made by the Company directly to institutional
investors or others. The terms of any such sales will be described in the
Prospectus Supplement relating thereto.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents and underwriters to solicit offers by certain institutions to
purchase Debt Securities from the Company at the public offering price set
forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
15
("Contracts") providing for payment and delivery on the date or dates stated in
such Prospectus Supplement. Each Contract will be for an amount not less than,
and unless the Company otherwise agrees the aggregate principal amount of Debt
Securities sold pursuant to Contracts shall be not less nor more than, the
respective amounts stated in such Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but shall in all cases be
subject to the approval of the Company. Contracts will not be subject to any
conditions except the purchase by an institution of the Debt Securities covered
by its Contracts shall not at the time of delivery be prohibited under the laws
of any jurisdiction in the United States to which such institution is subject.
A commission indicated in the Prospectus Supplement will be paid to
underwriters and agents soliciting purchases of Debt Securities pursuant to
Contracts accepted by the Company.
The place and time of delivery for the Debt Securities in respect of which
this Prospectus is delivered are set forth in the accompanying Prospectus
Supplement.
All Debt Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the
Company for public offering and sale may make a market in such Debt Securities,
but such underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of or the trading markets for any Debt Securities.
LEGAL MATTERS
The validity of the Debt Securities will be passed upon for the Company by
Foley & Lardner, Milwaukee, Wisconsin. Certain legal matters will be passed
upon for the underwriters, dealers, purchasers or agents by Jones, Day, Reavis
& Pogue, Chicago, Illinois. Benjamin F. Garmer, III, a partner of Foley &
Lardner, is a director of the Company.
EXPERTS
The financial statements and schedule included or incorporated by reference
in the Company's Annual Report on Form 10-K for the year ended December 31,
1994 and its Current Report on Form 8-K dated April 24, 1995, incorporated by
reference in this Prospectus, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon included therein,
and incorporated herein by reference. Such financial statements and schedule
are incorporated herein by reference in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.
16
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLE-
MENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR-
CUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
The Company................................................................ S-2
Recent Development......................................................... S-5
Use of Proceeds............................................................ S-5
Capitalization............................................................. S-6
Selected Financial Data.................................................... S-7
Ratios of Earnings to Fixed Charges........................................ S-8
Description of the Notes................................................... S-8
Underwriting............................................................... S-10
Notice to Canadian Residents............................................... S-11
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Ratios of Earnings to Fixed Charges........................................ 3
Description of the Debt Securities......................................... 3
Foreign Currency Risks..................................................... 14
Plan of Distribution....................................................... 15
Legal Matters.............................................................. 16
Experts.................................................................... 16
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PROSPECTUS SUPPLEMENT
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