Registration Statement File Nos. 333-36753 and 333-66412
Filed Pursuant to Rule 424(b)(5)
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 3, 1997)
$840,000,000
Weyerhaeuser Company
6% NOTES DUE 2006
----------------
Interest payable on February 1 and August 1
----------------
The notes will mature on August 1, 2006. Weyerhaeuser Company may redeem the
notes, in whole at any time or from time to time in part, at the redemption
prices described in this prospectus supplement. The notes will not be subject
to any sinking fund provision.
----------------
PRICE 99.830% AND ACCRUED INTEREST, IF ANY
----------------
Underwriting
Price to Discounts and Proceeds to
Public Commissions Weyerhaeuser
-------- ------------- ------------
Per Note ............................... 99.830% .600% 99.230%
Total .................................. $838,572,000 $5,040,000 $833,532,000
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the notes to purchasers on or about August
3, 2001.
----------------
Joint Book-Running Managers
MORGAN STANLEY JPMorgan
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DEUTSCHE BANC ALEX. BROWN
TOKYO-MITSUBISHI INTERNATIONAL PLC
July 31, 2001
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Forward-Looking Statements................................................ S-2
Recent Developments....................................................... S-3
Use of Proceeds........................................................... S-7
Ratios of Earnings to Fixed Charges and Earnings to Fixed Charges and
Preferred and Preference Share Dividends................................. S-7
Description of Notes...................................................... S-8
Underwriters.............................................................. S-10
Legal Matters............................................................. S-12
Experts................................................................... S-12
Prospectus
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 3
Use of Proceeds........................................................... 3
Ratios of Earnings to Fixed Charges and Earnings to Fixed Charges and
Preferred and Preference Share Dividends................................. 3
Description of Debt Securities............................................ 4
Description of Preferred Shares........................................... 11
Description of Preference Shares.......................................... 13
Plan of Distribution...................................................... 15
Legal Opinions............................................................ 16
Experts................................................................... 16
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the documents
incorporated or deemed to be incorporated by reference in the prospectus
contain statements concerning our future results and performance and other
matters that are "forward-looking" statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. These forward-looking statements are subject to a number of risks
and uncertainties and should not be relied upon as predictions of future
events. Some of these forward-looking statements can be identified by the use
of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "seeks," "approximately," "intends," "plans," "pro forma,"
"estimates" or "anticipates" or the negative or other variations of those
terms or comparable terminology, or by discussions of strategy, plans or
intentions. In particular, some of these forward-looking statements deal with
matters such as anticipated synergies, cost savings, cash flow, earnings,
earnings per share and shareholder value if our proposed acquisition of
Willamette Industries, Inc. is consummated and with the anticipated effect of
that acquisition, if consummated, on our results of operations, financial
condition and prospects. The accuracy of these forward-looking statements is
subject to a number of risks, uncertainties and assumptions that may cause
actual results to differ materially from those projected, including, but not
limited to:
. the effect of general economic conditions;
. market demand for our products, which may be tied to the relative
strength of various U.S. business segments;
. performance of our manufacturing operations;
. the types of logs harvested in our logging operations;
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. the level of competition from foreign producers;
. the effect of forestry, land use, environmental and other governmental
regulations;
. the risk of losses from fires, floods and other natural disasters; and
. our ability to successfully integrate and manage any businesses or
companies we acquire and to realize anticipated cost savings and
synergies, if any, from those acquisitions, and the ability of any
businesses or companies we acquire to perform in accordance with our
expectations.
We are also a large exporter and operate in a number of countries and we are
affected by changes in economic activity in Canada, Europe and Asia,
particularly Japan, and by changes in currency exchange rates, particularly
the relative value of the U.S. dollar to the Canadian dollar, the Euro, the
Japanese yen, plus restrictions on international trade. These and other
factors that could cause or contribute to actual results differing materially
from these forward-looking statements are discussed in greater detail
elsewhere in this prospectus supplement and in the documents incorporated by
reference in the accompanying prospectus.
RECENT DEVELOPMENTS
Results of Operations for the 13 Weeks Ended July 1, 2001
On July 24, 2001, we issued a press release reporting our results of
operations for the 13-week period ended July 1, 2001. We reported net earnings
of $171 million, or $0.78 per share, on net sales of $3.9 billion for this
period. This compares with net earnings of $203 million, or $0.89 per share,
on net sales of $4.2 billion for the 13-week period ended June 25, 2000. In
this discussion, we sometimes refer to the 13-week period ended July 1, 2001
as the "second quarter" of 2001 and the 13-week period ended June 25, 2000 as
the "second quarter" of 2000.
Net earnings for the second quarter of 2001 include a gain of $0.07 per
share for a one-time reduction in deferred taxes due to a lower Canadian
corporate tax rate and $0.03 per share charge for costs associated with the
transition by Westwood Shipping Line, which is one of our subsidiaries, to a
new charter fleet. Net earnings for the second quarter of 2000 include an
after-tax charge of $0.36 per share to cover estimated costs of a nationwide
class action settlement and claims related to hardboard siding. For further
information regarding this class action, please see our Annual Report on Form
10-K for the fiscal year ended December 31, 2000 and our Quarterly Report on
Form 10-Q for the 13-week period ended April 1, 2001, copies of which may be
obtained as described under "Available Information" in the accompanying
prospectus.
For the 26-week period ended July 1, 2001, net earnings before non-recurring
items were $295 million, or $1.35 per share. This compares with $529 million,
or $2.29 per share, for the 26-week period ended June 25, 2000.
Results for the second quarter of 2001 by segment were:
. Timberlands--Operating earnings were $129 million for the second quarter
of 2001 compared with $160 million for the second quarter of 2000. The
domestic log market improved early in the second quarter of 2001 due to
stronger lumber prices, but weakened as the quarter ended. Export
markets softened throughout the second quarter of 2001 with no signs of
improvement. We expect third quarter 2001 harvest levels to be
seasonally lower with further reductions possible due to dry conditions
in the western United States.
. Wood Products--Operating earnings were $110 million for the second
quarter of 2001 compared with $124 million for the second quarter of
2000. Markets rebounded during the second quarter of 2001 with stronger
prices for most products. Overall demand for wood products was strong
during the second quarter of 2001 due to higher housing starts, a trend
that we expect to continue through the third quarter of 2001. As the
second quarter of 2001 ended, prices were weakening. Uncertainty around
lumber supply is expected to result in continued pricing volatility.
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. Pulp, Paper and Packaging--Operating earnings were $95 million for the
second quarter of 2001 compared with $237 million for the second quarter
of 2000. The segment performed well despite challenging market
conditions and production curtailments. During the second quarter of
2001, prices for paper-grade market pulp dropped significantly, and fine
paper prices began to weaken. We estimate that production for the second
quarter of 2001 was reduced by approximately 410,000 tons as a result of
market, maintenance and strike-related downtime in our pulp, paper and
packaging operations. Market conditions are expected to remain difficult
given the strong U.S. dollar and weak global economic conditions.
. Real estate and related assets--Operating earnings were $62 million for
the second quarter of 2001. This compares with $80 million for the
second quarter of 2000, which included a gain of $21 million on the sale
of assets within a real estate joint venture. Given the strong six-month
backlog of existing orders and favorable mortgage rates, we expect the
real estate business to continue to perform well in the third quarter of
2001.
The press release included the following consolidated financial data with
respect to Weyerhaeuser Company:
Percent
13 Weeks Ended 13 Weeks Ended Increase or
July 1, 2001 June 25, 2000 (Decrease)
-------------- -------------- -----------
(In millions, except
percentages
and per share data)
Per share:
Basic and diluted earnings before
nonrecurring items................. $ 0.74 $ 1.25 (41)%
Less: nonrecurring items/(1)/....... 0.04 (0.36) N/M
------ ------
Basic and diluted net earnings...... $ 0.78 $ 0.89 (12)
====== ======
Net sales............................ $3,852 $4,189 (8)
====== ======
Earnings before income taxes and
nonrecurring items.................. $ 258 $ 447 (42)
Less: income taxes................... (96) (162) (41)
------ ------
Earnings before nonrecurring items... 162 285 (43)
Less (plus): nonrecurring items/(1)/. 9 (82) N/M
------ ------
Net earnings......................... $ 171 $ 203 (16)
====== ======
Weighted average common and
exchangeable shares outstanding..... 220 228
Percent
26 Weeks Ended 26 Weeks Ended Increase or
July 1, 2001 June 25, 2000 (Decrease)
-------------- -------------- -----------
(In millions, except
percentages
and per share data)
Per share:
Basic and diluted earnings before
nonrecurring items................. $ 1.35 $ 2.29 (41)%
Less: nonrecurring items/(1)/....... (0.08) (0.36) (78)
------ ------
Basic and diluted net earnings...... $ 1.27 $ 1.93 (34)
====== ======
Net sales............................ $7,405 $8,114 (9)
====== ======
Earnings before income taxes and
nonrecurring items.................. $ 469 $ 834 (44)
Less: income taxes................... (174) (305) (43)
------ ------
Earnings before nonrecurring items... 295 529 (44)
Less (plus): nonrecurring items/(1)/. (17) (82) (79)
------ ------
Net earnings......................... $ 278 $ 447 (38)
====== ======
Weighted average common and
exchangeable shares outstanding..... 219 231
(footnotes on following page)
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/(1)/Nonrecurring charges for 2001 include after-tax charges of $26 million
($0.12 per share) incurred in the first quarter for one-time costs
associated with information systems outsourcing and $6 million ($0.03 per
share) incurred in the second quarter for costs associated with Westwood
Shipping Line's transition to a new charter fleet. Also included in 2001
is a $15 million ($0.07 per share) benefit reflecting a one-time
reduction in deferred taxes due to a lower Canadian corporate tax rate
that was enacted during the second quarter. The nonrecurring item for
2000 was an $82 million ($0.36 per share) charge taken to cover the
estimated costs of a nationwide class action settlement and claims
related to hardboard siding.
N/M = not meaningful.
Proposed Business Combination Transaction Between Weyerhaeuser Company and
Willamette Industries, Inc.
Following several attempts by us to negotiate a business combination
transaction with Willamette Industries, Inc., on November 29, 2000, Company
Holdings, Inc., our wholly-owned subsidiary, which we refer to as "CHI,"
commenced a tender offer for all of the outstanding shares of common stock of
Willamette at a price of $48.00 per share. On May 7, 2001, we announced that
we were increasing the tender offer price to $50.00 per share. The tender
offer was originally scheduled to expire on January 4, 2001. We have extended
the tender offer a number of times, and the tender offer currently is
scheduled to expire on August 15, 2001, unless further extended by us.
The purpose of the tender offer is for us to acquire control of, and
ultimately the entire equity interest in, Willamette. The tender offer, as the
first step in the proposed acquisition of Willamette, is intended to
facilitate the acquisition of all of Willamette's outstanding shares. If the
tender offer is consummated, we currently intend, promptly afterwards, to seek
to have Willamette consummate a second-step merger or similar business
combination with CHI or another subsidiary of ours, pursuant to which each
then outstanding Willamette share, other than those held by us and our
subsidiaries, will be converted into the right to receive an amount in cash
equal to the highest price per share paid by us in the tender offer.
The tender offer is subject to the fulfillment of specified conditions.
Those conditions include, among others:
(1) there being validly tendered and not withdrawn prior to the expiration
of the tender offer a number of Willamette shares that would represent
at least a majority of all outstanding Willamette shares on a fully
diluted basis,
(2) the waiver or inapplicability of various Willamette defensive
measures, including the redemption of the rights issued under
Willamette's shareholder rights plan, the absence or inapplicability
of restrictions under Oregon law and Willamette's charter documents on
merging Willamette with us, and full voting rights being granted to
any Willamette shares purchased by CHI under both Oregon law and
Willamette's charter documents, and
(3) the receipt of various approvals from governmental regulatory
agencies.
On December 14, 2000, we received early termination of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act in respect of the
proposed combination.
We cannot assure you that the conditions to the tender offer will be
satisfied or waived or that the proposed combination will be consummated on
the terms contemplated, or at all. In the event that any of the conditions to
the tender offer is not satisfied by the time the tender offer expires on
August 15, 2001, we could choose to waive the applicable condition or extend
or withdraw the tender offer. As a result, we cannot assure you that the
tender offer will be consummated by the currently scheduled expiration date or
at all, that we will not further extend the expiration date of the tender
offer or that the price per share we are offering pursuant to the tender offer
will not be further increased.
On December 12, 2000, Willamette formally rejected the tender offer and
recommended that its shareholders not tender shares. On December 21, 2000, we
announced that we were nominating candidates for
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election to Willamette's board of directors at the 2001 annual meeting of
Willamette shareholders. On June 7, 2001 Willamette held its 2001 annual
meeting at which time we believe that its board of directors was restructured
to consist of a total of nine directors, divided into three classes of three
directors each. We believe that Willamette's directors serve staggered terms
of three years each, with one class standing for election each year.
The votes cast at Willamette's 2001 annual meeting were tabulated by
independent inspectors of the election. On July 16, 2001, these independent
inspectors certified that the Willamette shareholders had elected our three
nominees to the Willamette board of directors. As a result, our nominees will
constitute three of the nine directors on Willamette's board.
Assuming that Willamette continues to refuse to negotiate a definitive
merger agreement with us, we currently intend to nominate directors for
election at Willamette's 2002 annual meeting. Based upon our understanding of
the size and structure of Willamette's board of directors and assuming no
further changes in that size and structure, we believe that we would be
entitled to nominate three additional directors for election at that meeting.
However, our current plan to nominate additional directors for election to
Willamette's board is subject to many uncertainties and we cannot predict the
actions we may take with respect to this matter or its eventual outcome.
In connection with the proposed business combination transaction with
Willamette, we have obtained a commitment letter from Morgan Stanley Senior
Funding, Inc. and The Chase Manhattan Bank, both of which are affiliates of
underwriters of this offering and to which we collectively refer as the "Lead
Lenders," to provide $5.7 billion of senior bank financing to fund the
acquisition. We refer to this proposed senior bank financing as the "Proposed
Credit Facilities." The Proposed Credit Facilities are currently expected to
be comprised of
(1) a 364-day revolving credit facility in the aggregate amount of $1.21
billion, which we may, at our option, renew for an additional 12
months provided no default has occurred,
(2) a five-year revolving credit facility in the aggregate amount of $2.06
billion, and
(3) a bridge revolving credit facility in the aggregate amount of $2.43
billion, which will mature either 18 or 24 months after the closing
date of the Proposed Credit Facilities depending on our long-term
unsecured debt rating.
The closing of the Proposed Credit Facilities is subject to conditions,
including the execution of a credit agreement and other definitive
documentation, and individual borrowings will be subject to customary
conditions. Among other things, we expect that the Proposed Credit Facilities
will also contain representations and warranties, financial and other
covenants, mandatory prepayment provisions and events of default.
We estimate that the total amount of funds required to purchase the
outstanding Willamette shares pursuant to the current terms of the tender
offer and to pay estimated fees and expenses related to the tender offer will
be approximately $5.7 billion, substantially all of which is expected to be
financed through borrowings under the Proposed Credit Facilities. We cannot
assure you that the total amount required to complete the proposed
acquisition, if consummated, and pay related fees and expenses will not exceed
$5.7 billion, perhaps substantially, particularly if we were to further
increase the price that we will pay for each Willamette share in the tender
offer. In that regard, we have publicly stated that we are willing to increase
our offer above $50 per share if Willamette will promptly negotiate a
definitive merger agreement with us and demonstrate additional value. In
addition, we expect that, if the combination is consummated, we will assume
approximately $1.7 billion of Willamette's outstanding indebtedness. We expect
that we will seek to obtain alternative financing if the conditions to closing
and borrowing under the Proposed Credit Facilities are not satisfied, but
currently we have no alternative financing plans in place. We cannot assure
you that we will enter into the Proposed Credit Facilities on the terms
currently contemplated, or at all, or that alternative financing would be
available if we do not enter into the Proposed Credit Facilities. Likewise,
although we believe that the Lead Lenders may, in certain circumstances,
provide additional financing if the total amount required for the acquisition
exceeds the amount currently contemplated, there can be no assurance that we
will be able to obtain any additional financing.
S-6
Possible Reduction in Credit Rating on Our Debt Securities
Credit rating agencies may from time to time change their ratings on our
debt securities, including the notes offered by this prospectus supplement, as
a result of our operating results or actions we take or as a result of a
change in the views of the credit rating agencies regarding, among other
things, the general outlook for our industry or the economy. In particular, a
significant increase in the level of our outstanding indebtedness, whether as
a result of the proposed Willamette transaction or otherwise, may result in a
decrease in the credit rating on our debt securities. On November 13, 2000,
Moody's Investors Services announced that it had placed its rating on our
senior unsecured debt, which would include the notes offered by this
prospectus supplement, under review for a possible downgrade as a result of
our proposed acquisition of Willamette. On June 7, 2001, Standard & Poor's
indicated that, if the Willamette transaction is completed as currently
structured, Standard & Poor's will lower its rating on our long-term senior
debt, which would include the notes offered by this prospectus supplement, to
"BBB+" from "A-" and that the outlook for its rating on our long-term debt
will be negative. In addition, we are not able to predict the effect of the
Willamette acquisition, if consummated, on our financial condition or results
of operations, including cash flows, earnings or earnings per share. There can
be no assurance that Standard & Poor's and Moody's will not reduce their
ratings of our debt securities or that other ratings agencies will not reduce
their ratings of our debt securities or place those debt securities on a so-
called "watch list" for possible future downgrading. Any of these events will
likely increase our costs of debt and other financing and have an adverse
effect on the market price of the notes offered by this prospectus supplement.
The credit ratings accorded to our debt securities are not recommendations to
purchase, hold or sell the debt securities inasmuch as those ratings do not
comment as to the market price or suitability for particular investors.
USE OF PROCEEDS
We expect that the net proceeds received by us from the sale of the notes in
this offering will be approximately $833,332,000. We intend to use the net
proceeds for general corporate purposes, which may include reduction of our
short-term debt or commercial paper currently classified as long-term debt,
working capital, capital expenditures and acquisitions. Pending application
for those purposes, we intend to invest the net proceeds in marketable
securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED CHARGES
AND PREFERRED AND PREFERENCE SHARE DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges and
the ratios of earnings to fixed charges and preferred and preference share
dividends for Weyerhaeuser Company and its consolidated subsidiaries for the
periods indicated.
Thirteen Weeks Fiscal Year
------------------ -----------------------------
April 1, March 26,
2001 2000 2000 1999 1998 1997 1996
-------- --------- ----- ----- ----- ----- -----
Ratio of earnings to fixed
charges/(1)/................. 3.22x 4.01x 3.58x 3.45x 2.20x 2.29x 2.59x
Ratio of earnings to fixed
charges and preferred and
preference share
dividends/(1)/............... 3.22x 4.01x 3.58x 3.45x 2.20x 2.29x 2.59x
--------
(1) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of earnings before income taxes, extraordinary items,
undistributed earnings of equity investments and fixed charges. For the
purpose of calculating the ratio of earnings to fixed charges and
preferred and preference share dividends, earnings consist of earnings
before income taxes, extraordinary items, undistributed earnings of
equity investments, fixed charges and preferred and preference share
dividends. Fixed charges consist of interest on indebtedness,
amortization of debt expense and one-third of rents, which is deemed
representative of an interest factor. The ratio of earnings to fixed
charges is the same as the ratio of earnings to fixed charges and
preferred and preference share dividends for all periods shown because we
did not have any preferred or preference shares outstanding in any of the
applicable periods.
S-7
The ratios of earnings to fixed charges and the ratios of earnings to fixed
charges and preferred and preference share dividends of Weyerhaeuser
Company with its Weyerhaeuser Real Estate Company and Weyerhaeuser
Financial Services, Inc. subsidiaries accounted for on the equity method
but excluding the undistributed earnings of those subsidiaries were 2.19x
and 4.25x for the thirteen weeks ended April 1, 2001 and March 26, 2000,
respectively, and 3.58x, 3.78x, 2.72x, 2.91x and 3.26x for the fiscal years
ended December 31, 2000, December 26, 1999, December 27, 1998, December 28,
1997 and December 29, 1996, respectively.
DESCRIPTION OF NOTES
The notes will be issued under an indenture dated as of April 1, 1986, as
amended and supplemented by a first supplemental indenture dated as of
February 15, 1991 and a second supplemental indenture dated as of February 1,
1993, between us and The Chase Manhattan Bank (formerly known as Chemical
Bank), as trustee. We refer to the indenture, as so amended and supplemented,
as the "Indenture." The following summary of selected provisions of the
Indenture and the notes is not complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Indenture and the
notes. The form of Indenture has been filed, and the form of certificate
evidencing the notes will be filed, with the Securities and Exchange
Commission and you may obtain copies as described under "Available
Information" in the accompanying prospectus.
The notes offered by this prospectus supplement are a series of "Debt
Securities" as defined and described in the accompanying prospectus. The
following description of the particular terms of the notes and the Indenture
supplements, and to the extent inconsistent, replaces the description of the
general terms and provisions of the Debt Securities and the Indenture
contained in the accompanying prospectus. Capitalized terms used in the
following description of the notes and not defined have the meanings specified
in the accompanying prospectus or, if not defined in that prospectus, those
terms have the meanings specified in the Indenture.
General
The notes constitute a separate series of Debt Securities under the
Indenture, initially limited to $840 million in aggregate principal amount.
Under the Indenture we may, without the consent of the holders of the notes,
"reopen" the series and issue additional notes from time to time in the
future. The notes offered by this prospectus supplement and any additional
notes we may issue in the future will constitute a single series of Debt
Securities under the Indenture.
The notes are unsecured and unsubordinated obligations of Weyerhaeuser
Company. The notes are not obligations of or guaranteed by any of our
subsidiaries.
The notes will mature on August 1, 2006. Interest on the notes will accrue
from August 3, 2001 at the rate of 6% per annum, payable semi-annually in
arrears on February 1 and August 1 of each year, commencing February 1, 2002,
to the persons in whose names the notes are registered at the close of
business on the January 15 or July 15, as the case may be, next preceding
those interest payment dates. Interest on the notes will be computed on the
basis of a 360-day year consisting of twelve 30-day months.
The notes will be issued in fully registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. The notes will be
issued in book-entry form and will be evidenced by one or more global
certificates, which we sometimes refer to as "global notes," registered in the
name of Cede & Co., as nominee for The Depository Trust Company. Purchasers of
the notes will not be entitled to receive definitive certificates registered
in their names except in the limited circumstances described in the
accompanying prospectus. See "Description of Debt Securities--Global
Securities" in the accompanying prospectus for a summary of selected
provisions applicable to the depository arrangements.
In the event that definitive certificated notes are issued in exchange for
interests in the global notes, the certificated notes may be presented for
payment and surrendered for registration of transfer and exchange at our
agency maintained for that purpose in the Borough of Manhattan, The City of
New York, currently the office of the trustee located at 55 Water Street, 2nd
Floor, Room 234, New York, New York 10041.
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The notes will not be entitled to the benefit of any sinking fund and will
not be subject to repurchase by us at the option of the holders prior to
maturity. Except to the limited extent described in the accompanying
prospectus under "Description of Debt Securities--Consolidation, Merger,
Conveyance or Transfer," the Indenture does not contain any provisions which
are intended to protect holders of notes in the event of a highly-leveraged or
similar transaction affecting us. The Indenture does not limit the incurrence
of debt by us or any of our subsidiaries.
Optional Redemption
The notes will be redeemable, in whole or from time to time in part, at our
option on any date at a redemption price equal to the greater of:
(1) 100% of the principal amount of the notes to be redeemed, and
(2) the sum of the present values of the remaining scheduled payments of
principal and interest on the notes to be redeemed (exclusive of
interest accrued to the applicable redemption date) discounted to that
redemption date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 20 basis
points,
plus, in the case of both clause (1) and clause (2) above, accrued and unpaid
interest on the principal amount of the notes being redeemed to that
redemption date. Notwithstanding the foregoing, payments of interest on the
notes that are due and payable on or prior to a date fixed for redemption of
notes will be payable to the holders of those notes registered as such at the
close of businesses on the relevant record dates according to their terms and
the terms and provisions of the Indenture.
"Treasury Rate" means, with respect to any redemption date for the notes,
(1) the yield, under the heading that represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Board of Governors of the
Federal Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant maturity under
the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Final Maturity Date for the
notes, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such
yields on a straight line basis, rounding to the nearest month), or
(2) if such release (or any successor release) is not published during the
week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price
for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date.
The Treasury Rate shall be calculated on the third Business Day preceding the
applicable redemption date. As used in the immediately preceding sentence and
in the definition of "Reference Treasury Dealer Quotations" below, the term
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law, regulation or executive order to close.
"Comparable Treasury Issue" means, with respect to any redemption date for
the notes, the United States Treasury security selected by the Independent
Investment Banker as having a maturity comparable to the remaining term of the
notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
notes to be redeemed.
"Comparable Treasury Price" means, with respect to any redemption date for
the notes, (1) the average of four Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest such
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Reference Treasury Dealer Quotations, or (2) if the trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
quotations.
"Final Maturity Date" means August 1, 2006.
"Independent Investment Banker" means, with respect to any redemption date
for the notes, Morgan Stanley & Co. Incorporated and its successors or J.P.
Morgan Securities Inc. and its successors, whichever shall be selected by the
trustee after consultation with us, or, if both such firms or the respective
successors, if any, to such firms, as the case may be, are unwilling or unable
to select the Comparable Treasury Issue, an independent investment banking
institution of national standing appointed by the trustee after consultation
with us.
"Reference Treasury Dealer" means, with respect to any redemption date for
the notes, Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc.
and their respective successors (provided, however, that if any such firm or
any such successor, as the case may be, shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"),
the trustee, after consultation with us, shall substitute therefor another
Primary Treasury Dealer), and two other Primary Treasury Dealers selected by
the trustee after consultation with us.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date for the notes, the average, as
determined by the trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the trustee by that Reference Treasury Dealer at
5:00 p.m., New York City time, on the third Business Day preceding that
redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the notes to be redeemed
at the holder's registered address. If less than all the notes are to be
redeemed at our option, the trustee will select, in a manner it deems fair and
appropriate, the notes, or portions of the notes, to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date interest will cease to accrue on the notes or portions of
notes called for redemption on that redemption date.
UNDERWRITERS
Under the terms and subject to the conditions set forth in the underwriting
agreement dated the date of this prospectus supplement, the underwriters named
below, for whom Morgan Stanley & Co. Incorporated and J.P. Morgan Securities
Inc. are acting as joint book-running managers, have severally agreed to
purchase, and we have agreed to sell to them, severally, the principal amounts
of the notes set forth below:
Principal
Name Amount
---- ------------
Morgan Stanley & Co. Incorporated.......................... $357,000,000
J.P. Morgan Securities Inc................................. 357,000,000
Deutsche Banc Alex. Brown Inc.............................. 63,000,000
Tokyo-Mitsubishi International plc......................... 63,000,000
------------
Total.................................................... $840,000,000
============
The underwriters are offering the notes subject to their acceptance of the
notes from us and subject to prior sale. The underwriting agreement provides
that the obligations of the several underwriters to pay for and accept
delivery of the notes are subject to, among other things, the approval of
legal matters by their counsel and other conditions. The underwriters are
obligated to take and pay for all the notes if any are taken.
The underwriters initially propose to offer some of the notes directly to
the public at the public offering price shown on the cover page of this
prospectus supplement and some of the notes to certain dealers at that
S-10
price less a concession not in excess of .350% of the principal amount of the
notes. The underwriters may allow, and those dealers may reallow, a concession
not in excess of .250% of the principal amount of the notes on sales to other
underwriters or certain dealers. After the initial offering of the notes, the
offering price and other selling terms may from time to time be varied by the
underwriters.
The following table shows the underwriting discounts and commissions that we
will pay to the underwriters in connection with this offering, expressed as a
percentage of the principal amount of the notes:
Paid by
Weyerhaeuser
------------
Per note............................ .600%
We estimate that the expenses of this offering payable by us, excluding
underwriting discounts and commissions, will be approximately $200,000.
We do not intend to apply for listing of the notes on a national securities
exchange or any automated quotation system. However, we have been advised by
the underwriters that they presently intend to make a market in the notes, as
permitted by applicable laws and regulations. The underwriters are not
obligated, however, to make a market in the notes and any market making may be
discontinued at any time at the sole discretion of the underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
market for, the notes.
In order to facilitate the offering of the notes, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the notes. Specifically, the underwriters may over-allot in connection with
the offering, creating a short position in the notes for their own account. In
addition, to cover over-allotments or to stabilize the price of the notes, the
underwriters may bid for, and purchase, notes in the open market. Finally, the
underwriting syndicate may reclaim selling concessions allowed to an
underwriter or a dealer for distributing notes in this offering if the
syndicate repurchases previously distributed notes in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the notes above
independent market levels. The underwriters are not required to engage in
these activities, and may end any of these activities at any time.
We have agreed to indemnify the underwriters against specified liabilities,
including liabilities under the Securities Act of 1933.
J.P. Morgan Securities Inc. ("JPMorgan") will make the notes available for
distribution on the Internet through a proprietary web site and/or a third-
party system operated by Market Axess Inc., an Internet-based communications
technology provider. Market Axess Inc. is providing the system as a conduit
for communications between JPMorgan and its customers and is not a party to
any transactions. Market Axess Inc., a registered broker-dealer, will receive
compensation from JPMorgan based on transactions JPMorgan conducts through the
system. JPMorgan will make the notes available to its customers through the
Internet distributions, whether made through a proprietary or third-party
system, on the same terms as distributions made through other channels.
Tokyo-Mitsubishi International plc is not a U.S. registered broker-dealer
and, therefore, to the extent that it intends to effect any sales of notes in
the United States, it may do so only through one or more U.S. registered
broker-dealers as permitted by NASD regulations.
In the ordinary course of business, the underwriters and their affiliates
have provided and may in the future continue to provide investment banking,
commercial banking and other financial services to us and our subsidiaries for
which they have received and will receive compensation. In that regard, Morgan
Stanley & Co. Incorporated is acting as our financial advisor in connection
with the proposed acquisition of Willamette, affiliates of Morgan Stanley &
Co. Incorporated and J.P. Morgan Securities Inc. have entered into a
commitment letter to provide senior bank financing to fund the proposed
acquisition of Willamette, and an affiliate of Morgan Stanley & Co.
Incorporated and J.P. Morgan Securities Inc. will act as arrangers in
connection with that bank
S-11
financing. In addition, The Chase Manhattan Bank, an affiliate of J.P. Morgan
Securities Inc., is trustee under the Indenture pursuant to which the notes
will be issued. See "Recent Developments" and "Description of Notes."
Affiliates of the underwriters are also lenders and, in certain cases, agents
or arrangers under our existing bank credit facilities.
As noted under "Use of Proceeds," we may use the net proceeds from this
offering to repay indebtedness. To the extent that we repay indebtedness owed
to affiliates of the underwriters, this may result in more than 10% of the net
offering proceeds being paid to those affiliates. As a result, this offering
will be made in accordance with NASD Conduct Rule 2710(c)(8).
LEGAL MATTERS
The validity of the notes will be passed upon for us by Claire S. Grace,
Esq., Assistant General Counsel of Weyerhaeuser Company. Sidley Austin Brown &
Wood llp, San Francisco, California will act as counsel for the underwriters.
EXPERTS
The consolidated balance sheets of Weyerhaeuser Company for the fiscal years
ended December 31, 2000 and December 26, 1999 and the related consolidated
statements of earnings, cash flows and shareholders' interest and financial
statement schedule II--valuation and qualifying accounts of Weyerhaeuser
Company for the fiscal years ended December 31, 2000, December 26, 1999 and
December 27, 1998 incorporated by reference in the accompanying prospectus
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated therein
in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
S-12
PROSPECTUS
Weyerhaeuser Company
Debt Securities
Preferred Shares
Preference Shares
----------------
Weyerhaeuser Company (the "Company") may offer from time to time its (i)
debt securities (the "Debt Securities"), (ii) preferred shares and (iii)
preference shares, at an aggregate initial offering price not to exceed the
equivalent of $1,000,000,000, on terms to be determined at the time of sale.
The Debt Securities, preferred shares and preference shares are herein
collectively referred to as the "Securities." As used herein, Debt Securities
shall include Debt Securities denominated in U.S. dollars or, at the option of
the Company if so specified in the accompanying Prospectus Supplement (the
"Prospectus Supplement"), in any other currency, including composite
currencies such as the European Currency Unit. If this Prospectus is being
delivered in connection with a sale of Debt Securities, the specific
designation, aggregate principal amount, maturity, rate and time of payment of
any interest, purchase price, any terms for mandatory or optional redemption
(including any sinking fund), any modification of the covenants and any other
specific terms in connection with the sale of the Debt Securities in respect
of which this Prospectus is being delivered (the "Offered Debt Securities"),
are set forth in the accompanying Prospectus Supplement. If this Prospectus is
being delivered in connection with a sale of preferred shares or preference
shares, the specific designation, number of shares, purchase price and rights,
preference and privileges thereof and any qualifications or restrictions
thereon (including dividends, liquidation value, voting rights, terms of
conversion or exchange (if any), terms for mandatory or optional redemption
(if any) and any other specific terms of the preferred shares or the
preference shares in respect of which this Prospectus is being delivered (the
"Offered Shares"), are set forth in the accompanying Prospectus Supplement.
The Offered Debt Securities and the Offered Shares are herein collectively
referred to as the "Offered Securities." The Prospectus Supplement also
contains information about any listing of the Offered Securities on a
securities exchange.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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 Securities may be offered directly, through agents designated from time
to time, through dealers or through underwriters. Such underwriters may
include Morgan Stanley & Co. Incorporated and/or Goldman, Sachs & Co. and/or
other underwriters, acting alone or with other underwriters. See "Plan of
Distribution." Any such agents, dealers or underwriters are set forth in the
Prospectus Supplement. If an agent of the Company or a dealer or underwriter
is involved in the offering of the Offered Securities, the agent's commission,
dealer's purchase price, underwriter's discount and net proceeds to the
Company will be set forth in, or may be calculated from, the Prospectus
Supplement. Any underwriters, dealers or agents participating in the offering
may be deemed "underwriters" within the meaning of the Securities Act of 1933.
----------------
October 3, 1997
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus or any Prospectus Supplement, and, if given or
made, such information or representation must not be relied upon as having
been authorized by the Company or by any underwriter, dealer or agent. This
Prospectus and any Prospectus Supplement shall 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 or
solicitation in such jurisdiction. Neither the delivery of this Prospectus and
any Prospectus Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that the information therein is correct
as of any time subsequent to the date thereof.
---------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and in accordance therewith
files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C.; Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois; and 7 World Trade Center, New York, New York. Copies of
such information can be obtained by mail from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Certain of such reports, proxy statements and other information are
also available from the Commission over the Internet at http://www.sec.gov.
Reports, proxy statements and other information concerning the Company can
also be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York, at the office of the Midwest Stock Exchange,
440 South LaSalle Street, Chicago, Illinois, and at the office of the Pacific
Stock Exchange, 301 Pine Street, San Francisco, California or 618 South Spring
Street, Los Angeles, California. This Prospectus does not contain all
information set forth in the Registration Statement and the exhibits thereto
which the Company has filed with the Commission under the Securities Act of
1933, as amended, and to which reference is hereby made.
---------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company pursuant to
Section 13 or 15(d) of the 1934 Act are incorporated by reference in this
Prospectus: (a) Annual Report on Form 10-K for the fiscal year ended
December 29, 1996; (b) Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 28, 1997 and June 29, 1997; and (c) Current Reports on Form 8-K
dated January 2, 1997, February 24, 1997, April 15, 1997, May 23, 1997, June
19, 1997, July 1, 1997, July 9, 1997, July 11, 1997, July 17, 1997 and
September 4, 1997.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Prospectus.
The Company will provide without charge upon written or oral request, to
each person to whom a copy of this Prospectus is delivered, a copy of the
material described above (not including exhibits to such documents unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Weyerhaeuser Company, Tacoma, Washington 98477,
Attention: Richard J. Taggart, Director of Investor Relations, telephone
(206) 924-2058.
---------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERING OF THE SECURITIES MAY ENGAGE
IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
SECURITIES OR OTHER SECURITIES OF THE COMPANY. SPECIFICALLY, THE AGENTS
SPECIFIED IN THE RELEVANT PROSPECTUS SUPPLEMENT MAY OVERALLOT IN CONNECTION
WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE SECURITIES OR IN THE
OPEN MARKET, FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION"
IN THIS PROSPECTUS AND "PLAN OF DISTRIBUTION" OR "UNDERWRITING" IN THE
RELEVANT PROSPECTUS SUPPLEMENT.
2
THE COMPANY
Weyerhaeuser Company was incorporated in the state of Washington in January
1900, as Weyerhaeuser Timber Company. It is principally engaged in the growing
and harvesting of timber and the manufacture, distribution and sale of forest
products and real estate and financial services. Its principal business
segments include timberlands and wood products, and pulp, paper and packaging.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds to be received by the Company from the sale of the Securities offered
hereby will be added to the Company's general funds and will be used for
general corporate purposes, including working capital, capital expenditures,
reduction of the Company's short-term debt or commercial paper presently
classified as long-term debt and acquisitions. Pending such application, the
net proceeds may be invested in marketable securities.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED CHARGES AND
PREFERRED AND PREFERENCE SHARE DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges and
earnings to fixed charges and preferred and preference share dividends for the
Company for the periods indicated.
Twenty-six Weeks
-----------------
Year
June 29, June 30, ------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed
Charges(1)......................... 1.88 2.66 2.59 3.81 3.11 2.89 2.27
Ratio of Earnings to Fixed Charges
and preferred and preference share
dividends(1)....................... 1.88 2.66 2.59 3.81 3.11 2.89 2.27
--------
(1) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of earnings before income taxes, extraordinary item and
fixed charges. For the purpose of calculating the ratio of earnings to
fixed charges and preferred and preference share dividends, earnings
consist of earnings before income taxes, extraordinary item, fixed charges
and preferred and preference share dividends. Fixed charges consist of
interest on indebtedness, amortization of debt expense and one-third of
rents which is deemed representative of an interest factor. This ratio
excludes the interest paid on deposit accounts by Republic Federal Savings
and Loan Association, a subsidiary of the Company acquired in 1985 and
dissolved in 1992. If such interest is included for the fiscal year ended
December 27, 1992, the ratio would be 2.25. The ratio of Weyerhaeuser
Company with its Weyerhaeuser Real Estate Company and Weyerhaeuser
Financial Services, Inc. subsidiaries accounted for on the equity method
but excluding the undistributed earnings of those subsidiaries is 1.95 and
3.45 for the twenty-six weeks ended June 29, 1997 and June 30, 1996,
respectively, and 3.26, 6.21, 4.43, 4.02 and 3.32 for the fiscal years
ended December 29, 1996, December 31, 1995, December 25, 1994, December
26, 1993 and December 27, 1992, respectively.
3
DESCRIPTION OF DEBT SECURITIES
The Offered Debt Securities are to be issued in one or more series under an
Indenture, dated as of April 1, 1986, as supplemented by the First
Supplemental Indenture, dated as of February 15, 1991 and the Second
Supplemental Indenture, dated as of February 1, 1993 (the "Indenture"),
between the Company and The Chase Manhattan Bank (formerly Chemical Bank), as
Trustee (the "Trustee"). A copy of the Indenture dated April 1, 1986 is filed
as an exhibit to the registration statement of which this prospectus is a part
and copies of the First Supplemental Indenture and the Second Supplemental
Indenture have been filed as exhibits to the Company's Registration Statements
on Form S-3 (No. 33-52982 and 33-59974). The following summary of certain
provisions of the Indenture does not purport to be complete and is qualified
in its entirety by reference to the Indenture. The numerical references in
parentheses below are to provisions of the Indenture. Whenever a defined term
is indicated, the definition thereof is contained in the Indenture.
General
The Indenture does not limit the amount of debentures, notes or other
evidences of indebtedness ranking pari passu with the Debt Securities which
may be issued thereunder (such securities issued under the Indenture being
herein referred to as "Debt Securities"). The Indenture provides that Debt
Securities may be issued from time to time in one or more series and may be
denominated and payable in foreign currencies or units based on or relating to
foreign currencies, including European Currency Units ("ECUs"). The ECU is an
accounting unit calculated as the weighted average of currencies of the
European Community countries in which relative weights are derived based on
each country's share in intra-European trade and output. Such weights are
subject to periodic realignment upon the deviation of any such currency beyond
its prescribed band of fluctuation. The ECU serves primarily as the accounting
unit for the European Monetary System. Special United States federal income
tax considerations applicable to any Debt Securities as denominated are
described in the relevant Prospectus Supplement. The Debt Securities will be
unsecured and will rank on a parity with any other unsecured and
unsubordinated obligations of the Company.
Reference is made to the Prospectus Supplement for the following terms of
the Offered Debt Securities (to the extent such terms are applicable to such
Debt Securities): (i) designation, aggregate principal amount, purchase price
and denomination; (ii) currency or units based on or relating to currencies in
which such Debt Securities are denominated and/or in which principal (and
premium, if any) and/or any interest will or may be payable; (iii) any date of
maturity; (iv) interest rate or rates (or method by which such rate will be
determined), if any; (v) the dates on which any such interest will be payable;
(vi) the place or places where the principal of, premium, if any, and
interest, if any, on the Offered Debt Securities will be payable; (vii) any
redemption or sinking fund provisions; (viii) any applicable United States
federal income tax consequences, including whether and under what
circumstances the Company will pay additional amounts on Offered Debt
Securities held by a person who is not a U.S. person (as defined in the
Prospectus Supplement) in respect of any tax, assessment or governmental
charge withheld or deducted and, if so, whether the Company will have the
option to redeem such Debt Securities rather than pay such additional amounts;
and (ix) any other specific terms of the Offered Debt Securities, including
additional events of default or covenants provided for with respect to such
Debt Securities and any terms which may be required by or advisable under
United States laws or regulations.
Debt Securities may be presented for exchange and registered Debt Securities
may be presented for transfer in the manner, at the places and subject to the
restrictions set forth in the Debt Securities and the Prospectus Supplement.
See "Description of Debt Securities-Global Securities" below. Such services
will be provided without charge, other than any tax or other governmental
charge payable in connection therewith, but subject to the limitations
provided in the Indenture.
Debt Securities may be issued under the Indenture as Original Issue Discount
Securities (bearing either no interest or bearing interest at a rate which at
the time of issuance is below the prevailing market rate) to be sold at a
substantial discount below their stated principal amount. Any special United
States federal income tax and
4
other considerations applicable to such Original Issue Discount Securities
will be described in the Prospectus Supplement relating thereto.
Debt Securities may be issued, from time to time, with the principal amount
payable on any principal payment date, or the amount of interest payable on
any interest payment date, to be determined by reference to one or more
currency exchange rates, commodity prices, equity indices or other factors.
Holders of such Debt Securities may receive a principal amount on any
principal payment date, or a payment of interest on any interest payment date,
that is greater than or less than the amount of principal or interest
otherwise payable on such dates, depending upon the value on such dates of the
applicable currency, commodity, equity index or other factor. Information as
to the methods for determining the amount of principal or interest payable on
any date, the currencies, commodities, equity indices or other factors to
which the amount payable on such date is linked and certain additional tax
considerations will be set forth in the applicable Prospectus Supplement.
Global Securities
The registered Debt Securities of a series may be issued in the form of one
or more fully registered global Securities (a "Registered Global Security")
that will be deposited with a depositary (a "Depositary") or with a nominee
for a Depositary identified in the Prospectus Supplement relating to such
series and registered in the name of the Depositary or a nominee thereof. In
such case, one or more Registered Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding registered Debt Securities of the series to be
represented by such Registered Global Security or Securities. Unless and until
it is exchanged in whole for Debt Securities in definitive registered form, a
Registered Global Security may not be transferred except as a whole by the
Depositary for such Registered Global Security to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or by such Depositary or any such nominee to a successor of
such Depositary or a nominee of such successor and except in such
circumstances as may be described in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any portion
of a series of Debt Securities to be represented by a Registered Global
Security will be described in the applicable Prospectus Supplement. The
Company anticipates that the following provisions will apply to all depositary
arrangements.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of 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 (the "Exchange Act"). The Depositary holds
securities that its Participants (as defined below) deposit with the
Depositary. The Depositary also facilitates the settlement among Participants
of securities transactions through electronic computerized book-entry changes
in Participants' accounts thereby eliminating the need for physical movement
of securities certificates. Participants include securities brokers and
dealers (including one or more underwriters or agents of the Company), banks,
trust companies, clearing corporations and certain other organizations, some
of whom (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly. The
rules applicable to the Depositary and its Participants are on file with the
Commission.
Ownership of beneficial interests in a Registered Global Security registered
in the name of Depositary (a "Book-Entry Note") will be limited to persons
that have accounts with the Depositary ("Participants") or persons that may
hold interests through Participants. Upon the issue of a Book-Entry Note, the
Depositary will credit, on its book-entry registration and transfer system,
the Participants' accounts with the respective principal amounts of the Book-
Entry Notes beneficially owned by such Participants. The accounts to be
credited shall be designated by any dealers, underwriters or agents
participating in the distribution of such Debt Securities.
5
Ownership of beneficial interests in such Registered Global Security will be
shown on, and the transfer of such ownership interests will be effected only
through, records maintained by the Depositary (with respect to interests of
Participants) and on the records of Participants (with respect to interests of
persons holding through Participants).
So long as the Depositary, or its nominee, is the registered owner of a
Registered Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the Book-Entry Notes
represented by such Registered Global Security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a
Registered Global Security will not be entitled to have the Book-Entry Notes
represented by such Registered Global Securities registered in their names,
will not receive or be entitled to receive physical delivery of certificated
Debt Securities in exchange for Book-Entry Notes and will not be considered
the owners or holders thereof under the Indenture. Accordingly, each Person
owning a beneficial interest in a Registered Global Security must rely on the
procedures of the Depositary and, if such Person is not a Participant, on the
procedures of the Participant through which such Person owns its interest, to
exercise any rights of a holder under the Indenture or a Registered Global
Security. The Company understands that under existing policy of the Depositary
and industry practices, in the event that the Company requests any action of
holders or that an owner of a beneficial interest in such a Registered Global
Security desires to give any notice or take any action (including, without
limitation, any action pursuant to Section 5.7 of the Indenture) which a
holder is entitled to give or take under the Indenture or a Registered Global
Security, the Depositary would authorize the Participants holding the relevant
beneficial interests to give such notice or take such action. Any beneficial
owner that is not a Participant must rely on the contractual arrangements it
has directly, or indirectly through its financial intermediary, with a
Participant to give such notice or take such action.
Payment of principal of and premium, if any, and interest on Registered
Global Securities registered in the name of the Depositary or its nominee will
be made to the Depositary or its nominee, as the case may be, as the
registered owner of the Registered Global Security representing such Book-
Entry Notes. None of the Company, the Trustee or any other agent of the
Company or agent of 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 or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests. The Company
expects that the Depositary, upon receipt of any payment of principal and
premium, if any, and interest in respect of a Registered Global Security, will
immediately credit the accounts of the Participants with payment in amounts
proportionate to their respective beneficial interests in such Registered
Global Security as shown on the records of the Depositary. The Company also
expects that payments by Participants to owners of beneficial interests in a
Registered Global Security 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 (x) the Depositary is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered under the Exchange
Act, and a successor Depositary registered as a clearing agency under the
Exchange Act is not appointed by the Company within 90 days, (y) the Company
executes and delivers to the Trustee or its agent a Company Order to the
effect that the Registered Global Securities of any series shall be
transferable and exchangeable for definitive certificated Debt Securities of
such series or (z) an Event of Default has occurred and is continuing with
respect to the Debt Securities of any series, the Registered Global Securities
of such series will be exchanged for definitive certificated Debt Securities
of such series of like tenor and of an equal aggregate principal amount. Such
definitive certificated Debt Securities shall be registered in such name or
names as the Depositary shall instruct the Trustee. It is expected that such
instructions may be based upon directions received by the Depositary from
Participants with respect to ownership of beneficial interests in such
Registered Global Securities.
6
Certain Restrictions
The following restrictions apply to the Offered Debt Securities unless the
Prospectus Supplement provides otherwise.
Limitation on Liens. The Indenture states that, unless the terms of any
series of Debt Securities provide otherwise, if the Company or any Subsidiary
(as defined in the Indenture) issues, assumes or guarantees any indebtedness
for money borrowed ("Debt") secured by a mortgage, pledge, security interest
or other lien (collectively "Mortgage") on any timber or timberlands of the
Company or such Subsidiary located in the states of Washington, Oregon,
California, Arkansas or Oklahoma or on any principal manufacturing plant of
the Company or such Subsidiary located anywhere in the United States, the
Company must secure or cause such Subsidiary to secure the Debt Securities
(together with, if the Company so determines, any other indebtedness of or
guaranteed by the Company or such Subsidiary ranking equally with the Debt
Securities and then existing or thereafter created) equally and ratably with
(or prior to) such Debt, unless the aggregate amount of all such Debt,
together with all Attributable Debt (as defined in the Indenture) in respect
of Sale and Lease-Back Transactions (as defined below) existing at such time
(other than Sale and Lease-Back Transactions permitted because the Company
would be entitled to incur Debt secured by a Mortgage on the property to be
leased without equally and ratably securing the Debt Securities pursuant to
provisions described elsewhere under this caption "Limitation on Liens" and
other than Sale and Leaseback Transactions the proceeds of which have been
applied in accordance with clause (b) of the second paragraph under "--
Limitation on Sale Lease-Back Transactions" below) would not exceed 5% of the
"shareholders' interest in the Company and its consolidated Subsidiaries" (as
defined in the Indenture), as shown on the audited consolidated balance sheet
contained in the latest annual report to shareholders of the Company. The term
"principal manufacturing plant" does not include any manufacturing plant that
in the opinion of the Board of Directors is not a principal manufacturing
plant of the Company and its Subsidiaries. The exercise of the Board of
Directors' discretion in determining which of the Company's plants are
"principal manufacturing plants" could have the effect of limiting the
application of the limitation on liens. The following types of transactions
are not deemed to create Debt secured by a Mortgage: (a) the sale, Mortgage or
other transfer of timber in connection with an arrangement under which the
Company or a Subsidiary is obligated to cut some or all of such timber to
provide the transferee with a specified amount of money however determined;
and (b) the Mortgage of any property of the Company or any Subsidiary in favor
of the United States or any state, or any department, agency or
instrumentality of either, to secure any payments to the Company or any
Subsidiary pursuant to any contract or statute.
Such limitation will not apply to Mortgages (a) securing Debt of a
Subsidiary to the Company or another Subsidiary; (b) created, incurred or
assumed contemporaneously with, or within 90 days after, the acquisition or
improvement or construction of the mortgaged property to secure or provide for
the payment of any part of the purchase price of such property or the cost of
such construction or improvement, provided that in the case of construction or
improvement, the Mortgage does not apply to any property previously owned by
the Company or any Subsidiary other than unimproved real property on which the
property so constructed, or the improvement, is located; (c) existing at the
time of acquisition of the mortgaged property; or (d) any extension, renewal
or replacement of any Mortgage described in (b) and (c), not in excess of the
principal amount of such Debt and limited to all or part of the same property
secured by the Mortgage so extended, renewed or replaced. (Section 3.6)
Limitation on Sale and Lease-Back Transactions. The Indenture states that,
unless the terms of any series of Debt Securities provide otherwise, neither
the Company nor any Subsidiary may lease any real property in the United
States (except for temporary leases for a term of not more than three years),
which property has been or is to be sold or transferred by the Company or such
Subsidiary to such lessor (a "Sale and Lease-Back Transaction"). (Section 3.7)
Such limitation will not apply to any Sale and Lease-Back Transaction if (a)
the Company or such Subsidiary would be entitled to incur Debt secured by a
Mortgage on the leased property without equally and ratably securing the Debt
Securities as described in "Limitation on Liens" above or (b) the Company,
within
7
90 days of the effective date of any such Sale and Lease-Back Transaction,
applies an amount equal to the fair value (as determined by the Board of
Directors of the Company) of the leased property to the retirement of Debt
that matures at, or is extendable or renewable at the option of the obligor
to, a date more than 12 months after the date of the creation of such Debt.
(Section 3.7)
Events of Default
An Event of Default will occur under the Indenture with respect to any
series of Debt Securities if (a) the Company fails to pay when due any
installment of interest on any of such Debt Securities and such default
continues for 30 days, (b) the Company fails to pay when due all or any part
of the principal of (and premium, if any, on) any of such Debt Securities
(whether at maturity, upon redemption, upon acceleration or otherwise),
(c) the Company fails to deposit any sinking fund payment when due on any of
such Debt Securities, (d) the Company defaults in the performance of, or
breaches, any other covenant or warranty in respect of such Debt Securities
and such default or breach continues for 90 days after written notice by the
Trustee or the holders of at least 25% in principal amount of the outstanding
Debt Securities of all series affected thereby, or (e) certain events of
bankruptcy, insolvency or reorganization with respect to the Company have
occurred and are continuing. (Section 5.1)
If an Event of Default due to failure to pay the principal of, or interest
or any sinking fund payment on, any series of Debt Securities or the breach of
any other covenant or warranty of the Company applicable to less than all
series of Debt Securities then outstanding has occurred and is continuing,
either the Trustee or the holder or holders of 25% in principal amount of such
Debt Securities then outstanding (each such series voting as a separate class)
may declare the principal of all such Debt Securities and interest accrued
thereon to be due and payable immediately. If an Event of Default due to
default in the performance of any other covenant or agreement in the Indenture
applicable to all outstanding Debt Securities or due to certain events of
bankruptcy, insolvency and reorganization of the Company has occurred and is
continuing, either the Trustee or the holder or holders of 25% in principal
amount of all Debt Securities then outstanding (treated as one class) may
declare the principal of all Debt Securities and interest accrued thereon to
be due and payable immediately. The holders of a majority in principal amount
of the Debt Securities of such series (or of all series, as the case may be)
then outstanding may rescind such declaration if, prior to the entry of a
judgment or decree with respect to such acceleration, the Company pays or
deposits with the Trustee a sum sufficient to pay all matured installments of
interest on the outstanding Debt Securities of such series (or of all the
Securities, as the case may be) and all the principal of the Debt Securities
of such series (or of all the Securities, as the case may be) that have become
due otherwise than by acceleration and certain other expenses and if all other
Events of Default under the Indenture have been cured, waived or otherwise
remedied as permitted by the Indenture. In addition, prior to a declaration of
the acceleration of the maturity of the Debt Securities of any series, the
holders of a majority in aggregate principal amount of the outstanding Debt
Securities of such series (or of all series, as the case may be) may waive
past defaults or Events of Default (except a continuing default in payment of
principal of (or premium, if any) or interest on the Debt Securities and
except a default in respect of a covenant or provision which cannot be
modified or amended without the consent of the holder of each Debt Security
affected). (Sections 5.1 and 5.10)
The holder or holders of a majority in principal amount of the outstanding
Debt Securities of any series may 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, provided that such
direction may not conflict with any rule of law or the Indenture. (Section
5.9) Before proceeding to exercise any right or power under the Indenture at
the direction of such holder or holders, the Trustee is entitled to receive
from such holder or holders reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with any such direction. (Section 5.6)
The Company is required to furnish to the Trustee annually a statement of
certain of its officers to the effect that, to the best of their knowledge,
the Company is not in default in the performance of the terms of the Indenture
or, if they have knowledge that the Company is in default, specifying such
default. (Section 3.5)
8
The Indenture requires the Trustee to give to all holders of outstanding
Debt Securities of any series notice of any default by the Company with
respect to that series, unless such default has been cured or waived; however,
except in the case of a default in the payment of principal of (and premium,
if any) or interest on any outstanding Debt Securities of that series, the
Trustee is entitled to withhold such notice in the event that the board of
directors, the executive committee or a trust committee of directors or
certain officers of the Trustee in good faith determine that withholding such
notice is in the interest of the holder or holders of the outstanding Debt
Securities of that series.
Defeasance and Discharge
The following defeasance provision will apply to the Offered Debt Securities
unless the Prospectus Supplement provides otherwise.
The Indenture provides that, unless the terms of any series of Debt
Securities provide otherwise, the Company will be discharged from its
obligations in respect of the Indenture and the outstanding Debt Securities of
such series (including its obligation to comply with the provisions referred
to under "Certain Restrictions," if applicable, but excluding certain other
provisions thereof, such as the right of holders of Debt Securities of such
series to receive payments of principal thereof and interest thereon on the
original stated due dates (but not upon acceleration), and obligations to
register the transfer or exchange of such outstanding Debt Securities and to
replace stolen, lost or mutilated certificates), upon the irrevocable deposit,
in trust, of cash or U.S. Government Obligations (as defined in the Indenture)
which through the payment of interest and principal thereof in accordance with
their terms will provide cash in an amount sufficient to pay any installment
of principal of (and premium, if any) and interest on and mandatory sinking
fund payments in respect of such outstanding Debt Securities on the stated
maturity of such payments in accordance with the terms of the Indenture and
such outstanding Debt Securities, provided that the Company has delivered to
the Trustee an officers' certificate or an opinion of counsel to the effect
that the Company has received from, or there has been published by, the
Internal Revenue Service a ruling to the effect that such a discharge will not
be a taxable event with respect to holders of the outstanding Debt Securities
of such series and that certain other conditions are met. (Section 10.1)
Modification of the Indenture
The Indenture provides that the Company and the Trustee may enter into
supplemental indentures without the consent of the holders of Debt Securities
to: (a) secure any Debt Securities, (b) evidence the assumption by a successor
corporation of the obligations of the Company, (c) add covenants for the
protection of the holders of Debt Securities, (d) cure any ambiguity or
correct any inconsistency in the Indenture or to make other changes deemed
desirable, so long as no such action adversely affects the holders of Debt
Securities, (e) establish the form or terms of Debt Securities of any series,
and (f) evidence the acceptance of appointment by a successor trustee.
(Section 8.1)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holder or holders of not less than a majority
in principal amount of Debt Securities of all series then outstanding and
affected (voting as one class), to add any provisions to, or change in any
manner or eliminate any of the provisions of, the Indenture or modify in any
manner the rights of the holder or holders of the Debt Securities of each
series so affected, provided that the Company and the Trustee may not, without
the consent of the holder of each outstanding Debt Security affected thereby,
(a) extend the stated maturity of the principal of any Debt Security, or
reduce the principal amount thereof or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption
thereof, or impair the right to institute suit for the enforcement of any such
payment when due, or (b) reduce the percentage in principal amount of Debt
Securities of any series the consent of the holder or holders of which is
required for any such modification. (Section 8.2)
9
Consolidation, Merger, Conveyance or Transfer
The Company may, without the consent of the Trustee or the holders of Debt
Securities, consolidate or merge with, or convey, transfer or lease all or
substantially all of its assets to any other entity, provided that any
successor must be an entity organized under the laws of the United States of
America or any state and must expressly assume all obligations of the Company
under the Debt Securities and that certain other conditions must be met.
Thereafter, except in the case of a lease, the Company will be relieved of all
obligations thereunder. (Article Nine)
Applicable Law
The Debt Securities and the Indenture will be governed by and construed in
accordance with the laws of the State of New York. (Section 11.8)
Concerning the Trustee
The Chase Manhattan Bank is the Trustee under the Indenture.
10
DESCRIPTION OF PREFERRED SHARES
The following is a description of certain general terms and provisions of
the preferred shares of the Company. The particular terms of any series of
preferred shares will be set forth in the related Prospectus Supplement. If so
indicated in a Prospectus Supplement, the terms of any such series may differ
from the terms set forth below. The summary of the terms of the Company's
preferred shares contained in this Prospectus and the relevant Prospectus
Supplement does not purport to be complete and is subject to, and qualified in
its entirety by, the provisions of the Company's Restated Articles of
Incorporation and the statement regarding amendment of articles of
incorporation relating to the applicable series of preferred shares (the
"Statement"), which will be filed as an exhibit to or incorporated by
reference in the Registration Statement of which this Prospectus is a part at
the time of issuance of such series of preferred shares.
The Company's Restated Articles of Incorporation authorizes the issuance of
7,000,000 preferred shares having a par value of $1.00 per share. The Board of
Directors has the authority to divide the preferred shares into series, to
designate for each series established such rights and preferences as voting
rights, dividend rate, terms and conditions of redemption, amount payable upon
liquidation, sinking fund provisions and terms and conditions of conversion,
and to issue the shares so designated in such amounts and to such persons as
they lawfully determine without further action by the Company's shareholders.
Thus, the Board of Directors, without shareholder approval, could authorize
the issuance of preferred shares with voting, conversion, and other rights
that could adversely affect the voting power and other rights of holders of
common shares or other series of preferred shares or that could have the
effect of delaying, deferring or preventing a change in control of the
Company. The aggregate amount payable upon liquidation may not exceed
$350,000,000 with respect to all series of preferred shares. All preferred
shares rank senior to common and preference share with respect to accrued
dividends and assets available on liquidation. There are currently no series
of preferred shares outstanding.
General
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the preferred shares of any series (to the extent
such terms are applicable to such preferred shares): (i) the specific
designation, number of shares and purchase price; (ii) any liquidation
preference per share; (iii) any date of maturity; (iv) any redemption, payment
or sinking fund provisions; (v) any dividend rate or rates and the dates on
which any such dividends will be payable (or the method by which such rates or
dates will be determined); (vi) any voting rights; (vii) the currency or units
based on or relating to currencies in which such preferred shares are
denominated and/or payment will or may be payable; (viii) the methods by which
amounts payable in respect of such preferred shares may be calculated and any
commodities, currencies or indices, or value, rate or price, relevant to such
calculation; (ix) the place or places where dividends and other payments on
the preferred shares will be payable; (x) and any additional voting, dividend,
liquidation, redemption, sinking fund and other rights, preferences,
privileges, limitations and restrictions.
The preferred shares offered hereby will be issued in one or more series.
The preferred shares offered hereby will not be convertible or exchangeable
into common shares of the Company or into securities convertible or
exchangeable into common shares of the Company. The holders of preferred
shares will have no preemptive rights. Preferred shares, upon issuance against
full payment of the purchase price therefor, will be fully paid and
nonassessable. Neither the par value nor the liquidation preference is
indicative of the price at which the preferred shares will actually trade on
or after the date of issuance. All preferred shares will be of equal rank with
each other, regardless of series.
Dividends
Holders of preferred shares of each series will be entitled to receive, when
and as declared by the Board of Directors of the Company out of funds legally
available therefor, cumulative dividends at the rate determined by the Board
of Directors for such series, and no more. Dividends on the preferred shares
accrue on a daily basis
11
from such date as may be fixed by the Board of Directors for any series.
Unless dividends at the rate prescribed for each series of preferred shares
have been declared and paid or set apart for payment in full on all
outstanding preferred shares for all past dividend periods and the current
dividend period, no dividends may be declared or paid upon any class of shares
ranking as to dividends subordinate to the preferred shares, and no sum or
sums may be set aside for the redemption of preferred shares of any series
(including any sinking fund payment therefor) or for the purchase, redemption
(including any sinking fund payment therefor) or other acquisition for value
of any class or series of shares ranking as to dividends or assets on a parity
with or subordinated to any such series of preferred shares. Accrued and
unpaid dividends on the preferred shares will not bear interest.
Redemption
The terms, if any, on which preferred shares of any series may be redeemed
will be set forth in the related Prospectus Supplement.
If fewer than all of the outstanding preferred shares of any series are to
be redeemed, the number of shares of such series and the method of effecting
such redemption, whether by lot or pro rata, will be as determined by the
Company (with adjustment to avoid redemption of fractional shares).
Liquidation
In the event of voluntary or involuntary liquidation of the Company, before
any distribution of assets may be made to the holders of any class of shares
ranking as to assets subordinate to the preferred shares, the holders of the
preferred shares of each series will be entitled to receive out of the assets
of the Company available for distribution to its shareholders the sum of the
liquidation preference for such series and the amount per share equal to all
accrued and unpaid dividends thereon. Neither the consolidation nor merger of
the Company with or into any other corporation or corporations, the sale or
lease of all or substantially all of the assets of the Company, nor the merger
or consolidation of any other corporation into and with the Company, will be
deemed to be a voluntary or involuntary liquidation.
Voting
The preferred shares of a series will not be entitled to vote, except as
provided below or in the applicable Prospectus Supplement and as required by
applicable law. Unless otherwise indicated in the Prospectus Supplement
relating to a series of preferred shares, each series of shares will be
entitled to one vote on matters which holders of such series are entitled to
vote. Notwithstanding the foregoing, the Company may not alter certain rights
and preferences of a series of preferred shares without the affirmative vote
of the holders of at least two-thirds of the shares of such affected series.
Whenever dividends on the preferred shares are in arrears in an aggregate
amount equal to six quarterly dividend periods, then the holders of preferred
shares, voting as a class, will be entitled to elect two additional directors
beyond the number specified in the bylaws to be elected by all shareholders
and beyond the number that may be elected by the holders of the preference
shares.
Transfer Agent and Registrar
The Transfer Agent and Registrar for the preferred shares is ChaseMellon
Shareholder Services.
12
DESCRIPTION OF PREFERENCE SHARES
The following is a description of certain general terms and provisions of
the preference shares of the Company. The particular terms of any series of
preference shares will be set forth in the related Prospectus Supplement. If
so indicated in a Prospectus Supplement, the terms of any such series may
differ from the terms set forth below. The summary of the terms of the
Company's preference shares contained in this Prospectus and the relevant
Prospectus Supplement does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Company's Restated
Articles of Incorporation and the statement regarding amendment of articles of
incorporation relating to the applicable series of preference shares (the
"Statement"), which will be filed as an exhibit to or incorporated by
reference in the Registration Statement of which this Prospectus is a part at
the time of issuance of such series of preference shares.
The Company's Restated Articles of Incorporation authorizes the issuance of
40,000,000 preference shares having a par value of $1.00 per share. The Board
of Directors has the authority to divide the preference shares into series, to
designate for each series established such rights and preferences as voting
rights, dividend rate, terms and conditions of redemption, amount payable upon
liquidation, sinking fund provisions and terms and conditions of conversions,
and to issue the shares so designated in such amounts and to such persons as
they lawfully determine without further action by the Company's shareholders.
Thus, the Board of Directors, without shareholder approval, could authorize
the issuance of preference shares with voting, conversion, and other rights
that could adversely affect the voting power and other rights of holders of
common shares or other series of preferred or preference shares or that could
have the effect of delaying, deferring or preventing a change in control of
the Company. The aggregate amount payable upon liquidation of all series of
preference shares is unlimited. All preference shares rank senior to common
shares but subordinate to the preferred shares with respect to accrued
dividends and assets available on liquidation.
General
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the preference shares of any series (to the extent
such terms are applicable to such preference shares): (i) the specific
designation, number of shares and purchase price; (ii) any liquidation
preference per share; (iii) any date of maturity; (iv) any redemption, payment
or sinking fund provisions; (v) any dividend rate or rates and the dates on
which any such dividends will be payable (or the method by which such rates or
dates will be determined); (vi) any voting rights; (vii) the currency or units
based on or relating to currencies in which such preference shares are
denominated and/or payments will or may be payable; (viii) the methods by
which amounts payable in respect of such preference shares may be calculated
and any commodities, currencies or indices, or value, rate or price, relevant
to such calculation; (ix) the place or places where dividends and other
payments on the preference shares will be payable; (x) and any additional
voting, dividend, liquidation, redemption, sinking fund and other rights,
preferences, privileges, limitations and restrictions.
The preference shares offered hereby will be issued in one or more series.
The preference shares offered hereby will not be convertible or exchangeable
into common shares of the Company or into securities convertible or
exchangeable into common shares of the Company. The holders of preference
shares will have no preemptive rights. Preference shares, upon issuance
against full payment of the purchase price therefor, will be fully paid and
nonassessable. Neither the par value nor the liquidation preference is
indicative of the price at which the preference shares will actually trade on
or after the date of issuance. All preference shares will be of equal rank
with each other, regardless of series.
Dividends
Holders of preference shares of each series will be entitled to receive,
when and as declared by the Board of Directors of the Company out of funds
legally available therefor, cumulative dividends at the rate determined by the
Board of Directors for such series, and no more. Dividends on the preference
shares accrue on a daily basis from such date as may be fixed by the Board of
Directors for any series. Unless dividends at the rate prescribed for each
series of preferred shares have been declared and paid or set apart for
payment in full on all
13
outstanding preferred shares for all past dividend periods and the current
dividend period, no dividends may be declared or paid upon any class of shares
ranking as to dividends subordinate to the preferred shares, and no sum or
sums may be set aside for the redemption of preferred shares of any series
(including any sinking fund payment therefor) or for the purchase, redemption
(including any sinking fund payment therefor) or other acquisition for value
of any class or series of shares ranking as to dividends or assets on a parity
with or subordinate to any such series of preferred shares. Unless dividends
at the rate prescribed for each series of preference shares have been declared
and paid or set apart for the payment in full on all outstanding preference
shares for all past dividend periods and the current dividend period, no
dividends may be declared or paid upon any class of shares ranking as to
dividends subordinate to the preference shares, and no sum or sums may be set
aside for the redemption of preference shares of any series (including any
sinking fund payment therefor) or for the purchase, redemption (including any
sinking fund payment therefor) or other acquisition for value of any class or
series of shares ranking as to dividends or assets on a parity with or
subordinate to any series of preference shares. Accrued and unpaid dividends
on the preference shares will not bear interest.
Redemption
The terms, if any, on which preference shares of any series may be redeemed
will be set forth in the related Prospectus Supplement.
If fewer than all of the outstanding preference shares of any series are to
be redeemed, the number of shares of such series and the method of effecting
such redemption, whether by lot or pro rata, will be as determined by the
Company (with adjustment to avoid redemption of fractional shares).
Liquidation
In the event of voluntary or involuntary liquidation of the Company, before
any distribution of assets may be made to the holders of any class of shares
ranking as to assets subordinate to the preference shares, the holders of the
preference shares of each series will be entitled to receive out of the assets
of the Company available for distribution to its shareholders the sum of the
liquidation preference for such series and the amount per share equal to all
accrued and unpaid dividends thereon, but the holders of the preference shares
will not be entitled to receive the liquidation price of such shares until the
liquidation price of the preferred shares at the time outstanding shall have
been paid in full. The holders of all series of preference shares are entitled
to share ratably, in accordance with the respective amounts payable thereon,
in any such distribution which is not sufficient to pay in full the aggregate
amounts payable thereon. After payment in full of the liquidation price of the
preference shares the holders of such shares are not entitled to any further
participation in any distribution of assets by the Company. Neither the
consolidation nor merger of the Company with or into any other corporation or
corporations, the sale or lease of all or substantially all of the assets of
the Company, nor the merger or consolidation of any other corporation into and
with the Company, will be deemed to be a voluntary or involuntary liquidation.
Voting
The preference shares of a series will not be entitled to vote, except as
provided below or in the applicable Prospectus Supplement and as required by
applicable law. Unless otherwise indicated in the Prospectus Supplement
relating to a series of preference shares, each series of shares will be
entitled to one vote on matters which holders of such series are entitled to
vote. Notwithstanding the foregoing, the Company may not alter certain rights
and preferences of a series of preference shares without the affirmative vote
of the holders of at least two-thirds of the shares of such affected series.
Whenever dividends on the preference shares are in arrears in an aggregate
amount equal to six quarterly dividend periods, then the holders of preference
shares, voting as a class, will be entitled to elect two additional directors
beyond the number specified in the bylaws to be elected by all shareholders
and beyond the number that may be elected by the holders of the preferred
shares.
Transfer Agent and Registrar
The transfer agent and registrar for the preference shares is ChaseMellon
Shareholder Services.
14
PLAN OF DISTRIBUTION
The Company may sell Offered Securities (i) through agents, (ii) through
underwriters, (iii) through dealers or (iv) directly to purchasers (through a
specific bidding or auction process or otherwise).
Securities may be offered and sold through agents designated by the Company
from time to time. Any such agent involved in the offer or sale of the Offered
Securities 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. Any such agent may be
deemed to be an underwriter, as that term is defined in the Securities Act of
1933, as amended (the "1933 Act"), of the Securities so offered and sold.
Agents may be entitled under agreements that may be entered into with the
Company to indemnification by the Company against certain liabilities,
including liabilities under the 1933 Act, and may be customers of, engage in
transactions with or perform services for the Company in the ordinary course
of business.
If an underwriter or underwriters are utilized in the sale of Offered
Securities, the Company will execute an underwriting agreement with such
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, and the terms of the transaction, including
compensation of the underwriters and dealers, if any, will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales
of Offered Securities. The underwriters may be entitled, under the relevant
underwriting agreement, to indemnification by the Company against certain
liabilities, including liabilities under the 1933 Act. Morgan Stanley & Co.
Incorporated and/or Goldman, Sachs & Co. and/or other underwriters named in
the Prospectus Supplement may act as managing underwriter with respect to an
offering of Securities effected through underwriters. Only underwriters named
in the Prospectus Supplement are deemed to be underwriters in connection with
the Offered Securities and if Morgan Stanley & Co. Incorporated or Goldman,
Sachs & Co. is not named in the Prospectus Supplement, it will not be a party
to the underwriting agreement relating to such Securities, will not be
purchasing any such Securities from the Company in connection with such
offering and will have no direct or indirect participation in the underwriting
of such Securities, although it may participate in the distribution of such
Securities under circumstances where it may be entitled to a dealer's
commission.
If a dealer is utilized in the sale of Offered Securities, the Company will
sell such Securities to the dealer, as principal. The dealer may then resell
such Securities to the public at varying prices to be determined by such
dealer at the time of resale. Dealers may be entitled, under agreements which
may be entered into with the Company, to indemnification by the Company
against certain liabilities, including liabilities under the 1933 Act. The
name of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
In order to facilitate the offering of the Securities the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Securities, or any other securities the prices of which may be used to
determine payments on such Securities. Specifically, the underwriters may
overallot in connection with the offering, creating a short position in the
Securities for their own accounts. In addition, to cover overallotments or to
stabilize the price of the Securities or of any such other securities, the
underwriters may bid for, and purchase, the Securities or any such other
securities in the open market. Finally, in any offering of the Securities
through a syndicate of underwriters, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
Securities in the offering if the syndicate repurchases previously distributed
Securities in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Securities above independent market
levels. The underwriters are not required to engage in these activities, and
may end any of these activities at any time.
Offers to purchase 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, including the terms of any bidding or
auction process, if utilized, will be described in the Prospectus Supplement
relating thereto.
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If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain institutions to purchase
Securities from the Company at the public offering price set forth in the
Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts")
providing for payment and delivery on the date stated in the Prospectus
Supplement. Each Contract will be for an amount not less than, and unless the
Company otherwise agrees the aggregate principal amount of Securities sold
pursuant to Contracts will be not less nor more than, the respective amounts
stated in the 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 in all cases must be approved by the
Company. Contracts will not be subject to any conditions except that any
related sale of Securities covered by its Contract may 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
Securities pursuant to Contracts accepted by the Company.
The place and time of delivery of Offered Securities are set forth in the
accompanying Prospectus Supplement.
LEGAL OPINIONS
The validity of the Offered Securities will be passed upon for the Company
by Claire S. Grace, Esq., Assistant General Counsel of the Company.
EXPERTS
The financial statements and schedules incorporated herein by reference to
the Company's Annual Report on Form 10-K for the year ended December 29, 1996
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated herein
in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
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