As filed with the Securities and Exchange Commission on March 24, 2003
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TOYS "R" US, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-3260693
(State or Other Jurisdiction (I.R.S. Employer Identification Number)
of Incorporation or
Organization)
461 From Road
Paramus, New Jersey 07652
(201) 262-7800
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-----------------------
Louis Lipschitz
Executive Vice President--Chief Financial Officer
Toys "R" Us, Inc.
461 From Road
Paramus, New Jersey 07652
(201) 262-7800
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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Copies to:
Glenn M. Reiter, Esq. Robert Evans III, Esq.
Simpson Thacher & Bartlett Shearman & Sterling
425 Lexington Avenue 599 Lexington Avenue
New York, New York 10017-3954 New York, New York 10022-6069
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Approximate date of commencement of proposed sale to public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
==================================================================================================================
Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Aggregate Price Per Aggregate Offering Registration
Registered Registered (1) Unit (2) Price (3) Fee
------------------------------------------------------------------------------------------------------------------
Debt Securities........... $800,000,000 $800,000,000 $64,720
==================================================================================================================
(1) This Registration Statement is being filed to register an indeterminate
principal amount or number of debt securities of the Registrant as may
from time to time be issued at indeterminate prices (in U.S. dollars or
the equivalent thereof in any other currency or currency unit).
(2) The Proposed Maximum Aggregate Price Per Unit will be determined from
time to time by the Registrant in connection with the issuance by the
Registrant of the securities registered hereunder.
(3) The Proposed Maximum Aggregate Offering Price has been estimated solely
for purposes of calculating the registration fee pursuant to Rule
457(o) under the Securities Act of 1933, as amended, and reflects the
maximum offering price of securities issued, rather than the principal
amount of securities that may be issued at a discount and shall not
exceed $800,000,000 or the equivalent thereof, based on the exchange
rate on the applicable offering date, in one or more currencies or
currency units identified by the Registrant at the time of offering.
-----------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
===============================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 24, 2003
PROSPECTUS
TOYS "R" US, INC.
$800,000,000
DEBT SECURITIES
-----------------------
We may offer and sell the debt securities from time to time in one or
more offerings. This prospectus provides you with a general description of the
debt securities that we may offer.
Each time that we sell debt securities we will provide a prospectus
supplement to this prospectus that contains specific information about the
offering and the terms of the debt securities. The prospectus supplement may
also add, update or change information contained in this prospectus. You should
carefully read this prospectus and any prospectus supplement before you invest
in any of our debt securities.
We may offer and sell senior unsecured debt securities under this
prospectus.
We have not yet determined whether any of the debt securities will be
listed on any exchange or over-the-counter market. If we decide to seek the
listing of the debt securities, the prospectus supplement relating to such debt
securities will disclose the exchange or market on which the debt securities
will be listed.
-----------------------
Investment in the debt securities involves risks. See "Risk Factors"
beginning on page 5.
Neither the Securities and Exchange Commission nor any state or other
securities commission has approved or disapproved these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
-----------------------
The debt securities will be sold directly by us, through agents,
dealers or underwriters designated from time to time, or through a combination
of such methods. If our agents or any dealers or underwriters are involved in
the sale of the debt securities, the names of such agents, dealers or
underwriters and any applicable commissions or discounts will be set forth in
the applicable prospectus supplement.
This prospectus may not be used to consummate sales of debt securities
unless accompanied by an applicable prospectus supplement.
-----------------------
The date of this prospectus is , 2003.
TABLE OF CONTENTS
Page
About This Prospectus......................................................2
Where You Can Find More Information........................................3
Incorporation of Certain Documents by Reference............................3
Toys "R" Us, Inc...........................................................4
Risk Factors...............................................................5
Forward-Looking Statements.................................................7
Use of Proceeds............................................................7
Ratio of Earnings to Fixed Charges.........................................8
Description of Debt Securities.............................................9
United States Federal Income Tax Consequences.............................22
Plan of Distribution......................................................30
Legal Matters.............................................................32
Experts...................................................................32
ABOUT THIS PROSPECTUS
This prospectus is part of a "shelf" registration statement that we
filed with the Securities and Exchange Commission, or SEC. By using a shelf
registration statement, we may sell up to $800,000,000 aggregate offering price
of any combination of the debt securities described in this prospectus from time
to time and in one or more offerings. This prospectus only provides you with a
general description of the debt securities that we may offer. Each time we sell
debt securities, we will provide a supplement to this prospectus that contains
specific information about the terms of the debt securities. The prospectus
supplement may also add, update or change information contained in this
prospectus. Before purchasing any debt securities, you should carefully read
both this prospectus and any prospectus supplement, together with the additional
information described under the heading "Where You Can Find More Information"
and "Incorporation of Certain Documents by Reference".
You should rely only on the information contained or incorporated
by reference in this prospectus and in any prospectus supplement. We have not
authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not making an offer of these debt securities in any state or
jurisdiction where the offer or sale is not permitted. You should not assume
that the information appearing in this prospectus or any prospectus supplement
or in any document incorporated by reference is accurate as of any date other
than the respective dates thereof. Our business, financial condition, results of
operations and prospects may have changed since those dates.
As used in this prospectus, "Toys `R' Us," "company," "we," "us" and
"our" generally means Toys "R" Us, Inc., together with its consolidated
subsidiaries, unless the context otherwise requires or otherwise expressly
stated. However, in the "Description of Debt Securities" section in this
prospectus, whenever we refer to "Toys `R' Us," "company," "us", "we" or "our,"
we generally will be referring to Toys "R" Us, Inc. and not any of its
subsidiaries. When we refer to "you" or "yours," we mean the holders of the
applicable series of debt securities.
Our fiscal year ends on the Saturday nearest to January 31 of each
calendar year. References to the 2000, 2001 and 2002 fiscal years are to the 53
weeks ended February 3, 2001, the 52 weeks ended February 2, 2002 and the 52
weeks ended February 1, 2003, respectively. References to our last three fiscal
years are to our 2000, 2001 and 2002 fiscal years.
Toys "R" Us, Kids "R" Us, Babies "R" Us, Imaginarium and certain other
brand names used in this prospectus are our registered trademarks.
We are not incorporating by reference in this prospectus any material
from our web sites. The references to our web sites are inactive textual
references to the uniform resource locators (URLs) and are for your reference
only.
2
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You can inspect and copy these reports, proxy
statements and other information at the public reference facilities of the SEC,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You can also obtain
copies of these materials from the public reference section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You may call
the SEC at 1-800-SEC-0330 for further information on its public reference room.
The SEC also maintains a web site that contains reports, proxy statements and
other information regarding registrants, including us, that file electronically
with the SEC (http://www.sec.gov). You can also inspect reports and other
information that we file at the office of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005.
This prospectus is part of a registration statement on Form S-3 that we
filed with the SEC covering sales of the debt securities. For further
information concerning us and the debt securities, you should refer to the
registration statement, including its exhibits. The indenture and forms of the
other documents establishing the terms of the offered debt securities are filed
as exhibits to the registration statement or will be filed as exhibits to a
document incorporated by reference in the registration statement of which this
prospectus forms a part. This prospectus summarizes material provisions of the
debt securities and the indenture. Because this prospectus may not contain all
the information that you may find important, you should review the full text of
these documents.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information that we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this information.
We incorporate by reference the following documents previously filed by
us with the SEC and any future filings made by us with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the date
of this prospectus and prior to termination of the offering of the securities
that we have registered under the registration statement of which this
prospectus forms a part. These documents contain important information about us.
o Annual Report on Form 10-K for the fiscal year ended February
2, 2002;
o Quarterly Report on Form 10-Q for the quarter ended May 4,
2002;
o Quarterly Report on Form 10-Q and Form 10-Q/A for the quarter
ended August 3, 2002;
o Quarterly Report on Form 10-Q and Form 10-Q/A for the quarter
ended November 2, 2002;
o Current Report on Form 8-K filed with the SEC on May 13, 2002;
o Current Report on Form 8-K filed with the SEC on May 20, 2002;
and
o Current Report on Form 8-K filed with the SEC on January 21,
2003.
Any statement contained in a document incorporated by reference, or
deemed to be incorporated by reference, in this prospectus shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated by reference in this prospectus modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
3
You may request a copy of these reports and other filings, other than
exhibits unless those exhibits are specifically incorporated by reference into
those filings, at no cost by writing to Ursula Moran, Vice President-Investor
Relations, Toys "R" Us, Inc., 461 From Road, Paramus, New Jersey 07652, or
telephoning us at (201) 262-7800.
TOYS "R" US, INC.
We are one of the world's leading retailers of toys, children's apparel
and baby products, based upon our consolidated net sales in fiscal 2002. As of
February 1, 2003, we operated 1,595 retail stores worldwide. These stores
consist of 1,051 U.S. locations comprised of 681 toy stores under the name "Toys
"R" Us," 183 infant-toddler stores under the name "Babies "R" Us," 146
children's clothing stores under the name "Kids "R" Us," 37 educational
specialty stores under the name "Imaginarium" and 4 "Geoffrey" stores which
include products from Toys "R" Us, Babies "R" Us and Kids "R" Us.
Internationally, as of February 1, 2003, we operated 544 stores, including
licensed and franchised stores. We also sell merchandise through Internet sites
at www.toysrus.com, www.babiesrus.com, www.imaginarium.com and www.giftsrus.com.
We are incorporated under the laws of the State of Delaware. Our
principal executive offices are located at 461 From Road, Paramus, New Jersey
07652, and our telephone number is (201) 262-7800.
4
RISK FACTORS
An investment in our debt securities involves risks. You should
carefully consider the risks and uncertainties described below and the other
information contained or incorporated by reference in this prospectus before you
decide whether to invest in our debt securities. If any of the following risks
actually occurs, our business, financial condition, results of operations and
liquidity could be materially adversely affected. This may affect our ability to
pay interest on such debt securities or repay the principal when due, and you
may lose part or all of your investment.
Our industry is highly competitive, and competitive conditions may adversely
affect our revenues and overall profitability.
Our industry is highly competitive, and our results of operations are
sensitive to, and may be adversely affected by, competitive pricing, promotional
pressures, additional store openings and other factors. We compete with discount
and mass merchandisers, such as Wal-Mart, Kmart and Target, national and
regional chains and local retailers in the market areas served by our company.
Discount and mass merchandisers use aggressive pricing policies and, during the
holiday season, enlarged toy selling areas to build traffic for other store
departments. Competition is principally based on price, store location,
advertising and promotion, product selection, quality and service. In addition,
competition in the retail apparel business consists of discount and mass
merchandisers, national and regional chains, and local retailers as well as
Internet and catalog businesses. Kids "R" Us is vulnerable to demand and pricing
shifts for apparel and to less than optimal selection as a result of these
factors. Some of our competitors may have greater financial resources, lower
merchandise acquisition costs and lower operating expenses than our company. If
we fail to compete successfully, we could face lower net sales and be required
to offer greater discounts to our customers, which could result in decreased
profitability.
Our business is highly seasonal, and our financial performance depends upon the
results of the fourth quarter of each fiscal year.
Our business is highly seasonal, with net sales and earnings generally
highest in the fourth quarter. During the last three fiscal years, more than 40%
of our net sales and the substantial portion of our operating earnings have been
generated in the fourth quarter. Our results of operations depend significantly
upon the holiday selling season in the fourth quarter. If we achieve less than
satisfactory net sales during the key fourth quarter, we may not be able to
compensate sufficiently for lower net sales during the first three quarters of
the fiscal year.
We may not retain or attract customers if we fail to implement successfully our
strategy.
We continue to implement a series of customer-oriented strategic
initiatives to differentiate and strengthen our core merchandise content and
service levels. We also are continuing with initiatives to reduce and optimize
our operating expense structure. The success of these initiatives will depend on
various factors, including the appeal of renovated store formats and new
products to customers, competitive conditions and economic conditions. If we are
unsuccessful at implementing some or all of our strategic initiatives, we may be
unable to retain or attract customers, which could result in lower net sales and
a failure to realize the benefit of the sizeable expenditures incurred for these
strategic initiatives.
Our net sales may be adversely affected if we fail to respond to changes in
consumer preferences in a timely manner.
Our financial performance depends on our ability to identify, originate
and define product trends as well as to anticipate, gauge and react to changing
consumer demands in a timely manner. Our toy and other products must appeal to a
broad range of consumers whose preferences cannot be predicted with certainty
and are subject to change. We cannot assure you that we will be able to continue
to meet changing consumer demands in the future. If we misjudge the market for
our products, we may be faced with significant excess inventories for some
products and missed opportunities for other products. In addition, because we
place orders for products well in advance of purchases by our customers, we
could experience excess inventory if our customers purchase fewer products than
anticipated.
Our net sales may be affected by changes in consumer spending patterns.
Sales of toys and other products may depend upon discretionary consumer
spending, which may be affected by general economic conditions, consumer
confidence and other factors beyond our control. A decline in consumer spending
could, among other things, negatively affect our net sales and could also result
in excess inventories, which could, in turn, lead to increased inventory
financing expenses. As a result, changes in consumer spending patterns could
adversely affect our profitability.
5
Our operations depend on the availability of adequate financing.
We have significant liquidity and capital requirements, and we depend
on our ability to generate cash flow from operations, borrow funds and issue
securities in the capital markets. Although we currently retain lower-tier
investment grade ratings from each of the rating agencies, future rating agency
actions could affect our ability to obtain financing on satisfactory terms. We
currently have adequate sources of liquidity and capital resources; however, any
inability on our part to have access in the future to financing when needed
would have a negative effect on our results of operations and financial
condition.
We depend on key vendors to supply the merchandise that we sell to our
customers.
We have over 2,000 vendor relationships through which we procure the
merchandise that we offer to customers. For fiscal 2002, our top 20 vendors
based on our purchase volume represented approximately 45% of the total
merchandise we purchased on an annual basis. If our relationships with major
vendors deteriorate or we become unable to negotiate reasonable terms to acquire
merchandise from any of these vendors and then fail to obtain similar products
from alternative sources, our net sales and profitability would be negatively
affected.
International events could delay or prevent the delivery of products to our
stores.
A significant portion of the toys and other products sold by us is
manufactured outside the United States, particularly in Asia. As a result, any
event causing a disruption of imports, including the imposition of import
restrictions or trade restrictions in the form of tariffs or otherwise, acts of
war or international or domestic terrorism, could increase the cost and reduce
the supply of products available to us, which could, in turn, negatively affect
our net sales and profitability.
Economic, political and other risks associated with our international operations
could adversely affect our business.
We have operations in 29 countries outside the United States,
including, among others, the United Kingdom, Canada, Germany and France. We
intend to pursue opportunities that may arise in these and other countries. Net
sales in foreign countries (excluding sales by licensees and franchisees)
represented approximately 19% of our net sales in fiscal 2002. We are subject to
the risks inherent in conducting business across national boundaries, many of
which are outside our control. These risks include the following:
o economic downturns;
o currency exchange rate and interest rate fluctuations;
o changes in governmental policy, including, among others, those
relating to taxation;
o international military, political and diplomatic incidents;
o government instability;
o nationalization of foreign assets; and
o tariffs and governmental trade policies.
We cannot assure you that one or more of these factors will not
negatively affect our international operations and, as a result, harm our
business and financial performance.
As of the date of this prospectus, we are unable to predict the effect
of the current war in Iraq on consumer spending patterns or on our net sales and
profitability.
6
Our business operations could be disrupted if our existing and new management
information systems fail to perform adequately.
We depend upon our management information systems in the conduct of our
operations. We are in the process of upgrading our inventory management,
distribution and supply chain management systems and our point of sale systems,
as well as other essential information technology. We have spent in excess of
$100 million on systems in each of the last three fiscal years. Implementation
of major new systems and enhancements to existing systems could cause
disruptions in our operations. If our major management information systems fail
to perform as anticipated, we could experience difficulties in replenishing
inventories or in delivering toys and other products to store locations in
response to customer demands. Any of these or other systems-related problems
could, in turn, adversely affect our net sales and profitability.
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the documents
incorporated herein by reference contain certain statements that are, or may be
considered to be, 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. All statements that are not historical facts, including statements about
our beliefs or expectations, are forward-looking statements. We generally
identify these statements by words or phrases such as "anticipate," "estimate,"
"plan," "expect," "believe," "intend," "foresee," "will," "may" and similar
words or phrases. These statements discuss, among other things, our strategy,
store openings and renovations, future performance and anticipated cost savings,
results of our restructuring, anticipated international development and other
goals and targets. All of these forward-looking statements are subject to risks,
uncertainties and assumptions. Consequently, actual events and results may vary
significantly from those included in or contemplated or implied by our
forward-looking statements. The forward-looking statements included in this
prospectus, any prospectus supplement or the relevant incorporated document are
made only as of the date of this prospectus, the relevant prospectus supplement
or the relevant incorporated document, as the case may be, and, except as
required by law, we undertake no obligation to publicly update these
forward-looking statements to reflect subsequent events or circumstances, new
information or otherwise. Factors that could cause our actual results to differ
materially include the factors that we describe in this prospectus, including
under "Risk Factors," the relevant prospectus supplement and in the documents we
incorporate by reference.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, we
will use the net proceeds from the sale of the debt securities for repayment of
debt and our general corporate purposes. General corporate purposes may include,
in addition to the repayment of debt, working capital needs, capital
expenditures, possible acquisitions and any other purposes that may be
identified in any prospectus supplement. The net proceeds may be invested
temporarily in investment grade securities or applied to repay short-term or
revolving debt until they are used for their stated purpose.
7
RATIO OF EARNINGS TO FIXED CHARGES
The following table presents our consolidated ratio of earnings to
fixed charges for the periods indicated.
Fiscal Year Nine Months Fiscal Year Ended
Ended Ended ----------------------------------------------------------------------
February 1, November 2, February 2, February 3, January 29, January 30, January 31,
2003 (1) 2002 2002 2001 2000 1999 1998
----------- ----------- ----------- ---------- ---------- ---------- -----------
Ratio of Earnings to Fixed
Charges............... 2.26 --(2) 1.14 3.00 2.66 --(2) 4.19
(1) Preliminary, subject to audit of financial statements for the fiscal
year ended February 1, 2003.
(2) Earnings were insufficient to cover fixed charges for the nine months
ended November 2, 2002 by $97 million and for the fiscal year ended
January 30, 1999 by $103 million; therefore, the ratio is less than
one-to-one and is not shown.
For purposes of calculating the ratio of earnings to fixed charges,
earnings were calculated by adding (a) earnings from continuing operations
before minority interest and income taxes; (b) interest expense, including the
portion of rents representative of an interest factor; (c) amortization of debt
issue costs; and (d) the amount of our undistributed (income) losses of less
than 50% owned companies. Fixed charges consist of interest expense,
amortization of debt issue costs, and the portion of rents representative of an
interest factor.
8
DESCRIPTION OF DEBT SECURITIES
The following description discusses the general terms and provisions of
the debt securities that we may offer and sell with this prospectus. The
particular terms of the debt securities offered will be set forth in a
prospectus supplement relating to those debt securities. The debt securities
offered by this prospectus will be our senior unsecured obligations. The debt
securities will be issued under the debt indenture, dated as of May 28, 2002,
between us and The Bank of New York, as trustee.
The debt securities will be governed by the indenture. The
indenture gives us broad authority to set the particular terms of each series of
debt securities, including the right to modify certain of the terms contained in
the indenture. The particular terms of a series of debt securities and the
extent, if any, to which the particular terms of the issue modify the terms of
the indenture will be described in the prospectus supplement relating to the
debt securities. The terms of the debt securities will include those stated in
the indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939, as amended.
The indenture contains the full legal text of the matters
described in this section. Because this section is a summary, it does not
describe every provision of the debt securities or the indenture. This summary
is subject to and qualified in its entirety by reference to all the provisions
of the indenture, including definitions of terms used in the indenture. The
indenture has been filed as an exhibit to the registration statement of which
this prospectus forms a part. You should read the indenture, including the
defined terms, and the particular terms of the debt securities for provisions
that may be important to you. Whenever we refer to defined terms or particular
sections of the indenture in this prospectus or any prospectus supplement, those
defined terms or sections are incorporated by reference herein or therein as
applicable. You should read the prospectus supplement relating to a series of
debt securities for more information about the terms of a particular series of
debt securities, including variations from the terms described in this
prospectus. This summary is subject to and qualified by reference to the
description of the particular terms of the debt securities in the applicable
prospectus supplement.
The trustee for the debt securities will be The Bank of New York,
unless otherwise provided in the applicable prospectus supplement.
Capitalized terms used below are defined under "Covenants--Defined
Terms".
General
The indenture provides that our debt securities may be issued without
limit as to aggregate principal amount, in one or more series, and in any
currency or currency units, in each case as established from time to time in or
under authority granted by one or more resolutions of our board of directors and
set forth in an officers' certificate or as established in one or more
supplemental indentures. All debt securities of one series need not be issued at
the same time, and, unless otherwise provided, any series may be reopened,
without the consent of the holders of the debt securities of that series, for
issuances of additional debt securities of that series. Each time that we issue
a new series of debt securities or reopen any existing series, the prospectus
supplement relating to those debt securities will specify the particular amount,
price and other terms of those debt securities, including the following:
o the title of the debt securities;
o any limit on the total principal amount of the debt
securities;
o the date or dates on which the principal of the debt
securities will be payable or their manner of determination;
o the interest rate or rates of the debt securities (which may
be fixed or variable); the date or dates from which interest
will accrue on the debt securities; and the interest payment
dates and the regular record dates for the debt securities;
or, in each case, their manner of determination;
o if other than the principal corporate office of the trustee,
the place or places where the principal of and premium, if
any, and interest on the debt securities will be paid;
9
o the period or periods within which (or their manner of
determination), the price or prices at which (or their manner
of determination), the currency or currency unit, if other
than U.S. dollars, in which and the terms on which any of the
debt securities may be redeemed, in whole or in part at our
option;
o the obligation, if any, we have to redeem, repay or purchase
debt securities under any sinking fund, mandatory redemption
or analogous provision or at the option of the holder; and the
period or periods within which (or their manner of
determination), the price or prices at which (or their manner
of determination), the currency or currency unit, if other
than U.S. dollars, in which and the terms and conditions on
which the debt securities will be so redeemed, repaid or
purchased in whole or in part;
o the denomination in which the debt securities will be issued,
if other than denominations of $1,000 and any whole multiple
thereof, or, in the case of bearer securities, $5,000;
o the portion of the principal amount of the debt securities
that is payable on the declaration of acceleration of the
maturity, if other than their principal amount (these debt
securities could include original issue discount, or OID, debt
securities or indexed debt securities, which are each
described below);
o the obligation, if any, we have to pay additional amounts
under any debt securities held by a person who is not a U.S.
person for tax payments, assessments or other governmental
charges and whether we have the option to redeem the debt
securities which are affected by the additional amounts
instead of paying the additional amounts;
o the form in which we will issue the debt securities, whether
registered, bearer or both, and any restrictions on the
exchange of one form of debt securities for another and on the
offer, sale and delivery of the debt securities in either
form;
o whether the debt securities will be issuable as global
securities;
o whether the amounts of payments of principal of, premium, if
any, and interest, if any, on the debt securities are to be
determined with reference to an index, formula or other
method, and if so, the manner in which such amounts will be
determined;
o if the debt securities are issuable in definitive form upon
the satisfaction of certain conditions, the form and terms of
such conditions;
o the trustee, if other than The Bank of New York, and any
paying agents, transfer agents, registrars, depositories,
currency determination agents or similar agents with respect
to the debt securities;
o any additions or deletions to the terms of the debt securities
with respect to the events of default or covenants governing
the debt securities;
o the currency or currency units in which payment of the
principal of and premium and interest on any debt securities
will be made, if other than U.S. dollars, and our or the
holders' right, if any, to elect payment in a currency or
currency unit other than that in which the debt securities are
payable; and, if applicable, the method of establishing an
exchange rate;
o whether and to what extent the debt securities are subject to
defeasance on terms different from those described under
"Defeasance of the Indenture"; and
o any other terms of the debt securities that are not
inconsistent with the indenture.
We may issue indexed debt securities. Payments of principal of, and
premium and interest on, indexed debt securities are determined with reference
to the rate of exchange between the currency or currency unit in which the debt
security is denominated and any other currency or currency unit specified by us,
to the relationship between two or more currencies or currency units or by other
similar methods or formulas specified in the prospectus supplement.
The indenture permits us to issue debt securities which are
subordinated to present and future senior indebtedness and debt securities. We
do not intend to issue subordinated debt securities under this prospectus.
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The terms on which a series of debt securities may be convertible into
or exchangeable for other securities of Toys "R" Us or another party will be set
forth in the prospectus supplement relating to that series. The terms will
include provisions as to whether conversion or exchange is mandatory, at the
option of the holder or at our option. The terms may include provisions under
which the number of other securities to be received by the holders of a series
of debt securities may be adjusted.
We may also issue debt securities as original issue discount (OID) debt
securities. OID debt securities bear no interest or bear interest at
below-market rates and are sold at a discount below their stated principal
amount. Upon acceleration of maturity, the holder of an OID debt security will
be entitled to a specified amount that is less than the principal amount. If we
issue OID debt securities, the prospectus supplement will contain the issue
price, the rate at which interest will accrete, and the date from which such
interest will accrete on the OID debt securities.
The above list is not intended to be an exclusive list of the terms
that may be applicable to any series of debt securities, and we are not limited
in any respect in our ability to issue debt securities with terms different from
or in addition to those described above or elsewhere in this prospectus,
provided that the terms are not inconsistent with the indenture.
The debt securities are obligations exclusively of Toys "R" Us and not
of its subsidiaries. We are a holding company and conduct all of our operations
through subsidiaries. Our right to participate as an equity holder in any
distribution of assets of any subsidiary (and thus the ability of holders of the
debt securities to benefit as creditors of our company from such distribution)
is junior to creditors of that subsidiary, including trade creditors, debt
holders, secured creditors, taxing authorities and any guarantee holders. As a
result, claims of holders of the debt securities will generally have a junior
position to claims of creditors of our subsidiaries, except to the extent that
we may be recognized as a creditor of those subsidiaries.
Because we are a holding company, the debt securities will be
effectively subordinated to the existing and future liabilities of our
subsidiaries. We conduct substantially all of our operations through our
subsidiaries, so that our ability to meet our obligations under the debt
securities will be dependent on the earnings and cash flows of those
subsidiaries and the ability of those subsidiaries to pay dividends or to
advance or repay funds to us. In the event of our liquidation or reorganization,
holders of debt securities will generally have a junior position to claims of
creditors of our subsidiaries. As of February 1, 2003, Toys "R" Us had
approximately $2,341 million of outstanding indebtedness. At the same date, our
subsidiaries had approximately $177 million of outstanding indebtedness and had
also guaranteed approximately $342 million of outstanding indebtedness of Toys
"R" Us. Because the debt securities will not be secured, they will also be
effectively subordinated to our existing and future secured debt to the extent
of the value of the assets securing that indebtedness. As of February 1, 2003,
we had no secured senior debt outstanding, other than mortgages and capital
leases.
Our subsidiaries are separate and distinct legal entities. Our
subsidiaries have no obligation to pay any amounts due on the debt securities or
to provide us with funds for our payment obligations, whether by dividend,
distribution, loans or other payments. In addition, any payment of dividends,
distributions, loans or advances by our subsidiaries to us could be subject to
contractual restrictions. Payments to us by our subsidiaries will also be
contingent upon our subsidiaries' earnings and business considerations.
The indenture does not contain restrictions on the amount of additional
debt that we or our subsidiaries may incur in the future. In addition, the
indenture does not contain covenants that prevent us from selling, transferring
or otherwise disposing of any shares of, or securities convertible into, or
options, warrants or rights to subscribe for or purchase shares of, voting stock
of any of our subsidiaries, nor does it prohibit any subsidiary from issuing any
shares of, securities convertible into, or options, warrants or rights to
subscribe for or purchase shares of, voting stock of such subsidiary.
Status of Debt Securities
The debt securities will be our senior unsecured obligations and will
rank equal in right of payment with all of our existing and future unsecured and
unsubordinated debt. The debt securities will be effectively subordinated in
right of payment to our existing and future senior secured indebtedness to the
extent of the value of the assets securing that indebtedness.
Form
Unless otherwise indicated in the prospectus supplement, the debt
securities will be issued in fully registered form, without coupons.
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Payment
Unless otherwise indicated in the applicable prospectus supplement, we
will pay principal of and premium, if any, and interest on registered debt
securities at the office of the trustee or at any other office or agency
maintained by us for such purpose. We will pay installments of interest on any
registered debt security to the person in whose name the registered debt
security is registered at the close of business on the regular record date for
these payments. We will pay principal and premium, if any, on debt securities
only against surrender of these debt securities. If we issue debt securities in
bearer form, the prospectus supplement will describe where and how payment will
be made.
Covenants
The indenture includes each of the material covenants discussed below.
Limitation on Liens
The indenture provides that we will not, and will not permit any of our
Domestic Subsidiaries, directly or indirectly, to issue, assume or guarantee any
debt for borrowed money if that debt is secured by any Lien upon any Principal
Property of ours or of a Domestic Subsidiary or upon any shares of stock or debt
of any Domestic Subsidiary, whether owned at May 28, 2002 (the date of the
indenture) or thereafter acquired, without effectively securing the debt
securities equally and ratably with that debt. The foregoing restriction does
not apply to:
(1) Liens on any property acquired, constructed or improved by us
or any Domestic Subsidiary after May 28, 2002, which are
created or assumed contemporaneously with or within three
years (four years in the case of Liens on warehouses and
distribution centers) after its acquisition, or completion of
construction or improvement, or within six months thereafter
pursuant to a firm commitment for financing arrangements
entered into within that three-year period (or in the case of
warehouses and distribution centers, four-year period) to
secure or provide for the payment of the purchase price or
cost thereof; or in addition to Liens contemplated by clauses
(2) and (3) below, Liens existing on any property at the time
of acquisition thereof;
(2) Liens existing on any property, shares of stock or debt at the
time of acquisition thereof from a Person merged or
consolidated with or into us or a Domestic Subsidiary;
(3) Liens on property of any Person existing at the time it
becomes a Domestic Subsidiary;
(4) Liens to secure debt of a Domestic Subsidiary owed to us or
debt of us or one of our Domestic Subsidiaries owed to another
Domestic Subsidiary;
(5) Liens in favor of governmental bodies to secure partial
progress, advance or other payments pursuant to any contract
or statute or to secure debt incurred to finance all or any
part of the purchase price or cost of constructing or
improving the property subject to the Liens;
(6) any Lien existing on May 28, 2002; or
(7) Liens for the sole purpose of extending, renewing or replacing
debt secured by any Lien referred to in the foregoing clauses
(1) to (6), inclusive; provided, however, that the principal
amount of debt secured by that Lien shall not exceed the
principal amount of debt so secured at the time of such
extension, renewal or replacement, and that such extension,
renewal or replacement shall be limited to the property that
secured the Lien so extended, renewed or replaced (plus
improvements on such property).
The limitation on liens shall not apply to the issuance, assumption or
guarantee by us or any Domestic Subsidiary of debt secured by a Lien which would
otherwise be subject to the foregoing restrictions up to an aggregate amount
which, together with all other debt of ours and our Domestic Subsidiaries
secured by Liens (not including Liens permitted under the foregoing exceptions)
that would otherwise be subject to the foregoing restrictions and the Value of
Sale and Leaseback Transactions existing at that time (other than Sale and
Leaseback Transactions that, if such Sale and Leaseback Transaction had been a
Lien, would have been permitted under clause (1) above and other than Sale and
Leaseback Transactions as to which application of amounts have been made in
accordance with clause (3) under "--Limitation on Sale and Leaseback
Transactions"), does not at the time exceed the greater of 10% of Consolidated
Net Tangible Assets or 15% of Consolidated Capitalization.
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The indenture does not limit the ability of our Subsidiaries that are
not Domestic Subsidiaries to issue, assume or guarantee any secured debt.
Limitation on Sale and Leaseback Transactions
The indenture provides that we will not, and will not permit any of our
Domestic Subsidiaries to, enter into any Sale and Leaseback Transaction unless
the net proceeds of the Sale and Leaseback Transaction are at least equal to the
sum of all costs incurred by us or any Domestic Subsidiary in connection with
the acquisition of, and construction of any improvements on, the Principal
Property to be leased and:
(1) we or the Domestic Subsidiary would be entitled to incur debt
secured by a Lien on the Principal Property to be leased
without equally and ratably securing the debt securities,
pursuant to clause (1) under "--Limitation on Liens;" or
(2) we or the Domestic Subsidiary would be entitled to incur debt
secured by a Lien on the Principal Property to be leased
without equally and ratably securing the debt securities,
pursuant to the second to last sentence under "--Limitation on
Liens;" or
(3) we or the Domestic Subsidiary shall, within 120 days of the
effective date of any such arrangement (or, in the case of
(ii) below, within six months thereafter pursuant to a firm
purchase commitment entered into within such 120 day period)
apply an amount equal to the proceeds from such Sale and
Leaseback Transaction relating to such Principal Property:
(i) to the payment or other retirement of debt incurred
or assumed by us or any Subsidiary that ranks senior
to or equal with the debt securities (other than debt
owned by us or any Subsidiary); or
(ii) to the purchase of other Principal Property.
The indenture does not limit the ability of our Subsidiaries that are
not Domestic Subsidiaries to enter into Sale and Leaseback Transactions.
Merger, Consolidation or Sale or Conveyance of Assets
The indenture provides that we may not consolidate or merge with or
into any other Person or convey or transfer our properties and assets
substantially as an entirety to any Person, unless:
(1) the successor Person (if not Toys "R" Us) shall be a
corporation, partnership, limited liability company or trust
organized and existing under the laws of the United States,
any State thereof or the District of Columbia, and shall
expressly assume, by a supplemental indenture reasonably
satisfactory to the trustee, the due and punctual payment of
the principal of, premium, if any, and interest on the debt
securities and the performance of every covenant in the
indenture on our part;
(2) immediately after giving effect to such transaction, no event
of default, and no event which, after notice or lapse of time
or both, would become an event of default, shall have occurred
and be continuing; and
(3) we shall have delivered to the trustee an officers'
certificate and an opinion of counsel, each stating that the
consolidation, merger, conveyance or transfer and the
supplemental indenture comply with clauses (1) and (2) above
and all other conditions precedent specified in the indenture
relating to the transaction have been complied with.
In the case of any consolidation, merger, conveyance or transfer, the
successor Person will succeed to and be substituted for Toys "R" Us as obligor
on the debt securities, with the same effect as if it had been named in the
indenture as Toys "R" Us, and we will be relieved of all obligations under the
debt securities and the indenture.
The covenant described above includes a phrase relating to the sale,
assignment, conveyance, transfer or other disposition of "assets substantially
as an entirety". Like the phrase "all or substantially all" of a company's
assets, there is no precise, established definition of the phrase "assets
substantially as an entirety" under applicable law. In interpreting this phrase,
courts, among other things, make a subjective determination as to the portion of
assets conveyed, considering many factors, including the value of assets
conveyed, the proportion of a company's income derived from the assets conveyed
and the significance of those assets to the ongoing business of the company. To
the extent the meaning of such phrase is uncertain, uncertainty will exist as to
whether or not the covenant described above may apply.
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Defined Terms
"Consolidated Capitalization" means the total of all the assets
appearing on the consolidated balance sheet of Toys "R" Us and its Subsidiaries,
less the following: (A) current liabilities; and (B) deferred income taxes.
"Consolidated Net Tangible Assets" means the total of all the assets
appearing on the consolidated balance sheet of Toys "R" Us and its Subsidiaries,
less the following: (A) current liabilities; (B) intangible assets, including
without limitation, such items as goodwill, trademarks, trade names, patents and
unamortized debt discount and expense carried as an asset on said balance sheet;
and (C) appropriate adjustments on account of minority interests of other
Persons holding stock in any of our Subsidiaries.
"Domestic Subsidiary" means a Subsidiary formed under the laws of, or
conducting its principal operations within, the United States or any State or
territory thereof.
"Lien" means any mortgage, pledge, lien, encumbrance, charge or
security interest of any kind, excluding, pledges or deposits under worker's
compensation, unemployment insurance or similar statutes, mechanics', workmen's
or other similar liens arising in the ordinary course of business or deposits or
pledges to obtain the release of any such liens, certain liens for taxes,
assessments or governmental charges or levies, landlord's liens on property held
under lease, easements and other liens or encumbrances similar to the foregoing.
"Person" means an individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Principal Property" means any real property or any permanent
improvement thereon owned by us or any Domestic Subsidiary including, without
limitation, any store, warehouse, manufacturing facility or plant.
"Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing to us or any Domestic Subsidiary of any Principal
Property (except for temporary leases for a term, including any renewal thereof,
of not more than 36 months and except for leases between us and a Subsidiary or
between Subsidiaries), which Principal Property has been or is to be sold or
transferred by us or such Domestic Subsidiary to such Person.
"Subsidiary" means with respect to any Person, any corporation,
association or other business entity of which more than 50% of the outstanding
voting stock is owned, directly or indirectly, by such Person or one or more
Subsidiaries of such Person (or a combination thereof). Unless otherwise
specified, "Subsidiary" means a direct or indirect Subsidiary of ours.
"Value" means, with respect to a Sale and Leaseback Transaction, as of
any particular time, the amount equal to the greater of (1) the net proceeds
from the sale or transfer of the property leased pursuant to such Sale and
Leaseback Transaction and (2) the sum of all costs of us or any Domestic
Subsidiary incurred in connection with the acquisition of such property and the
construction of any improvements thereon, as determined in good faith by us or
such Domestic Subsidiary at the time of entering into such Sale and Leaseback
Transaction, in either case multiplied by a fraction, the numerator of which
shall be equal to the number of full years of the term of the lease that is part
of such Sale and Leaseback Transaction remaining at the time of determination
and the denominator of which shall be equal to the number of full years of such
term, without regard to any renewal or extension options contained in the lease.
Other Covenants
The applicable prospectus supplement will describe any other material
covenants in respect of a series of debt securities. Other than our covenants
included in the indenture as described above or as described in the applicable
prospectus supplement, the debt securities will not have the benefit of any
covenants that limit or restrict our business or operations or the incurrence of
additional indebtedness by us, and there are no covenants or other provisions in
the indenture providing for a put or increased interest or otherwise that would
afford holders of debt securities additional protection in the event of a
recapitalization transaction, a change of control transaction or a highly
leveraged transaction.
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Registration of Transfer and Exchange
All debt securities issued upon any registration of transfer or
exchange of debt securities will be valid obligations of ours, evidencing the
same debt and entitled to the same rights under the indenture as the debt
securities surrendered in the registration of transfer or exchange. We will not
apply any service charge for the registration of transfer or exchange, but we
may in some cases require payment of a sum to cover any tax or other
governmental charges.
Subject to the limitations applicable to global securities, holders of
registered debt securities may present their securities for registration of
transfer at the office of one or more security registrars designated and
maintained by us. At your option, you may exchange your registered debt
securities of any series, except a global security, for an equal principal
amount of other registered debt securities of the same series having authorized
denominations upon surrender to our designated agent.
We will not be required to register the transfer of or exchange (1) any
debt securities during a period of 15 days before any mailing of a notice of
redemption of any securities selected for redemption or (2) any debt securities
selected for redemption, in whole or in part, except the unredeemed portion of
any debt securities being redeemed in part or the exchange of any bearer
securities so selected for redemption for registered securities of the same
series and like tenor.
No global security may be exchanged for registered debt securities in
the name of any person other than the depositary for that global security or any
nominee of the depositary for that global security except in the limited
circumstances described below or in the prospectus supplement relating to those
debt securities. We may at any time, at our option, exchange debt securities
issued as one or more global securities for an equal principal amount of debt
securities of the same series in definitive registered form. In this case we
will deliver to the holders new debt securities in definitive registered form in
the same aggregate principal amount as the global securities being exchanged.
Global Debt Securities
Most offered debt securities will be book-entry (global) debt
securities. Upon issuance, all book-entry debt securities will be represented by
one or more fully registered global debt securities, without coupons. Unless
otherwise stated in the applicable prospectus supplement, each global debt
security will be deposited with, or on behalf of, The Depository Trust Company,
or "DTC," a securities depository, and will be registered in the name of DTC or
a nominee of DTC. DTC will thus be the only registered holder of these debt
securities.
Purchasers of debt securities may only hold interests in the global
debt securities through DTC if they are participants in the DTC system.
Purchasers may also hold interests through a securities intermediary -- banks,
brokerage houses and other institutions that maintain securities accounts for
customers that have an account with DTC or its nominee. DTC will maintain
accounts showing the debt security holdings of its participants, and these
participants will in turn maintain accounts showing the debt security holdings
of their customers. Some of these customers may themselves be securities
intermediaries holding debt securities for their customers. Ownership of
beneficial interests in book-entry debt securities will be shown only on, and
the transfer of those ownership interests will be effected only through, records
maintained by DTC or its nominee with respect to participants' interests or by
the participant with respect to interests of persons held by the participants on
their behalf.
The debt securities of each beneficial owner of a book-entry debt
security will be evidenced solely by entries on the books of the beneficial
owner's securities intermediary. The actual purchaser of the debt securities
will generally not be entitled to have the debt securities represented by the
global debt securities registered in its name and will not be considered the
owner under the indenture. Accordingly, each beneficial owner must rely on the
procedures of DTC or 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. In most cases, a beneficial owner will
also not be able to obtain a paper certificate evidencing the holder's ownership
of debt securities. The book-entry system for holding debt securities eliminates
the need for physical movement of certificates and is the system through which
most publicly traded securities are held in the United States. However, the laws
of some jurisdictions require some purchasers of debt securities to take
physical delivery of their debt securities in definitive form. These laws may
impair the ability to own, pledge or transfer book-entry debt securities.
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A beneficial owner of book-entry debt securities represented by a
global debt security may exchange the debt securities for definitive (paper)
debt securities only if:
o DTC is unwilling or unable to continue as depositary for such
global debt security or is no longer eligible to act as
depositary and we do not appoint a qualified replacement for
DTC within 90 days after we receive notice or become aware of
this ineligibility;
o we in our sole discretion decide to allow some or all
book-entry debt securities to be exchangeable for definitive
debt securities in registered form; or
o an event of default has occurred and is continuing with
respect to the debt securities of a particular series.
Unless we indicate otherwise, any global debt security that is
exchangeable will be exchangeable in whole for definitive debt securities in
registered form, with the same terms and of an equal aggregate principal amount.
Definitive debt securities will be registered in the name or names of the person
or persons specified by DTC in a written instruction to the registrar of the
debt securities. DTC may base its written instruction upon directions that it
receives from its participants.
In this prospectus, for book-entry debt securities, references to
actions taken by debt security holders will mean actions taken by DTC upon
instructions from its participants, and references to payments and notices of
redemption to debt security holders will mean payments and notices of redemption
to DTC as the registered holder of the debt securities for distribution to
participants in accordance with DTC's procedures. All payments on the book-entry
debt securities will be made to DTC or its nominee as their holder.
DTC 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 the New York Uniform Commercial Code and a "clearing
agency" registered under section 17A of the Securities Exchange Act of 1934. The
rules applicable to DTC and its participants are on file with the SEC.
None of the trustee, any paying agent, any security registrar or us
will have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interest in the
book-entry debt securities or for maintaining, supervising or reviewing any
records relating to the beneficial ownership interests.
Defeasance of the Indenture
Unless otherwise specified in the prospectus supplement, we can
terminate all of our obligations under the indenture with respect to the debt
securities of any series, other than the obligation to pay interest on, premium,
if any, and the principal of the debt securities of such series and certain
other obligations, known as "covenant defeasance", at any time by:
o depositing money or U.S. government obligations with the
trustee in an amount sufficient to pay the principal of and
interest on the debt securities of such series to their
maturity; and
o complying with certain other conditions, including delivery to
the trustee of an opinion of counsel to the effect that
holders of debt securities of such series will not recognize
income, gain or loss for federal income tax purposes as a
result of our covenant defeasance.
In addition, unless otherwise specified in the prospectus supplement,
we can terminate all of our obligations under the indenture with respect to the
debt securities of any series, including the obligation to pay interest on,
premium, if any, and the principal of the debt securities of such series, known
as "legal defeasance", at any time by:
o depositing money or U.S. government obligations with the
trustee in an amount sufficient to pay the principal of and
interest on the debt securities of such series to their
maturity, and
o complying with certain other conditions, including delivery to
the trustee of an opinion of counsel stating that there has
been a change in the federal tax law since the date of the
indenture to the effect that holders of debt securities of
such series will not recognize income, gain or loss for
federal income tax purposes as a result of our legal
defeasance or the delivery to the trustee of a ruling or other
formal statement or action by the Internal Revenue Service to
the same effect.
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Payments of Unclaimed Moneys
Moneys deposited with the trustee or any paying agent for the payment
of principal of or premium and interest on any debt security that remains
unclaimed for two years will be repaid to us at our request, unless the law
requires otherwise. If you want to claim any unclaimed moneys, you must look to
us and not to the trustee or paying agent.
Events of Default, Notices, and Waiver
Events of Default
An "event of default" regarding any series of debt securities is any
one of the following events:
o default for 30 days in the payment of interest on the debt
securities of that series;
o default in payment when due of principal of, or premium, if
any, on debt securities of that series or default in the
deposit of any sinking fund payment when and as due by the
terms of the debt securities of that series;
o our failure to comply with any covenant or agreement in the
indenture or debt security of that series for a period of 90
days after notice is provided to us by the trustee or to us
and the trustee by the holders of at least 25% in aggregate
principal amount of the then outstanding debt securities of
that series;
o certain events of bankruptcy, insolvency and reorganization
with respect to us; and
o any other event of default of that series that is specified in
the prospectus supplement.
A default regarding a single series of debt securities will not
necessarily constitute a default regarding any other series.
Certain of our indebtedness may provide for events of default which
differ from the events of default for the debt securities. In addition, the
indenture permits series of debt securities to be issued that include additional
or different events of default as compared with the events of default listed
above.
If an event of default for any series of debt securities occurs and is
continuing (other than an event of default involving the bankruptcy, insolvency
or reorganization of us), either the trustee or the holders of 25% in principal
amount of the outstanding debt securities of that series may declare the
principal (or, in the case of (a) OID debt securities, such lesser amount as
provided in those OID debt securities or (b) indexed debt securities, the amount
determined by the terms of those indexed debt securities), of all the debt
securities of that series, together with any accrued interest on the debt
securities, to be immediately due and payable by notice in writing to us. If it
is the holders of debt securities who give notice of that declaration of
acceleration to us, then they must also give notice to the trustee.
If an event of default occurs which involves the bankruptcy, insolvency
or reorganization of us, as set forth above, then all unpaid principal amounts
(or, if the debt securities are (a) OID debt securities, such lesser amount as
provided in those OID debt securities or (b) indexed debt securities, the amount
determined by the terms of those indexed debt securities) and accrued interest
on all debt securities of each series will immediately become due and payable,
without any action by the trustee or any holder of debt securities. In the event
that we become subject to a bankruptcy proceeding, liquidation or
reorganization, the claim of a holder of an OID debt security will be limited by
the bankruptcy court to the accreted value, rather than the face amount, of the
OID debt security.
In order for holders of debt securities to initiate proceedings for a
remedy under the indenture, holders of 25% in principal amount of those debt
securities must:
o first give notice to the trustee as provided above;
o request that the relevant trustee initiate a proceeding in its
own name; and
o offer that trustee indemnity reasonably satisfactory to it
against costs and liabilities.
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If the trustee still refuses for 60 days to initiate the proceeding, and no
inconsistent direction has been given to the trustee by holders of a majority of
the debt securities of the same series, the holders may initiate a proceeding.
The holders of a majority in principal amount of the outstanding debt
securities of a series may rescind a declaration of acceleration with respect to
the debt securities of that series if all events of default, besides the failure
to pay principal or interest due solely because of the declaration of
acceleration, have been cured or waived.
A judgment for money damages by courts in the United States, including
a money judgment based on an obligation expressed in a foreign currency, will
ordinarily be rendered only in U.S. dollars. A New York statute provides that a
court shall render a judgment or decree in the foreign currency of the
underlying obligation and that the judgment or decree shall be converted into
U.S. dollars at the exchange rate prevailing on the date of entry of the
judgment or decree.
We are required under the indenture to file an officers' certificate
with the trustee every year as to our compliance with all conditions and
covenants in the indenture.
Notices
The trustee is required to give notice to holders of a series of debt
securities of a default, which remains uncured, has not been waived and that is
known to the trustee, within 90 days after the default has occurred. If a
default occurs in the performance of any covenant in the debt securities or the
indenture, other than a default in the payment of principal of and premium or
interest on any of the debt securities, the trustee shall not give notice to the
holders of debt securities until 90 days after the occurrence of the default.
The trustee may withhold notice of a default if the trustee determines in good
faith that doing so is in the interest of the holders, but may not withhold the
notice in the case of a default in the payment of principal of and premium or
interest on any of the debt securities or the deposit of any sinking fund
payment.
Waiver
The holders of a majority in principal amount of the outstanding debt
securities of a series may waive any past default or event of default except a
default in the payment of principal of or premium or interest on the debt
securities of that series or a default relating to a provision that cannot be
amended without the consent of each affected holder.
Rights and Duties of the Trustee
The holders of a majority in principal amount of 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
other power conferred on the trustee. The trustee may decline to follow that
direction if it would involve the trustee in personal liability or would be
illegal. During an event of default, the trustee is required to exercise the
standard of care and skill that a prudent person would exercise under the
circumstances in the conduct of his own affairs. The trustee is not obligated to
exercise any of its rights or powers under the indenture at the request or
direction of any of the holders of debt securities unless those holders have
offered to the trustee security or indemnity reasonably satisfactory to it.
The trustee is entitled, in the absence of bad faith on its part, to
rely on an officers' certificate before taking action under the indenture.
Supplemental Indentures
Supplemental Indentures Not Requiring Consent of Holders
Without the consent of any holders of debt securities, we and the
trustee may supplement the indenture, among other things, to:
o reflect that another Person has succeeded us and assumed our
covenants and obligations under the debt securities and the
indenture;
o cure any ambiguity, inconsistency or defect in the indenture
or in the debt securities, or make any other provisions or
changes with respect to matters or questions arising under the
indenture;
o issue and establish the form and terms of any series of debt
securities as provided in the indenture;
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o provide for any guarantee of the debt securities of any
series, secure any debt securities of any series or confirm
and evidence the release, termination or discharge of any such
guarantee or lien securing any debt securities of any series
when such release, termination or discharge is permitted by
the indenture;
o add to our covenants further covenants or surrender any right
or power conferred upon us by the indenture for the benefit of
the holders of debt securities and, if the covenants or the
surrender of such right or power are for the benefit of less
than all series of debt securities, stating which series are
entitled to benefit;
o add any additional event of default and, if the new event of
default applies to fewer than all series of debt securities,
stating to which series it applies;
o change the trustee for a series of debt securities or provide
for an additional trustee;
o provide additional provisions for bearer debt securities;
o change or eliminate any provision of the indenture, so long as
no outstanding debt securities exist which are entitled to the
benefit of that provision;
o supplement any provisions of the indenture to the extent
necessary to permit or facilitate the defeasance and discharge
of any series of debt securities, provided that any such
action will not adversely affect the interests of the holders
of debt securities of that series or any other series of debt
securities issued under the indenture in any material respect;
o modify or supplement any provisions of the indenture necessary
to permit the reopening of any series of debt securities;
o modify the indenture in order to achieve or continue its
qualification under the Trust Indenture Act of 1939 or as may
be necessary or desirable in accordance with amendments to
that Act;
o add to the conditions, limitations and restrictions on the
authorized amount, form, terms or purposes of issue,
authentication and delivery of debt securities; or
o for any other reason specified in the applicable prospectus
supplement.
Supplemental Indentures Requiring Consent of Holders
We and the trustee, with the consent of the holders of at least a
majority in principal amount of each series of the debt securities that would be
affected by a modification of the indenture, may supplement the indenture or
modify in any way the terms of that indenture or the rights of the holders of
the debt securities. However, without the consent of each holder of all of the
debt securities affected by that modification, we and the trustee may not:
o reduce the principal of or premium, if any, on or change the
stated maturity of any debt security;
o reduce the rate of or change the time for payment of interest
on any debt security or, in the case of OID debt securities,
reduce the rate of accretion of the OID;
o change any of our obligations to pay additional amounts, if
any, under the indenture (except as contemplated by clause (1)
under "--Merger, Consolidation or Sale or Conveyance of
Assets" and permitted by the first bullet point under
"--Supplemental Indentures Not Requiring Consent of Holders");
o reduce or alter the method of computation of any amount
payable upon redemption, repayment or purchase of any debt
security by us, or the time when the redemption, repayment or
purchase may be made;
o make the principal or interest on any debt security payable in
a currency other than the currency stated in the debt security
or change the place of payment;
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o reduce the amount of principal due on an OID debt security
upon acceleration of maturity or provable in bankruptcy or
reduce the amount payable under the terms of an indexed debt
security upon acceleration of maturity or provable in
bankruptcy;
o impair any right of repayment or purchase at the option of any
holder of debt securities;
o adversely affect the conversion rights of any holder of debt
securities;
o impair the right of any holder of debt securities to sue for
payment of the principal, premium, if any, or interest on a
debt security that would be due and payable at the stated
maturity thereof or upon redemption;
o reduce the percentage in principal amount of the outstanding
debt securities of any series required to supplement the
indenture or to waive any of its provisions; or
o modify the foregoing except to increase any such percentage or
provide that other provisions of the indenture cannot be
modified or waived without the consent of the holder of each
debt security affected thereby.
A supplemental indenture which modifies or eliminates a provision
intended to benefit the holders of one series of debt securities will not affect
the rights under the indenture of holders of other series of debt securities.
Waiver of Covenants
We may omit to comply with some of our covenants and conditions set
forth in the indenture if the holders of at least a majority in aggregate
principal amount of the outstanding securities of each series affected by such
omission waive that compliance.
Redemption
The specific terms, if any, of any redemption of a series of debt
securities will be contained in the prospectus supplement for that series.
Generally, we must send notice of redemption to the holders at least 30 days but
not more than 60 days prior to the redemption date. The notice will specify:
o the redemption date;
o the redemption price;
o the place or places of payment;
o the CUSIP or other identifying number of the debt securities
being redeemed, if any;
o whether the redemption is pursuant to a sinking fund;
o that on the redemption date, interest, or, in the case of OID
debt securities, original issue discount and interest, if any,
will cease to accrue; and
o if bearer debt securities are being redeemed, that those
bearer debt securities must be accompanied by all coupons
maturing after the redemption date or the amount of the
missing coupons will be deducted from the redemption price, or
indemnity must be furnished, and whether those bearer debt
securities may be exchanged for registered debt securities not
being redeemed.
On or before any redemption date, we will deposit an amount of money
with the trustee or with a paying agent sufficient to pay the redemption price.
If less than all the debt securities are being redeemed, the trustee
shall select the debt securities to be redeemed using a method it considers
fair. From and after the redemption date, unless we default in the payment of
the redemption price, the debt securities will cease to bear interest and, in
the case of bearer securities, the coupons for such interest will be void.
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Concerning the Trustee
We may from time to time maintain lines of credit and have other
customary banking relationships with the trustee and its affiliates. We also
have agreed, pursuant to the indenture, to indemnify the trustee for certain
losses, liabilities and expenses.
Governing Law
The indenture and the debt securities will be governed by, and
construed in accordance with, the laws of the State of New York.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material U.S. federal income tax
consequences of the purchase, ownership and disposition of debt securities as of
the date of this prospectus. Except where noted, this summary deals only with
debt securities purchased on original issue at their issue price and held as
capital assets by United States holders, and does not deal with special
situations. For example, this summary does not address:
o tax consequences to holders who may be subject to special tax
treatment, such as dealers in securities or currencies,
financial institutions, real estate investment trusts,
regulated investment companies, tax-exempt entities, insurance
companies, traders in securities that elect to use a
mark-to-market method of accounting for their securities
holdings, investors in pass-through entities or persons liable
for alternative minimum tax;
o tax consequences to persons holding debt securities as part of
a hedging, integrated, conversion or constructive sale
transaction or a straddle;
o tax consequences to U.S. holders (as defined below) of debt
securities whose "functional currency" is not the U.S. dollar;
o alternative minimum tax consequences, if any; or
o any state, local or foreign tax consequences.
The discussion below is based upon the provisions of the Internal
Revenue Code of 1986 (the Code), and regulations, rulings and judicial decisions
as of the date of this prospectus. Those authorities may be changed, possibly
with retroactive effect, which could result in U.S. federal income tax
consequences that are different from those discussed below. The discussion set
forth below also assumes that all debt securities issued under this prospectus
constitute debt for U.S. federal income tax purposes. If any debt security does
not constitute debt for U.S. federal income tax purposes, the tax consequences
of the ownership of that debt security could differ materially from the tax
consequences described herein. We will summarize any special U.S. federal income
tax considerations relevant to a particular issue of debt securities in the
applicable prospectus supplement.
For the purposes of this summary, a "United States holder" means a
beneficial owner of the debt securities offered in this prospectus that is:
o a citizen or resident of the United States;
o a corporation or partnership created or organized in or under
the laws of the United States or any political subdivision of
the United States;
o an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or
o a trust if (x) it is subject to the primary supervision of a
court within the United States and one or more United States
persons have the authority to control all substantial
decisions of the trust or (y) it has a valid election in
effect under applicable U.S. Treasury regulations to be
treated as a United States person.
A "non-United States holder" means a beneficial owner of the debt
securities that is not a United States holder.
If a partnership holds the debt securities offered in this prospectus,
the tax treatment of a partner will generally depend upon the status of the
partner and the activities of the partnership. If you are a partner of a
partnership holding the offered debt securities, you should consult your tax
advisors.
If you are considering the purchase of debt securities, you should
consult your own tax advisors concerning the U.S. federal income tax
consequences to you and any consequences arising under the laws of any other
taxing jurisdiction.
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Consequences to United States Holders
The following is a summary of certain U.S. federal income tax
consequences that will apply to you if you are a United States holder of debt
securities.
Payments of Interest
Except as set forth below, stated interest on a debt security will
generally be taxable to you as ordinary income from domestic sources at the time
it is paid or accrued in accordance with your method of accounting for tax
purposes.
Original Issue Discount
If you own debt securities issued with original issue discount (OID),
you will be subject to special tax accounting rules, as described in greater
detail below. In that case, you should be aware that you generally must include
OID in gross income in advance of the receipt of cash attributable to that
income. However, you generally will not be required to include separately in
income cash payments received on the debt securities, even if denominated as
interest, to the extent those payments do not constitute qualified stated
interest, as defined below. Notice will be given in the applicable prospectus
supplement when we determine that a particular debt security will be an original
issue discount debt security.
Additional rules applicable to OID debt securities that are denominated
in or determined by reference to a currency other than the U.S. dollar are
described below under "--Foreign Currency Debt Securities".
A debt security with an issue price that is less than the "stated
redemption price at maturity" (the sum of all payments to be made on the debt
security other than "qualified stated interest") generally will be issued with
OID if that difference is at least 0.25% of the stated redemption price at
maturity multiplied by the number of complete years to maturity. The "issue
price" of each debt security in a particular offering will be the first price at
which a substantial amount of that particular offering is sold to the public.
The term "qualified stated interest" means stated interest that is
unconditionally payable in cash or in property, other than debt instruments of
the issuer, provided the interest to be paid meets all of the following
conditions:
o it is payable at least once per year;
o it is payable over the entire term of the debt security; and
o it is payable at a single fixed rate or, subject to certain
conditions, based on one or more interest indices.
We will give you notice in the applicable prospectus supplement when we
determine that a particular debt security will bear interest that is not
qualified stated interest.
If you own a debt security issued with "de minimis" OID, which is an
amount of discount that is less than 0.25% of the stated redemption price at
maturity multiplied by the number of complete years to maturity, the debt
security will not be considered to be issued with OID, and you generally must
include the de minimis OID in income at the time stated principal payments on
the debt securities are made in proportion to the amount of such payments. Any
amount of de minimis OID that you have included in income will be treated as
capital gain.
Certain of the debt securities may contain provisions permitting them
to be redeemed prior to their stated maturity at our option and/or at your
option. OID debt securities containing those features may be subject to rules
that differ from the general rules discussed herein. If you are considering the
purchase of OID debt securities with those features, you should carefully
examine the applicable prospectus supplement and should consult your own tax
advisors with respect to those features since the tax consequences to you with
respect to OID will depend, in part, on the particular terms and features of the
debt securities.
If you own OID debt securities with a maturity upon issuance of more
than one year you generally must include OID in income in advance of the receipt
of some or all of the related cash payments using the "constant yield method"
described in the following paragraph. This method takes into account the
compounding of interest. The accruals of OID on an OID debt security will
generally be less in the early years and more in the later years.
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The amount of OID that you must include in income if you are the
initial United States holder of an OID debt security is the sum of the "daily
portions" of OID with respect to the debt security for each day during the
taxable year or portion of the taxable year in which you held that debt security
(accrued OID). The daily portion is determined by allocating to each day in any
"accrual period" a pro rata portion of the OID allocable to that accrual period.
The "accrual period" for an OID debt security may be of any length and may vary
in length over the term of the debt security, provided that each accrual period
is no longer than one year and each scheduled payment of principal or interest
occurs on the first day or the final day of an accrual period. The amount of OID
allocable to any accrual period is an amount equal to the excess, if any, of:
o the debt security's adjusted issue price at the beginning of
the accrual period multiplied by its yield to maturity,
determined on the basis of compounding at the close of each
accrual period and properly adjusted for the length of the
accrual period, over
o the aggregate of all qualified stated interest allocable to
the accrual period.
OID allocable to a final accrual period is the difference between the
amount payable at maturity, other than a payment of qualified stated interest,
and the adjusted issue price at the beginning of the final accrual period. The
"adjusted issue price" of a debt security at the beginning of any accrual period
is equal to its issue price increased by the accrued OID for each prior accrual
period, determined without regard to the amortization of any acquisition or bond
premium, as described below, and reduced by any payments made on the debt
security (other than qualified stated interest) on or before the first day of
the accrual period. Under these rules, you will have to include in income
increasingly greater amounts of OID in successive accrual periods. We are
required to provide information returns stating the amount of OID accrued on
debt securities held of record by persons other than corporations and other
exempt holders.
Floating rate debt securities are subject to special OID rules. In the
case of an OID debt security that is a floating rate debt security, both the
"yield to maturity" and "qualified stated interest" will be determined solely
for purposes of calculating the accrual of OID as though the debt security will
bear interest in all periods at a fixed rate generally equal to the rate that
would be applicable to interest payments on the debt security on its date of
issue or, in the case of certain floating rate debt securities, the rate that
reflects the yield to maturity that is reasonably expected for the debt
security. Additional rules may apply if:
o the interest on a floating rate debt security is based on more
than one interest index; or
o the principal amount of the debt security is indexed in any
manner.
You may elect to treat all interest on any debt security as OID and
calculate the amount includible in gross income under the constant yield method
described above. For purposes of this election, interest includes stated
interest, acquisition discount, OID, de minimis OID, market discount, de minimis
market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium. You should consult with your own tax advisors
about this election.
Short-Term Debt Securities
In the case of debt securities having a term of one year or less, all
payments, including all stated interest, will be included in the stated
redemption price at maturity and will not be qualified stated interest. As a
result, you will generally be taxed on the discount instead of stated interest.
The discount will be equal to the excess of the stated redemption price at
maturity over the issue price of a short-term debt security, unless you elect to
compute this discount using tax basis instead of issue price.
In general, individual and certain other cash method United States
holders of short-term debt securities are not required to include accrued
discount in their income currently unless they elect to do so, but may be
required to include stated interest in income as the interest is received.
United States holders that report income for U.S. federal income tax purposes on
the accrual method and certain other United States holders are required to
accrue discount on short-term debt securities (as ordinary income) on a
straight-line basis, unless an election is made to accrue the discount according
to a constant yield method based on daily compounding. If you are not required,
and do not elect, to include discount in income currently, any gain you realize
on the sale, exchange or retirement of a short-term debt security will generally
be ordinary income to you to the extent of the discount accrued by you through
the date of sale, exchange or retirement. In addition, if you do not elect to
currently include accrued discount in income you may be required to defer
deductions for a portion of your interest expense with respect to any
indebtedness attributable to the short-term debt securities.
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Market Discount
If you purchase a debt security, other than an OID debt security, for
an amount that is less than its stated redemption price at maturity, or, in the
case of an OID debt security, its adjusted issue price, the amount of the
difference will be treated as "market discount" for U.S. federal income tax
purposes, unless that difference is less than a specified de minimis amount.
Under the market discount rules, you will be required to treat any payment,
other than qualified stated interest, on, or any gain on the sale, exchange,
retirement or other disposition of, a debt security as ordinary income to the
extent of the market discount that you have not previously included in income
and are treated as having accrued on the debt security at the time of its
payment or disposition. In addition, you may be required to defer, until the
maturity of the debt security or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness attributable to the debt security.
Any market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the debt security,
unless you elect to accrue on a constant yield method. You may elect to include
market discount in income currently as it accrues, on either a ratable or
constant yield method, in which case the rule described above regarding deferral
of interest deductions will not apply.
Acquisition Premium, Amortizable Bond Premium
If you purchase an OID debt security for an amount that is greater than
its adjusted issue price but equal to or less than the sum of all amounts
payable on the debt security after the purchase date other than payments of
qualified stated interest, you will be considered to have purchased that debt
security at an "acquisition premium". Under the acquisition premium rules, the
amount of OID that you must include in gross income with respect to the debt
security for any taxable year will be reduced by the portion of the acquisition
premium properly allocable to that year.
If you purchase a debt security (including an OID debt security) for an
amount in excess of the sum of all amounts payable on the debt security after
the purchase date other than qualified stated interest, you will be considered
to have purchased the debt security at a "premium" and, if it is an OID debt
security, you will not be required to include any OID in income. You generally
may elect to amortize the premium over the remaining term of the debt security
on a constant yield method as an offset to interest when includible in income
under your regular accounting method. Special rules limit the amortization of
premium in the case of convertible debt securities. If you do not elect to
amortize bond premium, that premium will decrease the gain or increase the loss
you would otherwise recognize on disposition of the debt security.
Sale, Exchange and Retirement of Debt Securities
Your adjusted tax basis in a debt security will, in general, be your
cost for that debt security, increased by OID, market discount or any discount
with respect to a short-term debt security that you previously included in
income, and reduced by any amortized premium and any cash payments on the debt
security other than qualified stated interest. Upon the sale, exchange,
retirement or other disposition of a debt security, you will recognize gain or
loss equal to the difference between the amount you realize upon the sale,
exchange, retirement or other disposition (less an amount equal to any accrued
and unpaid interest, which will be treated as a payment of interest for federal
income tax purposes) and the adjusted tax basis of the debt security. Except as
described above with respect to certain short-term debt securities or with
respect to market discount, or as described below with respect to foreign
currency debt securities, that gain or loss will be capital gain or loss.
Capital gains of individuals derived in respect of capital assets held for more
than one year are eligible for reduced rates of taxation. The deductibility of
capital losses is subject to limitations.
Foreign Currency Debt Securities
Payments of Interest
If you receive interest payments made in a foreign currency and you use
the cash basis method of accounting, you will be required to include in income
the U.S. dollar value of the amount received, determined by translating the
foreign currency received at the "spot rate" for such foreign currency on the
date such payment is received regardless of whether the payment is in fact
converted into U.S. dollars. You will not recognize exchange gain or loss with
respect to the receipt of such payment.
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If you use the accrual method of accounting, you may determine the
amount of income recognized with respect to such interest in accordance with
either of two methods. Under the first method, you will be required to include
in income for each taxable year the U.S. dollar value of the interest that has
accrued during such year, determined by translating such interest at the average
rate of exchange for the period or periods during which such interest accrued.
Under the second method, you may elect to translate interest income at the spot
rate on:
o the last day of the accrual period;
o the last day of the taxable year if the accrual period
straddles your taxable year; or
o the date the interest payment is received if such date is
within five days of the end of the accrual period.
This election must be applied consistently to all debt instruments from year to
year and may not be revoked without the consent of the Internal Revenue Service
(the IRS).
Upon receipt of an interest payment on such debt security (including,
upon the sale of such debt security, the receipt of proceeds which include
amounts attributable to accrued interest previously included in income), you
will recognize ordinary income or loss in an amount equal to the difference
between the U.S. dollar value of such payment (determined by translating the
foreign currency received at the spot rate for such foreign currency on the date
such payment is received) and the U.S. dollar value of the interest income you
previously included in income with respect to such payment.
Original Issue Discount
OID on a debt security that is also a foreign currency debt security
will be determined for any accrual period in the applicable foreign currency and
then translated into U.S. dollars, in the same manner as interest income accrued
by a holder on the accrual basis, as described above. You will recognize
exchange gain or loss when OID is paid (including, upon the sale of such debt
security, the receipt of proceeds which include amounts attributable to OID
previously included in income) to the extent of the difference between the U.S.
dollar value of such payment (determined by translating the foreign currency
received at the spot rate for such foreign currency on the date such payment is
received) and the U.S. dollar value of the accrued OID (determined in the same
manner as for accrued interest). For these purposes, all receipts on a debt
security will be viewed:
o first, as the receipt of any stated interest payment called
for under the terms of the debt security;
o second, as the receipt of previously accrued OID (to the
extent thereof), with payments considered made for the
earliest accrual periods first; and
o third, as the receipt of principal.
Market Discount and Bond Premium
The amount of market discount on foreign currency debt securities
includible in income will generally be determined by translating the market
discount determined in the foreign currency into U.S. dollars at the spot rate
on the date the foreign currency debt security is retired or otherwise disposed
of. If you have elected to accrue market discount currently, then the amount
which accrues is determined in the foreign currency and then translated into
U.S. dollars on the basis of the average exchange rate in effect during such
accrual period. You will recognize exchange gain or loss with respect to market
discount which is accrued currently using the approach applicable to the accrual
of interest income as described above.
Bond premium on a foreign currency debt security will be computed in
the applicable foreign currency. If you have elected to amortize the premium,
the amortizable bond premium will reduce interest income in the applicable
foreign currency. At the time bond premium is amortized, exchange gain or loss,
which is generally ordinary gain or loss, will be realized based on the
difference between spot rates at such time and the time of acquisition of the
foreign currency debt security.
If you elect not to amortize bond premium, you must translate the bond
premium computed in the foreign currency into U.S. dollars at the spot rate on
the maturity date and such bond premium will constitute a capital loss which may
be offset or eliminated by exchange gain.
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Sale, Exchange or Retirement
Upon the sale, exchange, retirement or other taxable disposition of a
foreign currency debt security, you will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange, retirement or
other disposition (less an amount equal to any accrued and unpaid interest,
which will be treated as a payment of interest for federal income tax purposes)
and your adjusted tax basis in the foreign currency debt security. Subject to
the foreign currency rules discussed below, such gain or loss will be capital
gain or loss. Capital gains of individuals derived with respect to capital
assets held for more than one year are eligible for reduced rates of taxation.
The deductibility of capital losses is subject to limitations.
If your foreign currency debt security is sold, exchanged or retired
for an amount denominated in foreign currency, then your amount realized
generally will be based on the spot rate of the foreign currency on the date of
sale, exchange or retirement. If the foreign currency debt securities are traded
on an established securities market and held by a cash method taxpayer, foreign
currency paid or received is translated into U.S. dollars at the spot rate on
the settlement date of the purchase or sale. An accrual method taxpayer may
elect the same treatment with respect to the purchase and sale of foreign
currency debt securities traded on an established securities market, provided
that the election is applied consistently.
Your tax basis in a foreign currency debt security generally will be
your cost therefor. If you purchased a foreign currency debt security with
foreign currency, your cost will be the U.S. dollar value of the foreign
currency amount paid for such foreign currency debt security determined at the
time of such purchase. If you purchased a foreign currency debt security with
previously owned foreign currency, you will recognize ordinary exchange gain or
loss at the time of purchase attributable to the difference at the time of
purchase, if any, between your tax basis in such foreign currency and the fair
market value of the foreign currency debt security in U.S. dollars on the date
of purchase. If the foreign currency debt securities are traded on an
established securities market and held by a cash method taxpayer, foreign
currency paid or received is translated into U.S. dollars at the spot rate on
the settlement date of the purchase or sale. An accrual method taxpayer may
elect the same treatment with respect to the purchase and sale of foreign
currency debt securities traded on an established securities market.
Upon the sale, exchange or retirement of a foreign currency debt
security, you will recognize exchange gain or loss with respect to the principal
amount of such foreign currency debt security. For these purposes, the principal
amount of the foreign currency debt security is your purchase price for the
foreign currency debt security calculated in the foreign currency on the date of
purchase, and the amount of exchange gain or loss recognized is equal to the
difference between (i) the U.S. dollar value of the principal amount determined
on the date of the sale, exchange, retirement or other disposition of the
foreign currency debt security and (ii) the U.S. dollar value of the principal
amount determined on the date you purchased the foreign currency debt security.
Such gain or loss will be treated as ordinary income or loss and generally will
be U.S. source gain or loss. The realization of such gain or loss will be
limited to the amount of overall gain or loss realized on the disposition of a
foreign currency debt security.
Exchange Gain or Loss with Respect to Foreign Currency
Your tax basis in the foreign currency received as interest on a
foreign currency debt security will be the U.S. dollar value thereof at the spot
rate in effect on the date the foreign currency is received. Your tax basis in
foreign currency received on the sale, exchange or retirement of a foreign
currency debt security will be equal to the U.S. dollar value of the foreign
currency, determined at the time of the sale, exchange or retirement, or, if the
foreign currency debt securities are traded on an established securities market,
the spot rate of exchange on the settlement date, in the case of a cash basis
United States holder or an electing accrual basis United States holder as
described above.
Any gain or loss recognized by you on a sale, exchange or other
disposition of the foreign currency will be ordinary income or loss and
generally will be U.S. source gain or loss.
Dual Currency Debt Securities
If so specified in an applicable prospectus supplement relating to a
foreign currency debt security, we may have the option to make all payments of
principal and interest scheduled after the exercise of such option in a currency
other than the specified currency. The U.S. federal income tax treatment of dual
currency debt securities is uncertain. U.S. Treasury regulations currently in
effect do not address the tax treatment of dual currency debt securities.
27
An IRS announcement states that the IRS is considering issuing proposed
regulations that would:
o apply the principles contained in regulations governing
contingent debt instruments to dual currency debt securities
in the "predominant currency" of the dual currency debt
securities; and
o apply the rules discussed above with respect to foreign
currency debt securities with OID for the translation of
interest and principal into U.S. dollars.
The IRS states that these concepts are still under consideration.
Persons considering the purchase of dual currency debt securities should
carefully examine the applicable prospectus supplement and should consult their
own tax advisors regarding the U.S. federal income tax consequences of the
ownership and disposition of such debt securities.
If we exercise such an option, you may be considered to have exchanged
your debt security denominated in the specified currency for a debt security
denominated in the optional payment currency. If the exercise is treated as a
deemed exchange, you will recognize gain or loss, if any, equal to the
difference between your basis in the debt security denominated in the specified
currency and the value of the debt security denominated in the optional payment
currency. If the exercise of the option is not treated as a deemed exchange, you
will not recognize gain or loss and your basis in the debt security will be
unchanged.
Consequences to Non-United States Holders
Under present U.S. federal income and estate tax law, and subject to
the discussion below concerning backup withholding:
(a) no withholding of U.S. federal income tax will be required with
respect to the payment by us or any of our paying agents of principal or
interest (which for purposes of this discussion includes OID) on a debt security
owned by you under the "portfolio interest rule," provided that:
o interest paid on the debt security is not effectively
connected with your conduct of a trade or business in the
United States;
o you do not actually or constructively own 10% or more of the
total combined voting power of all classes of our stock
entitled to vote within the meaning of section 871(h)(3) of
the Code and the regulations thereunder;
o you are not a controlled foreign corporation that is related
to us through stock ownership;
o you are not a bank whose receipt of interest on a debt
security is described in section 881(c)(3)(A) of the Code;
o the beneficial owner satisfies the statement requirement
(described generally below) set forth in section 871(h) and
section 881(c) of the Code and the regulations thereunder; and
o such interest is not considered contingent interest under
Section 871(h)(4)(A) of the Code and the regulations
thereunder;
(b) no withholding of U.S. federal income tax generally will be
required with respect to any gain realized by you upon the sale, exchange,
retirement or other disposition of a debt security; and
(c) a debt security beneficially owned by an individual who at the time
of death is a non-United States holder will not be subject to U.S. federal
estate tax as a result of such individual's death, provided that any payment to
you on the debt securities, including original issue discount, would be eligible
for exemption from the 30% federal withholding tax under the rules described in
paragraph (a) above without regard to the statement requirement described in the
fifth bullet point under paragraph (a) above.
28
To satisfy the requirement referred to in the fifth bullet point under
paragraph (a) above, you, or a financial institution holding the debt security
on your behalf, must provide, in accordance with specified procedures, a paying
agent of ours with a statement to the effect that the you are not a U.S. person.
Currently, these requirements will be met if:
o you provide your name and address, and certifies, under
penalties of perjury, that you are not a U.S. person (which
certification may be made on an IRS Form W-8BEN); or
o a financial institution holding the debt security on your
behalf certifies, under penalties of perjury, that such
statement has been received by it and furnishes a paying agent
with a copy thereof.
The statement requirement referred to in the fifth bullet point under paragraph
(a) above may also be satisfied with other documentary evidence with respect to
an offshore account or through certain foreign intermediaries.
If you cannot satisfy the requirements of the "portfolio interest"
exception described in (a) above, payments of premium, if any, and interest
(including OID) made to you will be subject to a 30% withholding tax unless you
provide us or our paying agent, as the case may be, with a properly executed:
o IRS Form W-8BEN claiming an exemption from or reduction in
withholding under the benefit of an applicable income tax
treaty; or
o IRS Form W-8ECI stating that interest paid on the debt
security is not subject to withholding tax because it is
effectively connected with your conduct of a trade or business
in the United States.
Alternative documentation may be applicable in certain situations.
If you are engaged in a trade or business in the United States and
premium, if any, or interest (including OID) on the debt security is effectively
connected with the conduct of such trade or business, you, although exempt from
the withholding tax discussed above (provided the certification requirements
described above are satisfied), will be subject to U.S. federal income tax on
such premium, interest and OID on a net income basis in the same manner as if
you were a United States holder. In addition, if you are a foreign corporation,
you may be subject to a branch profits tax equal to 30% (or lesser rate under an
applicable income tax treaty) of such amount, subject to adjustments.
Any gain realized upon the sale, exchange, retirement or other
disposition of a debt security generally will not be subject to U.S. federal
income tax unless:
o such gain is effectively connected with your trade or business
in the United States, if any; or
o if you are an individual, you are present in the United States
for 183 days or more in the taxable year of such sale,
exchange, retirement or other disposition, and certain other
conditions are met.
Special rules may apply to certain non-United States holders, such as
"controlled foreign corporations," "passive foreign investment companies,"
"foreign personal holding companies" and certain expatriates, that are subject
to special treatment under the Code. Such entities should consult their own tax
advisors to determine the U.S. federal, state, local and other tax consequences
that may be relevant to them.
Information Reporting and Backup Withholding
United States Holders
In general, information reporting requirements will apply to payments
of principal, interest, OID and premium, paid on debt securities and to the
proceeds of sale of a debt security made to you (unless you are an exempt
recipient such as a corporation). A backup withholding tax will apply to such
payments if you fail to provide a taxpayer identification number or
certification of exempt status, or fail to report in full dividend and interest
income.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your U.S. federal income tax liability provided
the required information is furnished to the IRS.
Non-United States Holders
Information reporting will generally apply to payments of interest on
the debt securities to you and the amount of tax, if any, withheld with respect
to such payments. Copies of the information returns reporting such interest
payments and any withholding may also be made available to the tax authorities
in the country in which you reside under the provisions of an applicable income
tax treaty.
29
In general, no backup withholding will be required regarding payments
that we make to you provided that we do not have actual knowledge or reason to
know that you are a United States person and we have received from you the
certification described above under "--Consequences to Non-United States
Holders" (such as an IRS Form W-8BEN).
In addition, no information reporting or backup withholding will be
required regarding the proceeds of the sale of a debt security made within the
United States or conducted through certain United States-related financial
intermediaries, if:
o the payor receives the certification described above and does
not have actual knowledge or reason to know that you are a
United States person; or
o you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your U.S. federal income tax liability provided
the required information is furnished to the IRS.
PLAN OF DISTRIBUTION
We may sell the debt securities described in this prospectus from time
to time in one or more transactions as follows:
o through underwriters or dealers;
o through agents;
o directly to purchasers; or
o through a combination of the foregoing methods of sale.
The prospectus supplement for each offering of debt securities will
describe, among other things, the following:
o the name or names of any underwriters, dealers or agents;
o the purchase price and the proceeds to us from that sale;
o any underwriting discounts, commissions or agents' fees and
other items constituting underwriters' or agents'
compensation;
o any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers; and
o any securities exchanges on which the debt securities may be
listed.
Underwriters
Unless otherwise set forth in the prospectus supplement, the
obligations of the underwriters to purchase debt securities will be subject to
conditions. The underwriters will be obligated to purchase all the debt
securities if any are purchased.
The applicable prospectus supplement will name any underwriter involved
in a sale of debt securities. The debt securities will be acquired by the
underwriters for their own account and may be resold by them from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale.
Underwriters may be deemed to have received compensation from us in the form of
underwriting discounts or commissions and may also receive commissions from the
purchasers of debt securities for whom they may act as agent. Underwriters may
also sell debt securities to or through dealers. These dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
30
We may authorize underwriters to solicit offers by certain types of
institutions to purchase debt securities from it at the public offering price
stated in the prospectus supplement required by delayed delivery contracts
providing for payment and delivery on a specified date in the future. If we sell
debt securities under these delayed delivery contracts, the prospectus
supplement will state that as well as the conditions to which these delayed
delivery contracts will be subject and the commissions payable for that
solicitation.
The applicable prospectus supplement will set forth whether or not
underwriters may over-allot or effect transactions that stabilize, maintain or
otherwise affect the market price of the debt securities at levels above those
that might otherwise prevail in the open market, including, for example, by
entering stabilizing bids, effecting syndicate covering transactions or imposing
penalty bids.
Agents
We may also sell debt securities through agents designated by us from
time to time. We will name any agents involved in the offer or sale of the debt
securities and will list commissions payable by us to these agents in the
prospectus supplement. These agents will be acting on a best efforts basis to
solicit purchases for the period of their appointment, unless we state otherwise
in the prospectus supplement.
Direct Sales
We may sell debt securities directly to purchasers. In this case, we
may not engage underwriters or agents in the offer and sale of debt securities.
Remarketing Transactions
We may also sell debt securities that we have purchased, redeemed or
repaid or which are being remarketed on behalf of holders through one or more
remarketing firms acting as principals for their own accounts or as our agents.
The applicable prospectus supplement will identify any remarketing firms and
describe the terms of our agreement with them and their compensation.
Remarketing firms may be deemed to be underwriters of the debt securities under
the Securities Act of 1933.
Indemnification
We may indemnify underwriters, dealers or agents who participate in the
distribution of debt securities against certain liabilities, including
liabilities under the Securities Act of 1933, and agree to contribute to
payments which these underwriters, dealers or agents may be required to make.
Relationships with Agents, Underwriters, Dealers and Remarketing Firms
Agents, underwriters, dealers and remarketing firms, and their
affiliates, may engage in transactions with, or perform services for, us in the
ordinary course of business. This includes commercial banking and investment
banking transactions.
Trading Market for Debt Securities
Unless otherwise indicated in the prospectus supplement, we will not
list the debt securities on any securities exchange. Typically, the debt
securities will be new issues of securities with no established trading market.
Any underwriters that purchase debt securities from us may make a market in
these debt securities. The underwriters will not be obligated, however, to make
a market in the debt securities and may discontinue market-making at any time
without notice to holders of those securities. We cannot assure you that there
will be liquidity in the trading market for any debt securities.
31
LEGAL MATTERS
The validity of the debt securities will be passed upon for us by
Simpson Thacher & Bartlett, New York, New York, our counsel. The validity of the
debt securities will be passed upon for any agents or underwriters by Shearman &
Sterling, New York, New York.
EXPERTS
Our financial statements as of February 2, 2002 and February 3, 2001
and for each of the fiscal years in the three-year period ended February 2, 2002
incorporated by reference in our Annual Report on Form 10-K for the fiscal year
ended February 2, 2002, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report incorporated by reference therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered, other than the underwriting discounts and
commissions, are as follows:
Securities and Exchange Commission registration fee ........... $ 64,720
Legal fees and expenses ....................................... $100,000
Accounting fees and expenses .................................. $ 60,000
Rating agency fees ............................................ $300,000
Blue sky fees and expenses .................................... $ 10,000
Trustee fees and expenses ..................................... $ 35,000
Printing and delivery expenses ................................ $100,000
Miscellaneous expenses ........................................ $ 30,280
--------
Total* .................................................. $700,000
--------------
* All of the above expenses are estimated except for the SEC registration fee.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify any present or former director, officer, employee or
agent made a party or threatened to be made a party to any threatened, pending
or completed action, suit or proceeding by reason of the fact that he was a
director, officer, employee or agent of the corporation or was serving at the
request of the corporation, against liabilities, costs and expenses actually and
reasonably incurred by him in his capacity as a director or officer or arising
out of such action, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action, had no reasonable cause to believe his
conduct was unlawful. No indemnification may be provided where the director,
officer, employee or agent has been adjudged by a court, after exhaustion of all
appeals, to be liable to the corporation, unless a court determines that the
person is entitled to such indemnity.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to eliminate or limit its directors' personal liability for monetary
damages to the corporation or its stockholders for breaches of their fiduciary
duty as directors except for (1) a breach of the duty of loyalty, (2) failure to
act in good faith, (3) intentional misconduct or knowing violation of law, (4)
willful or negligent violations of certain provisions of the Delaware General
Corporation Law (Sections 174, 160 and 173) imposing certain requirements with
respect to stock purchases, redemptions and dividends or (5) any transaction
from which the director derived an improper personal benefit.
The above provisions of the Delaware General Corporation Law are
non-exclusive.
Our Restated Certificate of Incorporation contains a provision
eliminating the personal liability for monetary damages of our directors to the
full extent permitted under the Delaware General Corporation Law.
The Delaware General Corporation Law contains provisions setting forth
conditions under which a corporation may indemnify its directors and officers.
Our Restated Certificate of Incorporation provides that a director or officer
who is a party to any action, suit or proceeding shall be entitled to be
indemnified by us to the extent permitted by the Delaware General Corporation
Law against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement incurred by such director or officer in connection with such
action, suit or proceeding.
We have entered into indemnification agreements with certain of our
executive officers and intend to enter into indemnification agreements with our
directors and other executive officers in the future. Pursuant to these
indemnification agreements, we have agreed, or will agree, to indemnify these
persons against certain liabilities.
We maintain a standard form of officers' and directors' liability
insurance policy, which provides coverage to our officers and directors for
certain liabilities.
II-1
Any underwriting agreement or agency agreement with respect to an
offering of securities registered hereunder will provide for indemnification of
the Registrant and its officers and directors by the underwriters or agents, as
the case may be, against certain liabilities, including liabilities under the
Securities Act of 1933 (Act).
Item 16. Exhibits.
1.1 Form of Underwriting Agreement.
4.1 Indenture, dated as of May 28, 2002, between the Registrant and The
Bank of New York, as trustee, with respect to the debt securities
(filed as Exhibit 4.14 to the Post-Effective Amendment to the
Registrant's Registration Statement on Form S-3, No. 333-84254 filed on
May 28, 2002 and incorporated herein by reference).
4.2 Form of Fixed Rate Note.
4.3* Form of Floating Rate Note.
5.1 Opinion and consent of Simpson Thacher & Bartlett.
12.1 Computation in support of ratio of earnings to fixed charges.
23.1 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Powers of attorney (included on signature pages to Part II of this
Registration Statement).
25.1 Form T-1 statement of eligibility and qualification of The Bank of New
York under the indenture with respect to the debt securities (filed as
Exhibit 25.1 to Pre-Effective Amendment No. 2 to the Registrant's
Registration Statement on Form S-3, No. 333-84254 filed on May 13, 2002
and incorporated herein by reference).
-------------------
* To be filed as an exhibit to a Current Report on Form 8-K or other
report, which will be deemed to be incorporated by reference herein.
II-2
Item 17. Undertakings.
(a)The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8, or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referred to in Item 15 of
this registration statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Toys "R"
Us, Inc. certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Paramus, State of New Jersey, on this 24th day of
March, 2003.
TOYS "R" US, INC.
By: /s/ John H. Eyler, Jr.
-------------------------------
John H. Eyler, Jr.
Chairman, Chief Executive
Officer and President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John H. Eyler, Jr., Louis Lipschitz, and
Christopher K. Kay, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement (and any
additional Registration Statement related thereto permitted by Rule 462(b)
promulgated under the Act), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform such and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Date:
-----
/s/ John H. Eyler, Jr. March 24, 2003
--------------------------
John H. Eyler, Jr.
Chairman, Chief Executive Officer and President
(Principal Executive Officer)
/s/ Louis Lipschitz March 24, 2003
--------------------------
Louis Lipschitz
Executive Vice President--Chief Financial Officer
(Principal Financial Officer)
/s/ Dorvin D. Lively March 24, 2003
--------------------------
Dorvin D. Lively
Senior Vice President and Corporate Controller
(Principal Accounting Officer)
/s/ Charles Lazarus March 24, 2003
--------------------------
Charles Lazarus
Director, Chairman Emeritus
II-4
/s/ RoAnn Costin March 24, 2003
--------------------------
RoAnn Costin
Director
/s/ Roger Farah March 24, 2003
--------------------------
Roger Farah
Director
/s/ Peter A. Georgescu March 24, 2003
--------------------------
Peter A. Georgescu
Director
/s/ Michael Goldstein March 24, 2003
--------------------------
Michael Goldstein
Director
/s/ Calvin Hill March 24, 2003
--------------------------
Calvin Hill
Director
/s/ Nancy Karch March 24, 2003
--------------------------
Nancy Karch
Director
/s/ Norman S. Matthews March 24, 2003
--------------------------
Norman S. Matthews
Director
/s/ Arthur B. Newman March 24, 2003
--------------------------
Arthur B. Newman
Director
II-5
EXHIBIT INDEX
1.1 Form of Underwriting Agreement.
4.1 Indenture, dated as of May 28, 2002, between the Registrant and The
Bank of New York, as trustee, with respect to the debt securities
(filed as Exhibit 4.14 to the Post-Effective Amendment to the
Registrant's Registration Statement on Form S-3, No. 333-84254 filed on
May 28, 2002 and incorporated herein by reference).
4.2 Form of Fixed Rate Note.
4.3* Form of Floating Rate Note.
5.1 Opinion and consent of Simpson Thacher & Bartlett.
12.1 Computation in support of ratio of earnings to fixed charges.
23.1 Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1).
23.2 Consent of Ernst & Young LLP.
24.1 Powers of attorney (included on signature pages to Part II of this
Registration Statement).
25.1 Form T-1 statement of eligibility and qualification of The Bank of New
York under the indenture with respect to the debt securities (filed as
Exhibit 25.1 to Pre-Effective Amendment No. 2 to the Registrant's
Registration Statement on Form S-3, No. 333-84254 filed on May 13, 2002
and incorporated herein by reference).
-------------------
* To be filed as an exhibit to a Current Report on Form 8-K or other
report, which will be deemed to be incorporated by reference herein.