Filed pursuant
to Rule 424(b)(3)
PROSPECTUS File No. 333-103750
March 27, 2003
[INTERNATIONAL PAPER COMPANY LOGO]
International Paper Company
Offer to Exchange
$1,200,000,000 5.85% Notes due 2012
for
$1,200,000,000 New 5.85% Notes due 2012
--------------------------------
We are offering to exchange up to $1,200,000,000 aggregate principal
amount of our new 5.85% Notes due 2012, which will be registered under the
Securities Act of 1933, as amended, for up to $1,200,000,000 principal amount
of our existing 5.85% Notes due 2012. We sold $1,000,000,000 aggregate
principal amount of the existing 5.85% Notes due 2012 on October 24, 2002 and
$200,000,000 aggregate principal amount of the existing 5.85% Notes due 2012 on
October 31, 2002. We collectively refer to both series of the existing 5.85%
Notes due 2012 as the old notes and we refer to the new 5.85% Notes due 2012 as
the new notes. We are offering to issue the new notes to satisfy our
obligations contained in each of the registration rights agreements entered
into when the old notes were sold in transactions permitted by Rule 144A under
the Securities Act.
The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the transfer restrictions, registration
rights and additional interest provisions relating to the old notes do not
apply to the new notes.
The exchange offer and withdrawal rights will expire at 5:00 p.m. New York
City time, on April 23, 2003 unless extended.
--------------------------------
To exchange your old notes for new notes:
o You must complete and send the letter of transmittal that accompanies
this prospectus to the exchange agent by 5:00 p.m., New York time, on
April 23, 2003, unless extended.
o If your old notes are held in book-entry form at The Depository Trust
Company, you must instruct DTC, through your signed letter of
transmittal, that you wish to exchange your old notes for new notes.
When the exchange offer closes, your DTC account will be changed to
reflect your exchange of old notes for new notes.
o You should read the section called "The Exchange Offer" for
additional information on how to exchange your old notes for new
notes.
--------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
In making your investment decision, you should rely only on the
information contained or incorporated by reference in this prospectus. We have
not authorized any person to provide you with any other
information. If anyone provides you with a different or inconsistent
information, you should not rely on it. You should assume that the information
appearing in this prospectus is accurate as of the date on the front cover of
this prospectus only. Our business, financial condition, results of operations
and prospects may have changed since that date. The delivery of this prospectus
shall not under any circumstances imply that the information herein is correct
as of any date subsequent to the date on the cover of this prospectus.
TABLE OF CONTENTS
Page
----
Incorporation of Certain Documents by Reference.............................3
Where You Can Find More Information.........................................3
Forward-Looking Statements..................................................4
Summary.....................................................................5
International Paper Company.................................................8
No Cash Proceeds to the Company.............................................9
Ratio of Earnings to Fixed Charges..........................................9
Selected Consolidated Financial Data.......................................10
Capitalization.............................................................12
Description of the New Notes...............................................13
The Exchange Offer.........................................................23
Certain United States Federal Income
Tax Considerations......................................................33
Plan of Distribution.......................................................34
Notice to Investors........................................................35
Validity of the New Notes..................................................36
Experts....................................................................36
International Paper Company is a New York corporation. Our principal
executive offices are located at 400 Atlantic Street, Stamford, Connecticut
06921, and our telephone number at that address is (203) 541-8000. Our world
wide website address is http://www.internationalpaper.com. The information in
our website is not part of this prospectus.
In this prospectus, "International Paper," "we," "us" and "our" refer to
International Paper Company and its subsidiaries, unless the context requires
otherwise. However, for purposes of the section entitled "Description of New
Notes", whenever we refer to "International Paper" or to "us," or use the terms
"we" or "our," we are referring only to International Paper Company and not to
any of our subsidiaries.
2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We "incorporate by reference" important business and financial information
about us into this prospectus. This means that we can disclose important
information to you that is not included in or delivered with the prospectus by
referring you to those documents. The information incorporated by reference is
deemed to be part of this prospectus and later information that we file with
the SEC will automatically update and supercede that information. This
prospectus incorporates by reference the documents set forth below that we have
previously filed with the SEC.
The following documents listed below that we have previously filed with
the SEC (Commission File Number: 001-03157) are incorporated by reference:
Our SEC Filings Period
--------------- ------
Annual Report on Form 10-K............ For the year ended December 31, 2002, as
filed on February 28, 2003.
Current Reports on Form 8-K........... Filed on:
o January 16, 2003,
o January 17, 2003,
o January 31, 2003, and
o February 21, 2003.
All documents filed by us under Section 13(a), 13 (c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, from the date of this prospectus
and prior to the termination of the exchange offer shall also be deemed to be
incorporated in this prospectus by reference.
You can obtain any of the filings incorporated by reference in this
prospectus through us or from the SEC through the SEC's web site or at the
addresses listed above. We will provide without charge to each person to whom a
copy of this prospectus has been delivered, upon the written or oral request of
such person, a copy of any or all of the documents which are incorporated in
this prospectus by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to International Paper Company, 400
Atlantic Street, Stamford, Connecticut 06921, Attention: Investor Relations
Department (Telephone: (203) 541-8625). To obtain timely delivery, you must
request the information no later than April 16, 2003, or five business days
before the expiration date, if the exchange offer is extended.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You can read and copy these reports, proxy statements
and other information at the public reference facilities of the SEC, in 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. Please 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 that file electronically with the SEC
(http://www.sec.gov). You can inspect reports and other information we file at
the office of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We will provide you upon oral or written request without charge a copy of
the new notes, the indenture governing the new notes and other material
agreements that we summarize in this prospectus. You may request copies of
these documents by contacting us at: International Paper Company, 400 Atlantic
Street, Stamford, Connecticut 06921, Attention: Investor Relations Department.
To obtain timely delivery, you must request the information no later than April
16, 2003, or five business days before the expiration date, if the exchange
offer is extended.
3
FORWARD-LOOKING STATEMENTS
This prospectus, including information included or incorporated by
reference in this prospectus, contains certain forward-looking statements
concerning our financial condition, results of operations and business.
Generally, the words "will," "may," "should," "continue," "believe," "expect,"
"intend," "anticipate" or similar expressions identify forward-looking
statements.
These forward-looking statements involve certain risks and uncertainties.
Factors that could cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the
following factors:
o the timing and strength of an economic recovery in the U.S. and
changes to international economic conditions;
o the relative value of the U.S. dollar compared with other foreign
currencies, especially the Euro;
o economic conditions in developing countries, particularly Brazil and
Russia;
o the effects of continued geopolitical unrest and uncertainty;
o the strength of demand for our products and changes in overall
demand;
o the effects of competition from domestic and foreign producers;
o the level of housing starts;
o our ability to continue to realize anticipated cost savings;
o the performance of our manufacturing operations;
o the results of legal proceedings;
o changes in the cost or availability of raw materials;
o changes in interest rates and plan asset values which could have an
impact on reported earnings and shareholders' equity; or
o the cost of compliance with environmental laws and other governmental
regulations.
In light of these risks, uncertainties, and assumptions, the
forward-looking events discussed in this prospectus might not occur.
4
SUMMARY
The following summary contains basic information about this exchange
offer. It may not contain all the information that is important to you in
making your investment decision. More detailed information appears elsewhere in
this prospectus and in our consolidated financial statements and accompanying
notes that we incorporate by reference. "The Exchange Offer" and the
"Description of the New Notes" sections of this prospectus contain more
detailed information regarding the terms and conditions of the exchange offer
and the new notes. Certain capitalized terms used in this prospectus summary
are defined elsewhere in this prospectus.
The Exchange Offer
New notes................. $1,200,000,000 in aggregate principal amount of
our new 5.85% notes due 2012.
The exchange offer........ We are offering to issue the new notes in exchange
for $1,000,000,000 aggregate principal amount of
old notes that we sold on October 24, 2002 and
$200,000,000 aggregate principal amount of old
notes that we sold on October 31, 2002. We are
offering to issue the new notes to satisfy our
obligations contained in each of the registration
rights agreements that we entered into when we
sold the old notes in transactions pursuant to
Rule 144A under the Securities Act. The old notes
were subject to transfer restrictions that will
not apply to the new notes so long as you are
acquiring the new notes in the ordinary course of
your business, you are not participating in a
distribution of the new notes and you are not an
affiliate of ours.
Maturity dates............ Each new note will mature on October 30, 2012.
Interest payment dates.... The new notes will pay interest semiannually on
April 30 and October 30 of each year.
Ranking................... The new notes will be senior unsecured debt and
will rank equally with all of our existing senior
unsecured debt. The new notes will be effectively
subordinated to all of our existing and future
secured debt to the extent of the assets securing
that indebtedness.
Optional redemption....... We may redeem some or all of the new notes at any
time, at our option, at a redemption price equal
to the greater of:
o 100% of the aggregate principal amount of the
new notes being redeemed, plus accrued and unpaid
interest to the date of redemption; or
5
o the sum of the present values of the remaining
scheduled payments of principal and interest in
respect of the new notes being redeemed (not
including any portion of the payments of interest
accrued as of the date of redemption) discounted
to the redemption date, on a semi-annual basis,
at the treasury rate plus 30 basis points, plus
accrued and unpaid interest to the date of
redemption.
See "Description of the New Notes--Optional
Redemption."
No cash proceeds to us.... We will not receive any proceeds from the issuance
of the new notes.
Form of new notes......... One or more global notes held in the name of The
Depository Trust Company or its nominee.
Tenders, expiration date,
withdrawal................ The exchange offer will expire at 5:00 p.m., New
York City time, on April 23, 2003, unless it is
extended. To tender your old notes you must follow
the detailed procedures described under the
heading "The Exchange Offer--Process for
Tendering" including special procedures for
certain beneficial owners and broker- dealers. If
you decide to exchange your old notes for new
notes, you must acknowledge that you do not intend
to engage in and have no arrangement with any
person to participate in a distribution of the new
notes. If you decide to tender your old notes
pursuant to the exchange offer, you may withdraw
them at any time prior to 5:00 p.m., New York City
time, on the expiration date.
United States federal
income tax consequences... Your exchange of old notes for new notes pursuant
to the exchange offer will not result in the
recognition of gain or loss for U.S. federal
income tax purposes. See "Certain United States
Federal Income Tax Considerations."
Exchange agent............ The Bank of New York is the exchange agent for the
exchange offer.
Failure to exchange your
old notes................. If you fail to exchange your old notes for new
notes in the exchange offer, your old notes will
continue to be subject to transfer restrictions
and you will not have any further rights under
either of the registration rights agreements,
including any rights to require us to register
your old notes or to pay any additional interest.
6
Trading market............ To the extent that old notes are tendered and
accepted in the exchange offer, your ability to
sell untendered, and tendered but unaccepted, old
notes could be adversely affected. There may be no
trading market for the old notes.
There can be no assurance that an active public
market for the new notes will develop or as to the
liquidity of any market that may develop for the
new notes, the ability of holders to sell the new
notes, or the price at which holders would be able
to sell the new notes. For more details, see the
section under the heading "Notice to Investors."
7
INTERNATIONAL PAPER COMPANY
We are a global forest products, paper and packaging company that is
complemented by an extensive distribution system, with primary markets and
manufacturing operations in the United States, Canada, Europe, the Pacific Rim,
and South America. Substantially all of our business have experienced, and are
likely to continue to experience, cycles relating to available industry
capacity and general economic conditions. We are a New York corporation and
were incorporated in 1941 as the successor to the New York corporation of the
same name organized in 1898.
In the United States at December 31, 2002, we operated 28 pulp, paper and
packaging mills, 87 converting and packaging plants, 27 wood products
facilities, and seven specialty chemicals plants. Production facilities at
December 31, 2002 in Europe, Asia, Latin America, South America and Canada
included 13 pulp, paper and packaging mills, 45 converting and packaging
plants, 11 wood products facilities, two specialty panels and laminated
products plants and seven specialty chemicals plants. We distribute printing,
packaging, graphic arts, maintenance and industrial products through over 283
distribution branches located primarily in the United States. At December 31,
2002, we owned or managed approximately 9 million acres of forestlands in the
United States, 1.5 million acres in Brazil and had, through licenses and forest
management agreements, harvesting rights on government-owned timberlands in
Canada and Russia.
At December 31, 2002, through Carter Holt Harvey, a New Zealand company
which is approximately 50.5% owned by us, we operated five mills producing
pulp, paper, packaging and tissue products, 24 converting and packaging plants
and 67 wood products manufacturing and distribution facilities, primarily in
New Zealand and Australia. Carter Holt Harvey distributes paper and packaging
products through six distribution branches located in New Zealand and
Australia. In New Zealand, Carter Holt Harvey owns approximately 810,000 acres
of forestlands.
8
NO CASH PROCEEDS TO THE COMPANY
This exchange offer is intended to satisfy certain of our obligations
under each of the registration rights agreements. We will not receive any
proceeds from the issuance of the new notes and have agreed to pay the expenses
of the exchange offer. In consideration for issuing the new notes as
contemplated in the registration statement, of which this prospectus is a part,
we will receive, in exchange, old notes in like principal amount. The form and
terms of the new notes are identical in all material respects to the form and
terms of the old notes, except as otherwise described herein under "The
Exchange Offer -- Terms of the Exchange Offer." The old notes surrendered in
exchange for the new notes will be retired and canceled and cannot be reissued.
Accordingly, issuance of the new notes will not result in any increase in our
outstanding debt.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges on a
historical basis for each of the five years in the period ended December 31,
2002.
For the Year Ended December 31,
-------------------------------------
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Ratio of earnings to fixed
charges................... 1.38 1.27 1.42 --(1) 1.26
---------
(1) Our deficiency in earnings necessary to cover fixed charges was $1,379.9
million for the year ended December 31, 2001.
For purposes of computing the ratio of earnings to fixed charges, earnings
include pre-tax earnings before extraordinary items and cumulative effect of
accounting changes, interest expense, the estimated interest factor in rent
expense (which, in our opinion, approximates one-third of rent expense)
preferred dividends of subsidiaries, adjustments for undistributed equity
earnings and the amortization of capitalized interest. Fixed charges include
interest incurred (including amounts capitalized), the estimated interest
factor in rent expense and preferred dividends of subsidiaries.
9
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended December 31, 2002 have been derived from our consolidated
financial statements. Deloitte & Touche LLP, independent auditors, have audited
the financial data for the year ended December 31, 2002. The financial data for
the four years ended December 31, 2001 have been audited by Arthur Andersen
LLP, our previous independent public accountants, who have since ceased
operations. You should read the financial data presented below in conjunction
with our audited consolidated financial statements, including the notes
thereto, and management's discussion and analysis of financial condition and
results of operations, each of which are incorporated herein by reference.
For the Year Ended December 31,
-----------------------------------------------------------------
1998 1999 2000 2001 2002
--------- --------- --------- --------- ---------
(in millions, except per share amounts)
Earnings Data:
Net sales........................ $ 23,979 $ 24,573 $ 28,180 $ 26,363 $ 24,976
Earnings (loss) before
income taxes,
minority interest,
extraordinary items
and cumulative
effect of accounting
changes...................... 429(a) 448(b) 723(d) (1,265)(f) 371(h)
Net earnings (loss).............. 247(a) 183(b)(c) 142(d)(e) (1,204)(f)(g) (880)(h)(i)(j)
Consolidated Balance
Sheet Data:
Total assets..................... 31,466 30,268 42,109 37,177 33,792
Notes payable and
current maturities of
long-term debt............... 1,418 920 2,115 957 --
Long-term debt................... 7,697 7,520 12,648 12,457 13,042
Common shareholders'
equity........................... 10,738 10,304 12,034 10,291 7,374
Per Share Data:
Net earnings (loss)
before extraordinary
items and cumulative
effect of accounting
changes...................... $ 0.60 $ 0.48 $ 0.82 $ (2.37) $ 0.61
Net earnings (loss).............. $ 0.60 $ 0.44 $ 0.32 $ (2.50) $ (1.83)
Cash dividends (k)............... $ 1.05 $ 1.01 $ 1.00 $ 1.00 $ 1.00
---------
(a) Includes a $20 million pre-tax gain ($12 million after taxes) on the
sale of the Veratec nonwovens business, an $83 million pre-tax credit
($50 million after taxes) from the reversals of previously established
reserves that were no longer required, a $111 million pre-tax charge
($68 million after taxes) for the impairment of oil and gas reserves due
to low prices, a $145 million pre-tax restructuring and asset impairment
charge ($82 million after taxes and minority interest) and $16 million
of pre-tax charges ($10 million after taxes) related to International
Paper's share of charges taken by Scitex, a 13% investee company, for
the write-off of in-process research and development related to an
acquisition and costs to exit the digital video business.
(b) Includes a $148 million pre-tax charge ($97 million after taxes) for
Union Camp merger-related termination benefits, a $107 million pre-tax
charge ($78 million after taxes) for merger-related expenses, a $298
million pre-tax charge ($180 million after taxes and minority interest)
for asset shutdowns of excess internal capacity and cost reduction
actions, a $10 million pre-tax charge ($6 million after taxes) to
increase existing environmental remediation reserves related to certain
former Union Camp facilities, a $30 million pre-tax
10
charge ($18 million after taxes) to increase existing legal reserves and
a $36 million pre-tax credit ($27 million after taxes) for the reversal
of reserves that were no longer required.
(c) Includes an extraordinary loss of $26 million before taxes ($16 million
after taxes) for the extinguishment of high-interest debt that was
assumed in the merger with Union Camp.
(d) Includes an $824 million charge before taxes and minority interest ($509
million after taxes and minority interest) for asset shutdowns, a $125
million pre-tax charge ($80 million after taxes) for additional exterior
siding legal reserves, a $54 million pre-tax charge ($33 million after
taxes) for merger-related expenses, and a $34 million pre-tax credit
($21 million after taxes) for the reversal of reserves no longer
required.
(e) Includes an extraordinary gain of $385 million before taxes and minority
interest ($134 million after taxes and minority interest) on the sale of
International Paper's investment in Scitex and Carter Holt Harvey's sale
of its share of Compania de Petroleos de Chile (COPEC), an extraordinary
loss of $460 million before taxes ($310 million after taxes) related to
the impairment of the Zanders and Masonite businesses, an extraordinary
gain before taxes and minority interest of $368 million ($183 million
after taxes and minority interest) related to the sale of Bush Boake
Allen, an extraordinary loss of $5 million before taxes and minority
interest ($2 million after taxes and minority interest) related to
Carter Holt Harvey's sale of its Plastics division, and an extraordinary
pre-tax charge of $373 million ($231 million after taxes) related to
impairments of the Argentine investments and the Chemical Cellulose Pulp
and the Fine Papers businesses.
(f) Includes a $1.1 billion charge before taxes and minority interest ($752
million after taxes and minority interest) for asset shutdowns of excess
internal capacity, cost reduction actions, and additions to existing
exterior siding legal reserves, a net pre-tax charge of $629 million
($587 million after taxes) related to dispositions and asset impairments
of businesses held for sale, a $42 million pre-tax charge ($28 million
after taxes) for Champion merger integration costs, and a $17 million
pre-tax credit ($11 million after taxes) for the reversal of reserves no
longer required.
(g) Includes a $73 million pre-tax extraordinary charge ($46 million after
taxes) related to the impairment of the Masonite business and the
divestiture of the Petroleum and Minerals assets and a $25 million
pre-tax charge ($16 million after taxes and minority interest) for the
cumulative effect of a change in accounting for derivatives and hedging
activities.
(h) Includes a $199 million charge before taxes and minority interest ($130
million after taxes and minority interest) for facility closures,
administrative realignment severance costs, and cost reduction actions,
a pre-tax charge of $450 million ($278 million after taxes) for
additions to existing exterior siding legal reserves, a charge of $46
million before taxes and minority interest ($27 million after taxes and
minority interest) for early debt retirement costs, a credit of $41
million before taxes and minority interest ($101 million after taxes and
minority interest) to adjust accrued costs of businesses sold or held
for sale, and a pre-tax credit of $68 million ($43 million after taxes)
for the reversal of restructuring and realignment reserves no longer
required.
(i) Includes a $1.2 billion charge for the transitional goodwill impairment
charge from the adoption of SFAS No. 142, "Goodwill and Other Intangible
Assets," recorded as the cumulative effect of an accounting change in
the first quarter of 2002.
(j) Reflects a decrease of $46 million in the income tax provision for a
reduction of deferred state income tax liabilities.
(k) The International Paper dividend has remained at $1.00 per share since
1996. However, dividends on a per share basis have been restated to
include dividends paid by Union Camp which merged with International
Paper during 1999 in a transaction accounted for as a
pooling-of-interests.
11
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
December 31, 2002.
As of
December 31, 2002
-----------------
(in millions)
Indebtedness:
Notes payable and current maturities of long-term debt..... 0
------
Total short-term debt.................................. 0
------
Long-term debt, excluding current maturities............... 13,042(1)
------
Total Indebtedness............................................. 13,042
------
International Paper-Obligated Mandatorily Redeemable
Preferred Securities of Subsidiaries Holding
International Paper Debentures............................. 1,805
Common Shareholders' Equity:
Common Stock............................................... 485
Paid-in capital............................................ 6,493
Retained earnings.......................................... 3,260
Accumulated other comprehensive income (loss).............. (2,645)
Less: Common stock held in treasury, at cost............... 219
------
Total Common Shareholders' Equity.............................. 7,374
Total Capitalization........................................... 22,221
======
---------
(1) Includes the $1,200,000,000 5.85% Notes due 2012.
12
DESCRIPTION OF THE NEW NOTES
The following summary of certain provisions of the indenture and the new
notes does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all provisions of the indenture, including the
definitions of certain terms and those terms made a part of this prospectus by
the Trust Indenture Act of 1939 and the new notes. Copies of these documents
are available from us upon request.
General
The old notes were, and the new notes will be, issued as a separate series
under an indenture, dated as of April 12, 1999 between us and The Bank of New
York, as Trustee, and supplemented by supplemental indentures dated as of
October 29, 2002 and November 5, 2002. We refer to the indenture, as
supplemented, as the indenture. The terms of the new notes are identical in all
material respects to the terms of the old notes, except that the transfer
restrictions, registration rights and additional interest provisions relating
to the old notes do not apply to the new notes.
The old notes and the new notes will be considered collectively to be a
single class for all purposes under the indenture, including, without
limitation, waivers and amendments.
The new notes will initially be limited to $1,200,000,000 aggregate
principal amount. The new notes will mature on October 30, 2012. Interest on
the new notes will accrue from October 29, 2002, or from the most recent
interest payment date to which interest has been paid or provided for, at the
rate of 5.85% per annum and will be payable semi-annually in arrears on each
April 30 and October 30, commencing on April 30, 2003. We will make each
interest payment to the holders of record of the new notes on the immediately
preceding April 15 and October 15. Interest will be computed on the basis of a
360-day year consisting of twelve 30-day months.
The new notes 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 new notes will be effectively subordinated in right of
payment to our existing and future senior secured indebtedness to the extent of
the assets securing that indebtedness.
The new notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000.
Optional Redemption
We may redeem all or a portion of the new notes at any time as set forth
below. We will mail notice to registered holders of the new notes of our intent
to redeem on not less than 30 nor more than 60 days' notice. We may redeem the
new notes at a redemption price equal to the greater of:
o 100% of the principal amount plus accrued and unpaid interest to the
redemption date; or
o the sum of the present values of the remaining scheduled payments of
principal and interest (exclusive of interest accrued to the date of
redemption) discounted to the redemption date on a semiannual basis
assuming a 360-day year consisting of twelve 30-day months) at the
treasury rate plus 30 basis points, plus accrued interest on the
principal amount being redeemed to the redemption date.
"Business day" means any calendar day that is not a Saturday, Sunday or
legal holiday in New York, New York and on which commercial banks are open for
business in New York, New York.
"Comparable treasury issue" means the United States Treasury security
selected by an independent investment banker as having a maturity comparable to
the remaining term of the new notes to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the new notes. We refer to the remaining term of the new
notes to be redeemed as the "remaining life."
13
"Comparable treasury price" means, with respect to any redemption date,
(A) the average of four reference treasury dealer quotations for such
redemption date, after excluding the highest and lowest such reference treasury
dealer quotations, or (B) if the independent investment banker obtains fewer
than four such reference treasury dealer quotations, the average of all such
quotations.
"Independent investment banker" means either one of the reference treasury
dealers or an independent investment banking institution of national standing
appointed by us.
"Reference treasury dealer" means (1) each of J.P. Morgan Securities Inc.,
Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc. and their respective successors,
provided, however, that if any of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City, which we refer to as a
"primary treasury dealer," we will substitute therefor another primary treasury
dealer and (2) any other primary treasury dealer selected by us.
"Reference treasury dealer quotations" means, with respect to each
reference treasury dealer and any redemption date, the average, as determined
by the independent investment banker, of the bid and asked prices for the
comparable treasury issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the independent investment banker by
such reference treasury dealer at 5:00 p.m. on the third business day preceding
such redemption date.
"Treasury rate" means, with respect to any redemption date, (1) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity
corresponding to the comparable treasury issue (if no maturity is within three
months before or after the remaining life, yields for the two published
maturities most closely corresponding to the comparable treasury issue shall be
determined and the treasury rate shall be interpolated or extrapolated from
such yields on a straight line basis, rounding to the nearest month) or (2) if
such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semiannual equivalent yield to maturity of the comparable
treasury issue, calculated using a price for the comparable treasury issue,
expressed as a percentage of its principal amount, equal to the comparable
treasury price for such redemption date. The treasury rate shall be calculated
on the third business day preceding the redemption date.
Certain Covenants
We have agreed in the indenture that with regard to the new notes, we will
not, nor will we permit any subsidiary (as defined below) to, issue, assume or
guarantee any debt for money borrowed that is secured by a mortgage, pledge,
security interest or lien (a "mortgage" or "mortgages") upon any forestlands or
principal manufacturing facility (each as defined below) which we or it now
owns or hereafter acquires, unless we or it provides that the new notes are
secured equally and ratably with, or with preference to, that debt. The
foregoing restrictions will not apply to the following:
o mortgages on any property acquired, constructed or improved by us or
any subsidiary after April 12, 1999 which are created within 180 days
after such acquisition (or, in the case of property constructed or
improved, after the completion and commencement of commercial
operation of such property, whichever is later) to secure or provide
for the payment of the purchase price or cost thereof, or existing
mortgages on property acquired, provided such mortgages shall not
apply to any property theretofore owned by us or any subsidiary other
than theretofore unimproved real property;
o mortgages on any property acquired from a corporation that is merged
with or into us or a subsidiary. or mortgages outstanding at the time
any corporation becomes a subsidiary;
o mortgages in favor of us or any subsidiary; or
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o any extension, renewal or replacement, or successive extensions,
renewals or replacements, in whole in part, of any of the mortgages
listed above.
The following types of transactions, among others, will not be deemed to
create debt secured by a mortgage:
o the sale, mortgage or other transfer of timber in connection with an
arrangement under which we are, or a subsidiary is, obligated to cut
such timber or a portion of such timber to provide the transferee
with a specified amount of money however determined; and
o mortgages for governmental bodies of the United States, which secure
advances, progress payments or other payments pursuant to any
contract or statute, or which secure indebtedness incurred to finance
the purchase price or cost of constructing or improving the property
subject to such mortgages.
However, we and any subsidiary may, without securing the new notes, issue,
assume or guarantee secured debt which would otherwise be subject to the
foregoing restrictions; provided that the aggregate amount of secured debt that
we may issue, assume or guarantee will not exceed 10% of the net tangible
assets of us and our consolidated subsidiaries as of the latest fiscal
year-end, when considered together with all other such debt and attributable
debt (as defined below) then existing in respect of sale and lease-back
transactions (as defined below) of us and our subsidiaries, other than sale or
lease-back transactions whose proceeds were applied to the retirement of funded
debt (as defined below).
The term "net tangible assets" means the aggregate assets, net of
applicable reserves and other properly deductible items, less current
liabilities and goodwill, tradenames, trademarks, patents, unamortized debt
discount and expense (to the extent included in the aggregate assets), and
other similar intangibles. Such amounts will be as described in our most recent
consolidated balance sheet, and computed in accordance with generally accepted
accounting principles.
We will not, nor will we permit any subsidiary to, lease from any person
for greater than a three year term any forestlands or principal manufacturing
facility which was owned (and in the case of any such principal manufacturing
facility, placed in commercial operation by us or a subsidiary for more than
180 days) and then sold or transferred to that person by us or a subsidiary (a
"sale and lease-back transaction"), unless either:
o we or the subsidiary would be entitled to incur debt secured by a
mortgage on the property to be leased, in an amount equal to the
attributable debt regarding such sale and lease-back transaction,
without equally and ratably securing the new notes; or
o we apply, or covenant that we will apply, an amount equal to the fair
value of the leased property, as determined by our board of
directors, to the retirement, within 180 days of the effective date
of any such sale and lease-back transaction, of debt securities or
our funded debt which ranks equally with the new notes.
The term "forestlands" means property in the United States which contains
standing timber which is, or is expected upon completion of a growth cycle then
in process to become, of a commercial quantity and merchantable quality.
However, this does not include any land which at the time is held by, or has
been, or after the date of this prospectus is, transferred to a subsidiary
primarily for development and/or sale rather than for the production of lumber
or other timber products.
The term "principal manufacturing facility" means any paperboard, paper or
pulp mill, or paper converting plant of ours or any subsidiary which is located
within the United States, other than any mill or plant or portion thereof
which:
o is financed by obligations issued by a state, territory, or
possession of the United States, any political subdivision, or the
District of Columbia, the interest on which is excludible from its
holders' gross income pursuant to the provisions of Section 103(a) of
the internal Revenue Code or any successor to such provision, as in
effect at the time the obligations are issued; or
15
o is not, in the opinion of our board of directors, of material
importance to the total business conducted by us and our
subsidiaries.
The term "subsidiary" means any corporation of which at least a majority
of the outstanding stock having by its terms the ordinary voting power to elect
a majority of its board of directors is at the time directly or indirectly
owned or controlled by us, by any one or more subsidiaries, or by us and one or
more subsidiaries, irrespective of whether any other class or classes of the
corporation's stock has or might have voting power by reason of the happening
of any contingency.
The term "attributable debt" means the present value at the time of
determination of the lessee's net rental payment obligation over the term,
including any extensions, of any lease entered into in connection with a sale
and leaseback transaction. The present value will be determined by using a
discount rate equal to the weighted average yield to maturity of each series of
debt securities then outstanding under the indenture, compounded semiannually.
The average will be weighted by the principal amount of each series of debt
securities or, in the case of original issue discount securities, the amount to
be determined as provided in the definition of "outstanding" in the indenture.
The term "funded debt" means debt which by its terms matures at, or is
extendible or renewable at the option of the obligor to, a date more than
twelve months after the date the debt is created.
Book-Entry, Delivery and Form
Certain Book-Entry Procedures for the Global Notes
Each series of new notes will be represented by one or more permanent
global notes in definitive, fully registered form without interest coupons and
will be deposited with the trustee as custodian for, and registered in the name
of a nominee of, The Depository Trust Company, or DTC.
The descriptions of the operations and procedures of DTC set forth below
are provided solely as a matter of convenience. These operations and procedures
are solely within the control of the respective settlement systems and are
subject to change by them from time to time. Neither we nor the initial
purchasers take any responsibility for these operations or procedures, and
investors are urged to contact the relevant system or its participants directly
to discuss these matters.
DTC has advised us that it is (1) a limited purpose trust company
organized under the laws of the State of New York, (2) a "banking organization"
within the meaning of the New York Banking Law, (3) a member of the Federal
Reserve System, (4) a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and (5) a "clearing agency" registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitates the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants. thereby eliminating the need for physical
transfer and delivery of certificates. DTC's participants include securities
brokers and dealers (including the initial purchasers), banks and trust
companies, clearing corporations and certain other organizations. Indirect
access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "indirect
participants") that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Investors who are not participants
may beneficially own securities held by or on behalf of DTC only through
participants or indirect participants.
We expect that pursuant to procedures established by DTC (1) upon deposit
of each global note, DTC will credit the accounts of participants with an
interest in the global note and (2) ownership of the new notes will be shown
on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the interests of participants) and
the records of participants and the indirect participants (with respect to the
interests of persons other than participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer interests in the new notes represented by
a global note to such persons may be limited, in addition, because DTC can act
only on behalf of its participants, who in turn
16
act on behalf of persons who hold interests through participants, the ability
of a person having an interest in new notes represented by a global note to
pledge or transfer such interest to persons or entities that do not participate
in DTC's system, or to otherwise take actions in respect of such interest, may
be affected by the lack of a physical definitive security in respect of such
interest.
So long as DTC or its nominee is the registered owner of a global note, DTC or
such nominee, as the case may be, will be considered the sole owner or holder
of the new notes represented by the global note for all purposes under the
indenture. Except as provided below, owners of beneficial interests in a global
note will not be entitled to have new notes represented by such global note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated notes, and will not be considered the owners or
holders thereof under the indenture for any purpose, including with respect to
the giving of any direction, instruction or approval to the trustee thereunder.
Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedures of DTC and, if such holder is not a participant or an
indirect participant, on the procedures of the participant through which such
holder owns its interest, to exercise any rights of a holder of new notes under
the indenture or such global note. We understand that under existing industry
practice, in the event that we request any action of holders of new notes, or a
holder that is an owner of a beneficial interest in a global note desires to
take any action that DTC, as the holder of such global note, is entitled to
take, DTC would authorize the participants to take such action and the
participants would authorize holders owning through such participants to take
such action or would otherwise act upon the instruction of such holders.
Neither we nor the trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of new notes by
DTC, or for maintaining, supervising or reviewing any records of DTC relating
to such new notes.
Payments with respect to the principal of, and premium, if any, and interest
on, any new notes represented by a global note registered in the name of DTC or
its nominee on the applicable record date will be payable by the trustee to or
at the direction of DTC or its nominee in its capacity as the registered holder
of the global note representing such new notes under the indenture. Under the
terms of the indenture, we and the trustee may treat the persons in whose names
the new notes, including the global notes, are registered as the owners thereof
for the purpose of receiving payment thereon and for any and all other purposes
whatsoever. Accordingly, neither we nor the trustee has or will have any
responsibility or liability for the payment of such amounts to owners of
beneficial interests in a global note (including principal, premium, if any,
and interest). Payments by the participants and the indirect participants to
the owners of beneficial interests in a global note will be governed by
standing instructions and customary industry practice and will be the
responsibility of the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with DTC's
procedures. and will be settled in same-day funds.
Certificated Notes
If (1) DTC notifies us that it is no longer willing or able to act as a
depositary or DTC ceases to be registered as a clearing agency under the
Exchange Act and a successor depositary is not appointed within 90 days of such
notice or cessation, (2) we, at our option, notify the trustee in writing that
we elect to cause the issuance of new notes in definitive form under the
indenture or (3) upon the occurrence of certain other events as provided in the
indenture, then, upon surrender by DTC of the global notes, certificated notes
will be issued to each person that DTC identifies as the beneficial owner of
the new notes represented by the global notes. Upon any such issuance, the
trustee is required to register such certificated notes in the name of such
person or persons (or the nominee of any thereof) and cause the same to be
delivered thereto.
Neither we nor the trustee shall be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related new notes and each such person may conclusively rely on, and shall he
protected in relying on, instructions from DTC for all purposes (including with
respect to the registration and delivery and the respective principal amounts,
of the new notes to be issued).
17
Events of Default
Each of the following events is an event of default under the indenture with
respect to the new notes:
o failure to pay any interest on the new notes when due, and continuing for
30 days;
o failure to pay any principal of or premium on the new notes when due;
o failure to perform any other covenant under the indenture or the new
notes, other than one included solely for the benefit of other series of
debt securities, and continuing for 60 days after written notice has been
provided in accordance with the indenture; and
o specific events in bankruptcy, insolvency or reorganization involving us.
If an event of default regarding the new notes occurs and is continuing, either
the trustee or the holders of at least 25% in aggregate principal amount of the
outstanding new notes and old notes, if any, may declare, by notice as provided
in the indenture, the principal amount of the new notes to be due and
immediately payable.
At any time after a declaration of acceleration regarding new notes has been
made, but before a judgment or decree for payment of money has been obtained by
the trustee, the holders of a majority in aggregate principal amount of the new
notes and old notes, if any, may, under specific circumstances, rescind and
annul such acceleration.
The indenture provides that, subject to the trustee's duty to act with the
required standard of care during default, the trustee has no obligation to
exercise any of its rights or powers under the indenture at the request or
direction of any of the holders, unless the holders have offered reasonable
indemnity to the trustee. Subject to the trustee indemnification provisions,
the holders of a majority in aggregate principal amount of the new notes and
old notes, if any, may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or of exercising any trust
or power conferred upon the trustee, with respect to the new notes.
We will annually furnish to the trustee a statement as to the performance of
specific obligations under the indenture and as to any default in performance.
Defeasance
We may discharge our indebtedness and certain of our obligations under the
indenture, by depositing with the trustee funds or obligations issued or
guaranteed by the United States.
Defeasance and Discharge. The indenture provides that we will be discharged
from all obligations in respect of the new notes upon deposit in trust of cash
and/or U.S. government obligations with the trustee, the payment of interest
and principal upon which will provide sufficient cash to pay any principal,
premium, and each installment of interest and in accordance with the terms of
the indenture and the new notes.
The term "U.S. government obligations" means direct obligations of the United
States or of an agency or instrumentality of the United States that is, or is
unconditionally guaranteed as, a full faith and credit obligation of the United
States and that is not callable or redeemable at the option of the issuer
thereof. The term also includes certain depository receipts with respect to
such obligations.
Such a deposit in trust may be made only if, among other things, the following
conditions are met:
o we have delivered to the trustee an opinion of counsel to the effect that
the holders of the new notes will not recognize income, gain or loss for
United States federal income tax purposes as a result of such deposit,
defeasance and discharge, and will be subject to United States federal
income tax as if no deposit, defeasance and discharge had occurred, which
opinion will be based upon either of the following:
18
o we having received a ruling from the Internal Revenue Service, or the
Internal Revenue Service having published such a ruling; or
o there having been a change in applicable United States federal income
tax law since the date of the indenture; and
o it will not result in the delisting of the debt securities of such series,
if then listed on any domestic or foreign securities.
The restrictions within this provision will not apply to specific obligations
relating to:
o temporary debt securities and exchange of debt securities,
o registration of transfer or exchange of the new notes,
o replacement of stolen, lost or mutilated new notes,
o maintenance of paying agencies to hold monies for payment in trust, and
o payment of any additional amounts required as a result of United States
withholding taxes imposed on payments to non-United States persons.
Defeasance of Certain Obligations. The indenture provides that we may omit
compliance with the restrictive covenants described under "Certain Covenants"
and any other covenants applicable to the new notes which are subject to
covenant defeasance, and that such omission will not be an event of default
regarding the new notes, upon a deposit in trust with the trustee. Such deposit
in trust must be of cash and/or U.S. government obligations, which through the
scheduled payment of interest and principal thereon will provide sufficient
cash to pay any principal, premium, and each installment of interest in
accordance with the indenture and the new notes. Our obligations under the
indenture and the new notes, other than regarding such covenant, will remain in
full force and effect.
Such a trust may be established only if, among other things, we have delivered
to the trustee an opinion of counsel to the effect that:
o the holders of the new notes will not recognize income, gain or loss for
United States federal income tax purposes as a result of such deposit and
defeasance of specific obligations and will be subject to United States
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if the deposit and defeasance had not
occurred; and
o the new notes, if then listed on any domestic or foreign securities
exchange. will not be delisted as a result of the deposit and defeasance.
In the event we exercise our option to omit compliance with the covenants
described under "Certain Covenants" regarding the new notes, as described
above, and the new notes are declared due and payable because of the occurrence
of any event of default, then the amount of money and U.S. government
obligations on deposit with the trustee must be sufficient to pay amounts due
on the new notes at the time of their stated maturity, but may be insufficient
to pay amounts due on the new notes at the time of the acceleration resulting
from the default. We will in any event remain liable for the payments as
provided in the indenture.
Meetings, Modification and Waiver
Except as set forth below, the indenture provides that modifications and
amendments of the indenture may be made by us and the trustee under the
indenture only with the consent of the holders of not less than a majority of
the aggregate principal amount of the outstanding new notes and old notes, if
any, issued under the indenture and affected by such modification or amendment.
19
No such modification or amendment may, without the consent of each holder of
the outstanding new notes affected thereby, do any of the following:
o change the stated maturity of the principal of, or any installment of
principal of or interest on, any note;
o reduce the principal amount of, premium, if any, or interest on, any note;
o change any obligation of ours to pay additional amounts;
o reduce the amount of principal of an original issue discount security or
any other debt security payable upon acceleration of the maturity thereof;
o change the coin or currency in which any note or any premium or interest
thereon is payable;
o impair the right to institute suit for the enforcement of any payment on
or regarding any note;
o reduce the percentage of the holders, in principal amount of any
outstanding new notes whose consent is required to either modify or amend
the indenture, to waive compliance with specific provisions of the
indenture, or to waive specific defaults;
o reduce the requirements contained in the indenture for quorum or voting;
o change any obligations of ours to maintain an office or agency in the
places and for the purposes required by the indenture; or
o modify any of the above provisions.
However, without the consent of any holders of new notes, we and the trustee
may supplement the indenture to, among other things:
o reflect that another entity has succeeded us and assumed our covenants
under the indenture and the new notes;
o add to our covenants for the benefit of the holders of new notes or to
surrender any right or power conferred upon us;
o add any additional events of default;
o secure the new notes pursuant to the requirements described above under
"Certain Covenants;"
o change the trustee or provide for an additional trustee; or
o cure any ambiguity or correct or supplement any inconsistency in the
indenture or in the new notes or make any other provisions necessary or
desirable, as long as the action shall not adversely affect the interest
of the holders of the new notes in any material respect.
The holders of at least a majority in aggregate principal amount of the
outstanding new notes and old notes, if any, may, on behalf of all holders of
such new notes, waive, insofar as such new notes are concerned, compliance by
us with specific restrictive provisions of the indenture. The holders of at
least a majority in aggregate principal of the outstanding new notes and old
notes, if any, may, on behalf of all holders of such new notes, waive any past
default under the indenture, except a default:
o in any payment of principal, premium, if any, or interest on any note; and
20
o in respect of a covenant or provision of the indenture and the new notes,
if applicable, which cannot be modified or amended without the consent of
the holder of each outstanding note.
Except for any consent which must be given by the holder of each outstanding
note affected thereby, as described above, any resolution presented at a
meeting or adjourned meeting at which a quorum is present may be adopted by the
affirmative vote of the holders of a majority in principal amount of the
outstanding new notes and old notes, if any.
Additionally, any resolution regarding any request, demand, authorization,
direction, notice, consent, waiver or other action which the indenture
expressly provides may be made, given or taken by the holders of a specified
percentage which is less than a majority in principal amount of the outstanding
new notes and old notes, if any, may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present. Adoption of a resolution
is accomplished by the affirmative vote of the holders of the specified
percentage in the principal amount of the outstanding new notes and old notes,
if any, except for any consent which must be given by the holder of each
outstanding note affected thereby, as described above.
Any resolution passed or decision taken at any meeting of holders duly held in
accordance with the indenture will be binding on all holders of the new notes.
The quorum at any meeting that is called to adopt a resolution, and at any
reconvened meeting, will be persons holding or representing a majority in
principal amount of the outstanding new notes and old notes, if any.
Consolidation, Merger and Sale of Assets
We, without the consent of the holders of any of the outstanding new notes
under the indenture, may consolidate or merge with or into or, sell, lease,
transfer or otherwise dispose of our assets substantially as an entirety to,
any person that is a corporation. partnership or trust organized and validly
existing under the laws of any domestic jurisdiction, or may permit any person
to consolidate or merge with or into us or sell, lease, transfer or otherwise
dispose of its assets substantially as an entirety to us, provided that:
o any successor person must assume our obligations on the new notes and the
indenture; and
o after giving effect to the transaction no event of default, and no event
which after notice or lapse of time would become an event of default, will
have occurred and be continuing; and
o specific other conditions are met.
Notices
Notices to holders of registered securities will be given by mail to the
holder's address as it appears in our security register.
Further Issues
We may from time to time, without notice to or consent of the holders, issue
additional new notes of the same tenor, coupon and other terms as the new
notes, so that such new notes and the new notes offered hereby shall form a
single series. We refer to this additional issuance of new notes as a "further
issue." References herein to the new notes shall include, unless the context
otherwise requires, any further new notes issued as described in this
paragraph.
Purchasers of the new notes after the date of any further issue will not be
able to differentiate between the new notes sold as part of the further issue
and previously issued new notes. If we were to issue new notes with original
issue discount, persons that are subject to U.S. federal income taxation who
purchase new notes after such further issue may be required to accrue original
issue discount with respect to their new notes. This may affect the price of
outstanding new notes as a result of a further issue.
21
Governing Law
The indenture and the new notes will be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
Regarding the Trustee
The indenture contains specific limitations on the rights of the trustee,
should it become a creditor of ours, to obtain payment of claims in specific
cases, or to realize on specific property received in respect of a claim as
security or otherwise, The trustee will be permitted to engage in other
transactions. However, if the trustee acquires any conflicting interest, it
must eliminate the conflict within 90 days and apply to the SEC for permission
to continue or resign.
The Bank of New York acts as trustee under various indentures. We and some of
our subsidiaries at various times maintain deposit accounts and conduct our
banking transactions with The Bank of New York in the ordinary course of
business.
22
THE EXCHANGE OFFER
Purpose of the Exchange Offer
Pursuant to a purchase agreement dated October 24, 2002 between us and J.P.
Morgan Securities Inc. and Deutsche Bank Securities Inc., as representatives on
behalf of the initial purchasers named in the purchase agreement, we sold
$1,000,000,000 aggregate principal amount of old notes. Pursuant to a purchase
agreement dated October 31, 2002 between us and J.P. Morgan Securities and
Deutsche Bank Securities, we sold an additional $200,000,000 aggregate
principal amount of old notes. We refer to J.P. Morgan Securities, Deutsche
Bank Securities and any other initial purchasers of old notes collectively as
the initial purchasers. The initial purchasers subsequently sold the old notes
to "qualified institutional buyers," as defined in Rule 144A under the
Securities Act in reliance on Rule 144A. As a condition to the initial sale of
the old notes, we and the initial purchasers entered into registration rights
agreements pursuant to which we agreed that we would:
(1) file the exchange offer registration statement or a shelf registration
statement with the SEC:
o within 120 days of the closing date relating to the issuance of the
$1,000,000,000 aggregate principal amount of old notes, which we
refer to as the initial notes closing date; and
o within 113 days of the closing date relating to the issuance of the
$200,000,000 aggregate principal amount of old notes, which we refer
to as the subsequent notes closing date;
(2) have that exchange offer registration statement or shelf registration
statement declared effective by the SEC:
o within 210 days after the initial notes closing date; and
o within 203 days after the subsequent notes closing date;
(3) consummate the exchange offer:
o within 248 days of the initial notes closing date; and
o within 238 days of the subsequent notes closing date; and
(4) commence the exchange offer and issue the exchange notes in exchange for
all notes validly tendered in accordance with the terms of the exchange
offer prior to the close of the exchange offer, or, in the alternative,
cause a shelf registration statement to remain effective for a maximum of
two years from the initial notes closing date.
We agreed to issue and exchange new notes for all old notes validly tendered
and not withdrawn before the expiration of the exchange offer. Copies of the
registration rights agreements have been filed as exhibits to the registration
statement of which this prospectus is a part. The registration statement is
intended to satisfy certain of our obligations under the registration rights
agreement and the purchase agreements. In the event that due to a change in
current interpretations by the SEC, we are not permitted to effect such
exchange offer, it is contemplated that we will instead file a shelf
registration statement covering resales by the holders of the old notes and
will use our reasonable best efforts to cause such shelf registration statement
to become effective and to keep such shelf registration statement effective for
a maximum of two years from the initial closing date.
23
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus and
in the letter of transmittal, we will accept any and all old notes validly
tendered and not withdrawn prior to the expiration date.
We will issue $1,000 principal amount of new notes in exchange for each
respective $1,000 principal amount of outstanding old notes validly tendered
and not withdrawn pursuant to the exchange offer. old notes may be tendered in
the principal amount of $1000 and any integral multiple thereof, provided that
if fewer than all of the old notes of a holder are tendered for exchange, the
untendered principal amount of the holder's remaining old notes must be $1,000
or any integral multiple of $1,000 in excess thereof.
The form and terms of the new notes are the same as the form and terms of the
old notes except that:
o the exchange will be registered under the Securities Act and, therefore,
the new notes will not bear legends restricting the transfer of the new
notes; and
o holders of the new notes will not be entitled to any of the registration
rights of holders of old notes under the registration rights agreement,
which rights will terminate upon the consummation of the exchange offer.
The new notes will evidence the same indebtedness as the old notes (which
they replace) and will be issued under, and be entitled to the benefits of, the
Indenture which also authorized the issuance of the old notes, such that the
new notes and the old notes will be treated as a single class of securities
under the Indenture.
As of the date of this prospectus, $1,200,000,000 aggregate principal amount of
our 5.85% Notes due 2012 are outstanding, all of which are registered in the
name of Cede & Co., as nominee for DTC. Solely for reasons of administration,
we have fixed the close of business on March 27, 2003 as the record date for
the exchange offer for purposes of determining the persons to whom this
prospectus and the letter of transmittal will be mailed initially. There will
be no fixed record date for determining holders of the old notes entitled to
participate in the exchange offer.
Holders of the old notes do not have any appraisal or dissenters' rights under
the Business Corporation Law of the State of New York or the indenture in
connection with the exchange offer. We intend to conduct the exchange offer in
accordance with the provisions of the registration rights agreements and the
applicable requirements of the Securities Act and the rules and regulations of
the SEC thereunder.
We shall be deemed to have accepted validly tendered old notes when, and if, we
have given oral or written notice thereof to The Bank of New York, the exchange
agent. The exchange agent will act as agent for the tendering holders of old
notes for the purpose of receiving the new notes from the Company.
Holders who tender old notes in the exchange offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes with respect to the exchange of old notes pursuant
to the exchange offer. We will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the exchange offer. See
"The Exchange Offer--Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "expiration date" shall mean 5:00 p.m., New York City time, on April
23, 2003, unless we, in our sole discretion, extend the exchange offer, in
which case the term "expiration date" shall mean the latest date and time to
which the exchange offer is extended.
If we determine to extend the exchange offer, we will, prior to 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date:
o notify the exchange agent of any extension by oral or written notice; and
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o issue a press release or other public announcement which shall include
disclosure of the approximate number of old notes deposited to date.
We reserve the right, in our sole discretion:
o to delay accepting any old notes;
o to extend the exchange offer; or
o if, in the opinion of our counsel, the consummation of the exchange offer
would violate any applicable law, rule or regulation or any applicable
interpretation of the staff of the SEC, to terminate or amend the exchange
offer by giving oral or written notice of such delay, extension,
termination or amendment to the exchange agent. Any such delay in
acceptance, extension, termination or amendment will be followed as
promptly as practicable by a press release or other public announcement
thereof.
If the exchange offer is amended in a manner determined by us to constitute a
material change, we will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
old notes, and we will extend the exchange offer for a period of five to ten
business days, depending upon the significance of the amendment and the manner
of disclosure to the holders, if the exchange offer would otherwise expire
during such five to ten business day period.
Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment or termination of the exchange
offer, we shall have no obligation to publish, advertise, or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
Resale of the New Notes
With respect to the new notes, based upon interpretations by the staff of the
SEC set forth in certain no-action letters issued to third parties, we believe
that a holder who exchanges old notes for new notes in the ordinary course of
business, who is not participating, does not intend to participate, and has no
arrangement or understanding with any person to participate in a distribution
of the new notes, and who is not an "affiliate" of ours within the meaning of
Rule 405 of the Securities Act, will be allowed to resell new notes to the
public without further registration under the Securities Act and without
delivering to the purchasers of the new notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act.
If any holder acquires new notes in the exchange offer for the purpose of
distributing or participating in the distribution of the new notes, it:
o cannot rely on the position of the staff of the SEC enumerated in such
no-action letters issued to third parties; and
o must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction, unless an
exemption from registration is otherwise available.
Each broker-dealer that receives new notes for its own account in exchange for
old notes acquired by such broker-dealer as a result of market-making or other
trading activities must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. The letter of transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of any new
notes received in exchange for old notes acquired by such broker-dealer as a
result of market-making or other trading activities. We will make this
prospectus, as it may be amended or supplemented from time to time, available
to any such broker-dealer that requests copies of such prospectus in the letter
of transmittal for use in connection with any such resale for a period of up to
90 days after the expiration date. See "Plan of Distribution."
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Procedures for Tendering
To tender in the exchange offer, a holder of old notes must either:
o complete, sign and date the letter of transmittal or facsimile thereof,
have the signatures thereon guaranteed if required by the letter of
transmittal, and mail or otherwise deliver such letter of transmittal or
such facsimile to the exchange agent; or
o transmit an agent's message (as defined below) to the exchange agent in
lieu of the letter of transmittal,
in either case for receipt on or prior to the expiration date.
In addition,
o a timely confirmation of a book-entry transfer (a "book-entry
confirmation") of such old notes into the exchange agent's account at DTC
pursuant to the procedure for book-entry transfer described below, along
with the letter of transmittal or an agent's message, as the case may be,
must be received by the exchange agent prior to the expiration date; or
o the holder must comply with the guaranteed delivery procedures described
below.
The term "agent's message" means a message, transmitted to the exchange agent's
account at DTC and received by the exchange agent and forming a part of the
book-entry confirmation, which states that such account has received an express
acknowledgment from the tendering participant that such participant has
received and agrees to be bound by the letter of transmittal and that we may
enforce the letter of transmittal against such participant. To be tendered
effectively, the letter of transmittal and other required documents, or an
agent's message in lieu thereof, must be received by the exchange agent at the
address set forth below under "--Exchange Agent" prior to 5:00 p.m., New York
City time, on the expiration date.
The tender by a holder that is not withdrawn prior to the expiration date will
constitute an agreement between such holder and us in accordance with the terms
and subject to the conditions set forth herein and in the letter of
transmittal.
The method of delivery of old notes, the letter of transmittal and all other
required documents to the exchange agent is at the election and risk of the
holder. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service, properly insured. In all cases, sufficient
time should be allowed to assure delivery to the exchange agent before the
expiration date. Do not send the letter of transmittal or any old notes to us.
Holders may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transactions for such holders.
Any beneficial owner(s) of the old notes whose old notes are held through a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such intermediary promptly and instruct such
intermediary to tender on such beneficial owner's behalf. If such beneficial
owner wishes to tender on its own behalf, such owner must, prior to completing
and executing the letter of transmittal and delivering such owner's old notes:
o make appropriate arrangements to register ownership of the old notes in
such owner's name; or
o obtain a properly completed bond power from the registered holder.
The transfer of registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal described below
(see "--Withdrawal of Tenders"), as the case may be, must be guaranteed by an
eligible institution unless the old notes tendered pursuant thereto are
tendered:
26
o by a registered holder who has not completed the box titled "Special
Delivery Instruction" on the letter of transmittal; or
o for the account of an eligible institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantee
must be made by an eligible institution, which is a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an "eligible guarantor institution"
(within the meaning of Rule 17Ad-15 under the Exchange Act) which is a member
of one of the recognized signature guarantee programs identified in the letter
of transmittal.
If the letter of transmittal is signed by a person other than the registered
holder of any old notes listed therein, such old notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered
holder exactly as such registered holder's name appears on such old notes. If
the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by us, evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal.
The exchange agent and DTC have confirmed that any financial institution that
is a participant in DTC's system may utilize DTC's Automated Tender Offer
Program to tender old notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered old notes will be determined by
us in our sole discretion, which determination will be final and binding. We
reserve the absolute right:
o to reject any and all old notes not properly tendered and any old notes
our acceptance of which would, in the opinion of our counsel, be unlawful;
and
o to waive any defects, irregularities or conditions of tender as to
particular old notes.
Our interpretation of the terms and conditions of the exchange offer (including
the instructions in the letter of transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of old notes must be cured within such time as we shall determine.
Although we intend to notify holders of defects or irregularities in connection
with tenders of old notes, neither we, the exchange agent nor any other person
shall incur any liability for failure to give such notification. Tenders of old
notes will not be deemed to have been made until such defects or irregularities
have been cured or waived.
While we have no present plan to acquire any old notes that are not tendered in
the exchange offer or to file a registration statement to permit resales of any
old notes that are not tendered pursuant to the exchange offer, we reserve the
right in our sole discretion to purchase or make offers for any old notes that
remain outstanding subsequent to the expiration date and, to the extent
permitted by applicable law, purchase old notes in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the exchange offer.
By tendering old notes pursuant to the exchange offer, each holder of the old
notes, will represent that, among other things:
o any new notes to be received by it were acquired by it in the ordinary
course of its business;
o it is not participating, does not intend to participate, and has no
arrangement or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of the new notes;
27
o it acknowledges and agrees that any person who is participating in the
exchange offer for the purpose of distributing the new notes must comply
with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale of the new notes
acquired by such person and cannot rely on the position of the staff of
the SEC set forth in certain no-action letters;
o it understands that a secondary resale transaction, described above, and
any resales of new notes obtained by it in exchange for old notes acquired
by it directly from us should be covered by an effective registration
statement containing the selling security holder information required by
Item 507 or Item 508, as applicable, of Regulation S-K of the SEC and
o it is not our "affiliate", as defined in Rule 405 of the Securities Act.
If the tendering holder is a broker-dealer that will receive new notes for its
own account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge in the letter of transmittal that it will deliver a prospectus in
connection with any resale of such new notes; however, by so acknowledging and
by delivering a prospectus, it will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
Return of Old Notes
In all cases, issuance of new notes for old notes that are accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the exchange agent of:
o old notes or a timely book-entry confirmation of such old notes into the
exchange agent's account at DTC; and
o a properly completed and duly executed letter of transmittal and all other
required documents, or an agent's message in lieu thereof.
If any tendered old notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if old notes are withdrawn or are
submitted for a greater principal amount than the holders desire to exchange,
such unaccepted, withdrawn or otherwise non-exchanged old notes will be
returned without expense to the tendering holder thereof (or, in the case of
old notes tendered by book-entry transfer into the exchange agent's account at
DTC pursuant to the book-entry transfer procedures described below, such old
notes will be credited to an account maintained with DTC) as promptly as
practicable.
Book-Entry Transfer
The exchange agent will make a request to establish an account with respect to
the old notes at DTC for purposes of the exchange offer within two business
days after the date of this prospectus, and any financial institution that is a
participant in DTC's systems may make book-entry delivery of old notes by
causing DTC to transfer such old notes into the exchange agent's account at DTC
in accordance with DTC's procedures for transfer. However, although delivery of
old notes may be effected through book-entry transfer at DTC, the letter of
transmittal or facsimile thereof, with any required signature guarantees and
any other required documents, or an agent's message in lieu of a letter of
transmittal, must, in any case, be transmitted to and received by the exchange
agent at the address set forth below under "--Exchange Agent" on or prior to
the expiration date or pursuant to the guaranteed delivery procedures described
below.
If a holder of the old notes holds those notes through DTC, that holder must
complete a form called "instructions to registered holder and/or book-entry
participant," which will instruct the DTC participant through whom such holder
holds its notes of the holder's intention to tender its old notes or not tender
its old notes. Delivery of documents to DTC in accordance with its procedures
does not constitute delivery to the exchange agent and we will not be able to
accept a tender of notes by a holder of old notes until the exchange agent
receives a letter of transmittal and a book-entry confirmation from DTC with
respect to such old notes. A copy of that form is available from the exchange
agent.
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Guaranteed Delivery Procedures
If a holder of the old notes desires to tender such old notes and the old notes
are not immediately available or the holder cannot deliver its old notes (or
complete the procedures for book-entry transfer), the letter of transmittal or
any other required documents to the exchange agent prior to the expiration
date, a holder may effect a tender if:
o the tender is made through an eligible institution;
o prior to the expiration date, the exchange agent receives from such
eligible institution (by facsimile transmission, mail or hand delivery) a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by us setting forth the name and
address of the holder and the principal amount of old notes tendered,
stating that the tender is being made thereby and guaranteeing that,
within three New York Stock Exchange trading days after the expiration
date:
(1) the letter of transmittal (or a facsimile thereof), or an
agent's message in lieu thereof,
(2) the certificate(s) representing the old notes in proper form for
transfer or a book-entry confirmation, as the case may be, and
(3) any other documents required by the letter of transmittal,
will be deposited by the eligible institution with the exchange agent; and
o such properly executed letter of transmittal (or facsimile thereof), or an
agent's message in lieu thereof, as well as the certificate(s)
representing all tendered old notes in proper form for transfer or a
book-entry confirmation, as the case may be, and all other documents
required by the letter of transmittal, are received by the exchange agent
within three New York Stock Exchange trading days after the expiration
date.
Upon request to the exchange agent, a form of Notice of Guaranteed Delivery
will be sent to holders who wish to tender their old notes according to the
guaranteed delivery procedures set forth above.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of old notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the expiration date.
To withdraw a tender of old notes in the exchange offer, a written or facsimile
transmission notice of withdrawal must be received by the exchange agent at its
address set forth herein prior to the expiration date. Any such notice of
withdrawal must:
o specify the name of the person having deposited the old notes to be
withdrawn;
o identify the old notes to be withdrawn (including the certificate number,
if applicable, and principal amount of such old notes) or, in the case of
old notes transferred by book-entry transfer, the name and number of the
account at DTC to be credited; and
o be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such old notes were tendered (including
any required signature guarantees) or, in the case of old notes
transferred by book-entry transfer, be transmitted by DTC and received by
the exchange agent in the same manner as the agent's message transferring
the notes.
If old notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must comply with the
procedures of DTC. All questions as to the validity, form and eligibility
29
(including time of receipt) of such notices will be determined by us, in our
sole discretion, which determination shall be final and binding on all parties.
Any old notes so withdrawn will be deemed not to have been validly tendered for
purposes of the exchange offer, and no new notes will be issued with respect
thereto, unless the old notes so withdrawn are validly re-tendered. Properly
withdrawn old notes may be re-tendered by following one of the procedures
described above under "--Procedures for Tendering" at any time prior to the
expiration date.
Termination of Certain Rights
All registration rights under the registration rights agreements accorded to
holders of the old notes (and all rights to receive additional interest in the
event of a registration default as defined therein) will terminate upon
consummation of the exchange offer. However, for a period of up to 90 days
after the registration statement is declared effective, we will keep the
registration statement effective and provide copies of the latest version of
the prospectus to any broker-dealer that requests copies of such prospectus in
the letter of transmittal for use in connection with any resale by such
broker-dealer of new notes received for its own account pursuant to the
exchange offer in exchange for old notes acquired for its own account as a
result of market-making or other trading activities.
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Exchange Agent
The Bank of New York has been appointed as exchange agent for the exchange
offer. Questions and requests for assistance, requests for additional copies of
this prospectus or the letter of transmittal and requests for a copy of the
Notice of Guaranteed Delivery should be directed to the exchange agent
addressed as follows:
By Registered or Certified Mail: By Overnight Courier/Hand:
The Bank of New York The Bank of New York
101 Barclay Street, 7 East 101 Barclay Street
New York, NY 10286 New York, NY 10286
Attention: Reorganization Section Corporate Trust Services Window
Mr. Bernard Arsenec Ground Level
Attention: Reorganization Section
Mr. Bernard Arsenec
By Facsimile:
(212) 815-6339
By Telephone:
(212) 815-5920
The Bank of New York also serves as Trustee under the indenture.
Delivery to an address other than listed above or transmission of
instructions via facsimile other than as listed above does not constitute a
valid delivery.
Fees and Expenses
The expenses of soliciting tenders will be borne by us. The principal
solicitation is being made by mail; however, additional solicitation may be
made by telegraph, facsimile transmission, electronic mail, telephone or in
person by our officers and regular employees or those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
The expenses to be incurred in connection with the exchange offer,
including registration fees, fees and expenses of the exchange agent and the
Trustee, accounting and legal fees, and printing costs, will be paid by us.
We will pay all transfer taxes, if any, applicable to the exchange of old
notes pursuant to the exchange offer. If, however, a transfer tax is imposed
for any reason other than the exchange of the old notes pursuant to the
exchange offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
Consequence of Failure to Exchange
Participation in the exchange offer is voluntary. Holders of the old notes
are urged to consult their financial and tax advisers in making their own
decisions on what action to take.
Old notes that are not exchanged for the new notes pursuant to the
exchange offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) under the Securities Act. Accordingly, such old notes may not be
offered, sold, pledged or otherwise transferred except:
31
o to a person whom the seller reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for
its own account or for the account of a qualified institutional buyer
in a transaction meeting the requirements of Rule 144A;
o pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available)
o pursuant to an effective registration statement under the Securities
Act; or
o pursuant to another available exemption from the registration
requirements of the Securities Act, and, in each case, in accordance
with all other applicable securities laws.
Accounting Treatment
For accounting purposes, we will recognize no gain or loss as a result
of the exchange offer. The expenses of the exchange offer will be amortized
over the term of the new notes.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of our counsel, Davis Polk & Wardwell, the exchange of old
notes for new notes will not be treated as a taxable transaction for U.S.
federal income tax purposes. Therefore, a holder will not recognize gain or
loss upon the exchange. A holder's basis for the new notes will be the same as
its basis for the old notes, and the holding period of the new notes will
include the holding period of the old notes.
You should consult your own tax advisors concerning the tax consequences
arising under state, local, or foreign laws of the exchange of old notes for
new notes.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account in exchange
for old notes acquired by the broker-dealer as a result of market-making or
other trading activities must acknowledge that it will deliver a prospectus in
connection with any resale of those new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a participating
broker-dealer in connection with resales of new notes received in exchange for
such old notes. For a period of up to 90 days after the expiration date, we
will make this prospectus, as amended or supplemented, available to any such
broker-dealer that requests copies of this prospectus in the letter of
transmittal for use in connection with any such resale.
We will not receive any proceeds from any sale of new notes by
broker-dealers or any other persons. New notes received by participating
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the over-the-counter market,
in negotiated transactions or through the writing of options on the new notes,
or a combination of these methods of resale, at market prices prevailing at the
time of resale or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such participating
broker-dealer that resells the new notes that were received by it for its own
account pursuant to the exchange offer. Any broker or dealer that participates
in a distribution of new notes may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit on any such resale of new notes
and any commissions or concessions received by these persons may be deemed to
be underwriting compensation under the Securities Act. The letter of
transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
34
NOTICE TO INVESTORS
Based on interpretations of the staff of the SEC set forth in no-action
letters issued to third parties, we believe that new notes issued pursuant to
the exchange offer in exchange for old notes may be offered for resale, resold,
and otherwise transferred by a holder (other than broker-dealers, as set forth
below, and any holder that is an "affiliate" of ours within the meaning of Rule
405 under the Securities Act) without further registration under the Securities
Act and without delivery to prospective purchasers of a prospectus pursuant to
the provisions of the Securities Act, provided that the holder is acquiring the
new notes in the ordinary course of its business, is not participating and has
no arrangement or understanding with any person to participate in the
distribution of the new notes. Eligible holders wishing to accept the exchange
offer must represent to us in the letter of transmittal that these conditions
have been met. See "The Exchange Offer--Procedures for Tendering."
Each broker-dealer who holds old notes acquired for its own account as a
result of market-making or other trading activities and who receives new notes
for its own account pursuant to the exchange offer must acknowledge that it
will deliver a prospectus in connection with any resale of new notes. The
letter of transmittal states that by acknowledging and delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with the resales of new notes received for the broker-dealer's own account in
exchange for old notes where old notes were acquired by the broker-dealer as a
result of market-making activities or other trading activities. For a period of
up to 90 days after the expiration date, we will make this prospectus available
to those broker-dealers (if they so request in the letter of transmittal) for
use in connection with those resales. See "Plan of Distribution."
The old notes and the new notes constitute new issues of securities with
no established public trading market. We do not intend to apply for listing of
the new notes on any securities exchange or for inclusion of the new notes in
any automated quotation system. There can be no assurance that an active public
market for the new notes will develop or as to the liquidity of any market that
may develop for the new notes, the ability of holders to sell the new notes, or
the price at which holders would be able to sell the new notes. Future trading
prices of the new notes will depend on many factors, including among other
things, prevailing interest rates, our operating results and the market for
similar securities.
Any old notes not tendered or accepted in the exchange offer will remain
outstanding. To the extent that old notes are tendered and accepted in the
exchange offer, your ability to sell untendered, and tendered but unaccepted,
old notes could be adversely affected. Following consummation of the exchange
offer, the holders of old notes will continue to be subject to the existing
restrictions on transfer thereof and we will have no further obligation to
those holders, under either of the registration rights agreements, to provide
for the registration under the Securities Act of the old notes. There may be no
trading market for the old notes.
We will not receive any proceeds from, and have agreed to bear the
expenses of, the exchange offer. No underwriter is being used in connection
with the exchange offer.
The exchange offer is not being made to, nor will we accept surrenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance thereof would not be in compliance with the securities
or blue sky laws of those jurisdictions.
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VALIDITY OF THE NEW NOTES
The validity of the new notes will be passed upon for us by Davis Polk &
Wardwell, New York, New York.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from our Annual Report on Form
10-K for the year ended December 31, 2002 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
Our financial statements as of and for each of the two years in the period
ended December 31, 2001 incorporated by reference in prospectus and elsewhere
in the Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
On April 9, 2002, we announced that we engaged Deloitte & Touche LLP to
replace Arthur Andersen as our independent auditors. During each of the fiscal
years in the two year period ended December 31, 2001 and the subsequent interim
period preceding the change of auditors, we had no disagreements with Arthur
Andersen on any matter of accounting principles or practices, financial
statement disclosures or auditing scope or procedures which, if not resolved to
Arthur Andersen's satisfaction, would have caused it to make reference to the
disagreement in connection with its report.
We have not been able to obtain, after reasonable efforts, the written
consent of Arthur Andersen to our naming it in this prospectus as having
certified our consolidated financial statements for the two years ended
December 31, 2001, as required by Section 7 of the Securities Act. Accordingly,
we have dispensed with the requirement to file its consent in reliance upon
Rule 437a of the Securities Act. Because Arthur Andersen has not consented to
the inclusion of its report in this prospectus, you may have no effective
remedy against Arthur Andersen under Section 11 of the Securities Act for any
untrue statements of a material fact contained in the financial statements
audited by Arthur Andersen, or any omissions to state a material fact required
to be stated therein. In addition, the ability of Arthur Andersen to satisfy
any claims (including claims arising from its provision of auditing and other
services to us) may be limited as a practical matter due to recent events
regarding Arthur Andersen.
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