FILED PURSUANT
TO RULE 424(b)(5)
REGISTRATION NOS. 333-38193
333-23559
Prospectus Supplement to Prospectus dated September 23, 1999.
[LOGO] BD
$200,000,000
Becton, Dickinson and Company
7.15% Notes due October 1, 2009
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Becton, Dickinson will pay interest on the notes on April 1 and October 1
of each year. The first such payment will be on April 1, 2000. Becton,
Dickinson has the option to redeem all or any portion of the notes at any time
at the redemption price described in this prospectus supplement, plus accrued
interest. The notes will be issued only in denominations of $1,000 and integral
multiples of $1,000.
----------------
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
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Per Note Total
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Initial public offering price............................. 99.90% $199,800,000
Underwriting discount..................................... 0.65% $1,300,000
Proceeds, before expenses, to Becton, Dickinson........... 99.25% $198,500,000
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the notes will accrue from September 28, 1999 and
must be paid by the purchaser if notes are delivered after September 28, 1999.
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The underwriters expect to deliver the notes in book-entry form only
through the facilities of The Depository Trust Company against payment in New
York, New York on September 28, 1999.
Goldman, Sachs & Co.
Salomon Smith Barney
Chase Securities Inc.
Banc One Capital Markets, Inc.
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Prospectus Supplement dated September 23, 1999.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the notes, estimated to
be approximately $198,340,000 million, to repay outstanding commercial paper,
including commercial paper issued in connection with our acquisition of
Clontech Laboratories, Inc. in August 1999. On August 31, 1999, our commercial
paper had a weighted average interest rate of approximately 5.30% per annum.
We may invest the net proceeds in short-term interest-bearing securities
pending the application of the proceeds.
DESCRIPTION OF NOTES
The following description of the particular terms of the notes being
offered (referred to in the accompanying prospectus as "Debt Securities")
supplements, and to the extent inconsistent with the accompanying prospectus
replaces, the description of the general terms and provisions of Debt
Securities set forth in the accompanying prospectus. Capitalized terms used
but not defined in this prospectus supplement have the meanings given to them
in the accompanying prospectus. In this prospectus supplement, "Becton,
Dickinson", "we," "us" and "our" refer to Becton, Dickinson and Company.
GENERAL
The 7.15% Notes due October 1, 2009 will be limited to an aggregate
principal amount of $200,000,000 and will mature on October 1, 2009.
The notes will bear interest from September 28, 1999 or from the most
recent interest payment date. In general, interest on the notes will be
payable annually on each April 1 and October 1, beginning April 1, 2000, to
the persons in whose names the notes or any predecessor notes are registered
at the close of business on the preceding March 15 and September 15,
respectively. However, in the case of a global note representing debentures,
payment will be made in accordance with arrangements in effect among Becton,
Dickinson, the Trustee and the depositary.
The notes will not be redeemable at the option of the holders and will not
be entitled to any sinking fund. The notes will be issued in registered form,
in denominations of $1,000 and integral multiples of $1,000. The covenants in
the Indenture would not necessarily protect holders of the notes in the event
of a highly leveraged or other transaction involving us that may adversely
affect holders of the notes.
OPTIONAL REDEMPTION
We may, at our option, redeem all or any part of the notes. If we choose
to do so, we will mail a notice of redemption to you not less than 30 days and
not more than 60 days before this redemption occurs. The redemption price will
be equal to the greater of:
(1) 100% of the principal amount of the notes to be redeemed; and
(2) the sum of the present values of the Remaining Scheduled Payments on
the notes, 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 15 basis points.
The redemption price will also include interest accrued to the date of
redemption on the principal balance of the notes being redeemed.
"Treasury Rate" means, for any redemption date, the annual rate equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue equal to the Comparable
Treasury Price, expressed as a percentage of its principal amount, for that
redemption date. The yield of the Comparable Treasury Issue will be computed
as of the second business day immediately preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by one of the investment banking firms named below that would be
used, 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 applicable remaining term of the notes.
The investment banks we may use to select a Comparable Treasury Issue for
this purpose are Goldman, Sachs & Co., Salomon Smith Barney Inc., Chase
Securities Inc. and Banc One Capital Markets, Inc., each of their successors,
and any two other nationally recognized investment banking firms that we
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will appoint from time to time that are primary dealers of U.S. government
securities in New York City, each of whom we call a "Reference Treasury
Dealer." If any of the firms named in the preceding sentence ceases to be a
primary dealer of U.S. government securities in New York City, we will appoint
another nationally recognized investment banking firm as a substitute.
"Comparable Treasury Price" means, for any redemption date:
(1) the average of the Reference Treasury Dealer Quotations obtained by
the Trustee for that redemption date after excluding the highest and lowest
of those Reference Treasury Dealer Quotations; or
(2) if the Trustee obtains fewer than four Reference Treasury Dealer
Quotations, the average of all those quotations.
"Reference Treasury Dealer Quotation" means, with respect to any redemption
date, the average, as determined by the Trustee, of the bid and asked prices
for the Comparable Treasury Issue, expressed in each case as a percentage of
its principal amount, quoted in writing to the Trustee by a Reference Treasury
Dealer as of 3:30 p.m., New York time, on the third business day preceding that
redemption date. The Trustee shall seek Reference Treasury Dealer Quotations in
respect of any redemption date from each of the then-existing Reference
Treasury Dealers.
"Remaining Scheduled Payments" means, with respect to each note being
redeemed, the remaining scheduled payments of principal and interest on that
note that would be due after the related redemption date but for the
redemption. If, however, the redemption date is not an interest payment date
with respect to that note, the amount of the next succeeding scheduled interest
payment on that note that would have been due will be deemed reduced by the
amount of interest accrued on the note to the redemption date.
On and after any redemption date, the notes or any portion of the notes
called for redemption will stop accruing interest. On or before any redemption
date, we will deposit with the paying agent or the Trustee money sufficient to
pay the accrued interest on the notes to be redeemed and their redemption
price. If less than all of the notes are redeemed, the Trustee will choose the
notes to be redeemed by any method that it deems fair and appropriate.
BOOK-ENTRY SYSTEM
The notes will be issued only in book-entry form through the facilities of
The Depository Trust Company ("DTC"). Beneficial interests in notes in book-
entry form may be transferred or exchanged only through a participating member
of DTC. Under some limited circumstances, notes may be issued in certificated
form in exchange for the global note. See "Description of Debt Securities-
Global Securities" in the accompanying prospectus. In the event that notes are
issued in certificated form, those notes may be transferred or exchanged at the
office of the Trustee described in the next paragraph.
Payments on notes issued in book-entry form will be made to DTC. If notes
are issued in certificated form, principal, premium, if any, and interest will
be payable at the office of the Trustee at 450 West 33rd Street, 15th floor,
New York, New York 10001. We will also have the option of paying interest by
mailing a check to the address of the person entitled to the interest.
Payments of principal of, and interest and premium, if any, on, notes
registered in the name of DTC or its nominee will be made to DTC or its
nominee, as the case may be, as the registered owner of the global notes
representing those notes. DTC has informed us that its nominee will be Cede &
Co. Accordingly, we expect Cede & Co. to be the initial registered holder of
the notes.
None of Becton, Dickinson, the Trustee, or any agent of Becton, Dickinson
or the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the global note or for maintaining, supervising or reviewing any
records relating to the beneficial ownership interests. These records or
payment procedures are more fully described in this prospectus supplement or
the accompanying prospectus.
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SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for
each of the five years in the period ended September 30, 1998. These figures
are derived from the audited consolidated financial statements of Becton,
Dickinson and its subsidiaries, with the exception of the ratio of earnings to
fixed charges which for each of the periods presented is unaudited. The
selected consolidated financial data as of June 30, 1999 and for the nine month
periods ended June 30, 1999 and 1998 are derived from unaudited financial
statements. The unaudited financial statements include all adjustments
consisting of normal recurring accruals, which in the opinion of management
of Becton, Dickinson are considered necessary for a fair presentation of the
financial position and the results of operations for these periods. Operating
results for the nine month period ended June 30, 1999 are not necessarily
indicative of the results that may be expected for the year ending September
30, 1999. The data should be read in conjunction with the consolidated
financial statements, related notes and other financial information
incorporated by reference in this prospectus supplement. See "Incorporation of
Certain Documents by Reference" in the accompanying prospectus.
(Unaudited)
Nine Months Ended
June 30, Year Ended September 30,
--------------------- ------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Dollars in thousands, except per share data and ratios)
Income Statement Data:
Revenues................ $2,515,932 $2,273,634 $3,116,873 $2,810,523 $2,769,756 $2,712,525 $2,559,461
Gross Profit............ 1,239,639 1,135,744 1,575,841 1,397,212 1,340,579 1,276,167 1,159,827
Interest Expense, Net... 53,506 39,194 56,340 39,373 37,409 42,833 47,624
Net Income.............. 199,396 146,671 236,568 300,074 283,447 251,696 227,174
Earnings Per Share
Basic.................. 0.79 0.59 0.95 1.21 1.10 0.92 0.77
Diluted................ 0.75 0.56 0.90 1.15 1.05 0.89 0.76
Dividends Per Share..... 0.26 0.22 0.29 0.26 0.23 0.21 0.19
Ratio of Earnings to
Fixed Charges.......... 4.54 -- 5.07 6.91 6.25 5.43 4.59
Balance Sheet Data at
Period End:
Working Capital......... $ 333,227 $ -- $ 450,849 $ 634,412 $ 510,719 $ 607,483 $ 648,230
Total Assets............ 4,083,241 -- 3,846,038 3,080,252 2,889,752 2,999,505 3,159,533
Short-Term Debt
(including current
portion of long-term
debt).................. 592,560 -- 385,162 132,440 227,424 205,799 173,228
Long-Term Debt.......... 759,216 -- 765,176 665,449 468,223 557,594 669,157
Shareholders' Equity.... 1,668,176 -- 1,613,820 1,385,433 1,325,183 1,398,385 1,481,694
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Earnings used to compute the Ratio of Earnings to Fixed Charges are earnings
before income taxes and before fixed charges (excluding, for purposes of this
computation, interest capitalized during the period) and after excluding
undistributed earnings and losses of minority-owned affiliates. Fixed charges
consist of interest, whether expensed or capitalized, amortization of debt
discount and expense, and the portion of rental expense representative of an
interest factor.
In June 1999 and 1998, we recorded special charges of $75,553 and $90,945,
respectively. Excluding the effect of these charges, the Ratio of Earnings to
Fixed Charges would be 5.57 for the nine months ended June 30, 1999 and 6.15
for the year ended September 30, 1998. Special charges recorded in the fourth
quarter of fiscal 1994 did not have a significant effect on the calculation of
the Ratio of Earnings to Fixed Charges for the year ended September 30, 1994.
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UNDERWRITING
Becton, Dickinson and the underwriters for the offering (the "Underwriters")
named below have entered into an underwriting agreement and a pricing agreement
with respect to the notes. Subject to certain conditions, each Underwriter has
severally agreed to purchase the principal amount of notes indicated in the
following table.
Underwriters Principal Amount of Notes
------------ -------------------------
Goldman, Sachs & Co. .............................. $156,000,000
Salomon Smith Barney Inc. ......................... $ 24,000,000
Chase Securities Inc. ............................. $ 14,000,000
Banc One Capital Markets, Inc. .................... $ 6,000,000
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Total............................................ $200,000,000
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Notes sold by the Underwriters to the public will initially be offered at the
initial public offering price set forth on the cover of this prospectus supple-
ment. Any notes sold by the Underwriters to securities dealers may be sold at a
discount from the initial public offering price of up to 0.40% of the principal
amount of notes. Any such securities dealers may resell any notes purchased
from the Underwriters to certain other brokers or dealers at a discount from
the initial public offering price of up to 0.25% of the principal amount of the
notes. If all the notes are not sold at the initial offering price, the Under-
writers may change the offering price and the other selling terms.
The notes are a new issue of securities with no established trading market.
Becton, Dickinson has been advised by the Underwriters that the Underwriters
intend to make a market in the notes but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the notes.
In connection with the offering, the Underwriters may purchase and sell notes
in the open market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short sales. Short
sales involve the sale by the Underwriters of a greater number of notes than
they are required to purchase in the offering. Stabilizing transactions consist
of certain bids or purchases made for the purpose of preventing or retarding a
decline in the market price of the notes while the offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a particular
Underwriter repays to the Underwriters a portion of the underwriting discount
received by it because the Underwriters have repurchased notes sold by or for
the account of such Underwriter in stabilizing or short covering transactions.
These activities by the Underwriters may stabilize, maintain or otherwise af-
fect the market price of the notes. As a result, the price of the notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected in the over-the-counter market or oth-
erwise.
Becton, Dickinson estimates that its share of the total expenses of the of-
fering, excluding underwriting discounts and commissions, will be approximately
$160,000.
Becton, Dickinson has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
Certain of the Underwriters or their affiliates have engaged from time to
time and may in the future engage in various general financing and banking
transactions with Becton, Dickinson. The Chase Manhattan Bank, the Trustee, is
an affiliate of Chase Securities Inc.
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BECTON, DICKINSON AND COMPANY
Debt Securities and Warrants to Purchase Debt Securities
----------------
Becton, Dickinson and Company (the "Company") from time to time may offer,
at an aggregate initial offering price not to exceed $500,000,000, its
unsecured debt securities consisting of debentures, notes or other unsecured
evidences of indebtedness (the "Debt Securities") and warrants to purchase Debt
Securities (the "Warrants" and, together with the Debt Securities, the
"Securities"). The Debt Securities and Warrants may be offered, separately or
together, in separate series, in amounts, at prices and on terms to be
determined at the time of sale and to be set forth in supplements to this
Prospectus (each, a "Prospectus Supplement"). The Company may sell the
Securities to or through underwriters, and also may sell the Securities
directly to other purchasers or through agents. See "Plan of Distribution."
The terms of the Securities, including with respect to the Debt Securities,
the specific designation, aggregate principal amount, denominations, maturity,
rate (which may be fixed or variable) and time of payment of interest, if any,
and terms for redemption, and, with respect to any Warrants, where applicable,
the offering price, exercise price, duration and detachability, and the names
and compensation of any underwriters or agents and the other terms in
connection with the offering and sale of the Securities in respect of which
this Prospectus is being delivered, will be set forth in the Prospectus
Supplement relating to such Securities. As used herein, Securities shall
include securities denominated in United States dollars or, at the option of
the Company, if so specified in the applicable Prospectus Supplement, in any
other currency, including composite currencies. This Prospectus may not be used
to consummate sales of Securities unless accompanied by the Prospectus
Supplement applicable to the Securities being sold.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is September 23, 1999
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE
HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF OR THAT INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES,
INCLUDING OVERALLOTMENT, STABILIZING AND SHORT COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at 7 World Trade Center, Suite 1300, New York, New
York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials can also be obtained upon written request from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a World
Wide Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of the site is http://www.sec.gov. The Company's
Common Stock is listed on the New York Stock Exchange, and reports, proxy
statements and other information concerning the Company can also be inspected
and copied at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
This Prospectus does not contain all of the information contained in the
Registration Statement filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), and reference is
hereby made to the Registration Statement and to the exhibits thereto for
further information with respect to the Company and the Securities offered
hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which are on file with the Commission pursuant to
the Exchange Act (File No. 1-4802), are incorporated herein by reference and
made a part hereof:
(a) The Company's most recently filed Annual Report on Form 10-K;
(b) The Company's Quarterly Reports on Form 10-Q filed since the end of
the Company's fiscal year covered by its most recent Annual Report on Form
10-K;
1
(c) The Company's Current Reports on Form 8-K filed since the end of the
Company's fiscal year covered by its most recent Annual Report on Form 10-
K; and
(d) All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, filed since the end of the
Company's fiscal year covered by its most recent Annual Report on Form 10-
K and prior to the termination of the offering of the Securities
hereunder.
Any statement contained in a document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified shall not be deemed
to constitute a part of this Prospectus except as so modified, and any
statement so superseded shall not be deemed to constitute a part of this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any and all of the
documents incorporated herein 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 the
Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New
Jersey 07417-1880, telephone (201) 847-6800.
THE COMPANY
The Company was incorporated under the laws of the State of New Jersey in
November 1906, as successor to a New York business started in 1897. Its
executive offices are located at 1 Becton Drive, Franklin Lakes, New Jersey
07417-1880 and its telephone number is (201) 847-6800. All references herein
to the "Company" refer to Becton, Dickinson and Company and its domestic and
foreign subsidiaries unless otherwise indicated by the context.
The Company is engaged principally in the manufacture and sale of a broad
line of medical supplies and devices and diagnostic systems used by health
care professionals, medical research institutions and the general public. The
Company's operations are comprised of two worldwide business segments, Medical
Supplies and Devices ("Medical") and Diagnostic Systems ("Diagnostic").
The major products in the Company's Medical segment are hypodermic
products, specially designed devices for diabetes care, prefillable drug
delivery systems, infusion therapy products and specialty and surgical blades.
The Medical segment also includes specialty needles, disposable scrubs,
elastic support products and thermometers.
The major products in the Company's Diagnostic segment are clinical and
industrial microbiology products, sample collection products, flow cytometry
systems for (including reagents for cellular analysis), tissue culture
labware, hematology instruments and other diagnostic systems, including
immunodiagnostic test kits.
The Company's products are manufactured and sold worldwide. The principal
markets for the Company's products outside of the United States are Europe,
Japan, Mexico, Asia Pacific, Canada and Brazil. The principal products sold by
the Company outside the United States are hypodermic needles and syringes,
diagnostic systems, VACUTAINER(R) brand sample collection products, HYPAK(R)
brand prefillable syringe systems and infusion therapy products. The Company
has manufacturing operations in Brazil, China, France, Germany, India,
Ireland, Japan, Mexico, Pakistan, Singapore, Spain, Sweden, the United Kingdom
and the United States.
2
The Company's products and services are marketed in the United States both
through independent distribution channels and directly to end-users. The
Company's products are marketed outside of the United States through
independent distributors and sales representatives, and in some markets
directly to end-users.
USE OF PROCEEDS
Except as may be set forth in the Prospectus Supplement with respect to
any Securities, the net proceeds to the Company from the sale of the
Securities offered hereby will be added to the general funds of the Company
and may be used to repay outstanding debt and to meet capital expenditure and
working capital requirements. The Company has not allocated a specific portion
of the net proceeds for any particular use at this time. Pending application
of the net proceeds, such proceeds may be invested in marketable securities.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated.
Nine Months
Ended Year Ended September 30,
June 30, ------------------------
1999 1998 1997 1996 1995 1994
----------- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges
(unaudited)............................. 4.54 5.07 6.91 6.25 5.43 4.59
Earnings used to compute this ratio are earnings before income taxes and
the cumulative effect of accounting changes and before fixed charges
(excluding, for purposes of such computation, interest capitalized during the
period) and after excluding undistributed earnings and losses of minority-
owned affiliates. Fixed charges consist of interest, whether expensed or
capitalized, amortization of debt discount and expense and the portion of
rental expense representative of an interest factor.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement
and the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating
to such Debt Securities.
The Debt Securities are to be issued under an Indenture, dated as of March
1, 1997 (the "Indenture"), between the Company and The Chase Manhattan Bank,
as Trustee (the "Trustee") (a copy of which is filed with the Commission as an
exhibit to the Registration Statement of which this Prospectus is a part). The
following summaries of certain provisions of the Indenture do not purport to
be complete and are subject to, and are qualified in their entirety by
reference to, all of the provisions of the Indenture, including the
definitions therein of certain terms capitalized in this Prospectus. Wherever
particular provisions or defined terms of the Indenture are referred to, such
provisions or defined terms are incorporated herein by reference.
GENERAL
The Debt Securities will be unsecured and unsubordinated obligations of
the Company. The Indenture does not limit the aggregate principal amount of
Debt Securities which may be issued thereunder and provides that Debt
Securities may be issued thereunder from time to time in one or more series.
3
The Debt Securities will be issued in registered form without coupons
unless otherwise provided in a supplemental indenture or Board Resolution
(Section 2.03). Unless otherwise provided in a Prospectus Supplement,
principal (unless the context otherwise requires, "principal" includes
premium, if any) of and any interest on the Debt Securities will be payable,
and the Debt Securities will be exchangeable and transfers thereof will be
registrable, at an office or agency designated for the Debt Securities,
provided that, at the option of the Company, payment of interest may be made
by check to the address of the Person entitled thereto as it appears in the
Security Register (Sections 2.04 and 2.06). Subject to the limitations
provided in the Indenture, such services will be provided without charge,
other than any tax or other governmental charge payable in connection
therewith. (Section 2.06)
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities of each series offered thereby (to the extent such terms
are applicable to such Debt Securities): (a) the designation of the Debt
Securities of the series; (b) any limit upon the aggregate principal amount of
the Debt Securities of the series and any limitation on the ability of the
Company to increase such aggregate principal amount after the initial issuance
of such Debt Securities; (c) any date on which the principal of the Debt
Securities of the series is payable (which date may be fixed or extendible);
(d) any rate (which may be fixed or variable) per annum at which any Debt
Securities of the series shall bear interest, any interest accrual, payment
and record dates and/or any method by which any such rate or date shall be
determined; (e) if other than as provided in the Indenture, any place where
principal of and interest on Debt Securities of the series shall be payable,
where Debt Securities of the series may be surrendered for exchange, where
notices or demands may be served and where notice to Holders may be published
and any time of such payment at any place of payment; (f) any right of the
Company to redeem Debt Securities of the series and any terms thereof; (g) any
obligation of the Company to redeem, purchase or repay Debt Securities of the
series and any terms thereof; (h) if other than denominations of $1,000 and
any integral multiple thereof, the denominations in which Debt Securities of
the series shall be issuable; (i) if other than the principal amount thereof,
the portion of the principal amount of Debt Securities of the series which
shall be payable upon declaration of acceleration of the maturity thereof; (j)
if other than the coin or currency in which the Debt Securities of the series
are denominated, the coin or currency in which payment of the principal of or
interest on the Debt Securities of the series shall be payable or, if the
amount of any payments of principal of and/or interest on the Debt Securities
of the series may be determined with reference to an index based on a coin or
currency other than that in which the Debt Securities of the series are
denominated, the manner in which such amounts shall be determined; (k) if
other than the currency of the United States of America, the currency or
currencies, including composite currencies, in which payment of the principal
of and interest on the Debt Securities of the series shall be payable, and the
manner in which any such currencies shall be valued against other currencies
in which any other Debt Securities shall be payable; (l) any obligation of the
Company to pay additional amounts on the Debt Securities of the series in
respect of any tax, assessment or governmental charge withheld or deducted and
any right of the Company to redeem such Debt Securities rather than pay such
additional amounts; (m) any provisions for the Debt Securities of the series
to be issued in bearer form, with or without coupons, and if the Debt
Securities of the series are to be issuable in definitive form (whether upon
original issue or upon exchange of a temporary Debt Security of such series)
only upon receipt of certain certificates or other documents or satisfaction
of other conditions, the form and terms of such certificates, documents or
conditions; (n) if other than the Person acting as Trustee, any Agent acting
with respect to the Debt Securities of the series; (o) any provisions for the
defeasance of any Debt Securities of the series in addition to, in
substitution for or in modification of the provisions described in "Defeasance
and Covenant Defeasance;" (p) the identity of any Depositary for Registered
Global Securities of the series other than The Depository Trust Company and
any circumstances other than those described in "Global Securities" in which
any Person may have the right to obtain Debt Securities in exchange therefor;
(q) any provisions for Events of Default applicable to any Debt Securities of
the series in addition to, in substitution for or in modification of those
described in "Events of Default;" (r) any
4
provision for covenants applicable to any Debt Securities of the series in
addition to, in substitution for or in modification of those described in
"Covenants;" and (s) any other terms of the Debt Securities of the series not
inconsistent with the Indenture (Section 2.03).
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount from the
principal amount thereof. If any Debt Securities are Original Issue Discount
Securities, special federal income tax, accounting and other considerations
applicable thereto will be described in the Prospectus Supplement relating
thereto. "Original Issue Discount Security" means any security which provides
for an amount less than the principal amount thereof to be due and payable
upon the declaration of acceleration of the maturity thereof upon the
occurrence of an Event of Default and the continuation thereof. (Section 1.01)
GLOBAL SECURITIES
The Debt Securities of each series may be issued in the form of one or
more fully registered global Debt Securities (each a "Registered Global
Security") registered in the name of The Depository Trust Company (the
"Depositary") or a nominee thereof, unless otherwise established for the Debt
Securities of such series. Except as described in a Prospectus Supplement
hereto, Debt Securities in definitive form will not be issued. Unless and
until a Registered Global Security is exchanged in whole or in part for Debt
Securities in definitive form, it may not be registered for transfer or
exchange except as a whole by the Depositary for such Registered Global
Security to a nominee of such Depositary or by such Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
(Section 2.06)
Upon the issuance of any Registered Global Security, and the deposit of
such Registered Global Security with or on behalf of the Depositary, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Debt Securities represented by such
Registered Global Security to the accounts of institutions ("participants")
entitled thereto that have accounts with the Depositary designated by the
underwriters or their agents engaging in any distribution of the Debt
Securities. Ownership of beneficial interests in a Registered Global Security
will be limited to participants or Persons that may hold interests through
participants. Ownership of beneficial interests by participants in a
Registered Global Security will be shown on, and the transfer of such
beneficial interests will be effected only through, records maintained by the
Depositary or by its nominee. Ownership of beneficial interests in a
Registered Global Security by Persons that hold through participants will be
shown on, and the transfer of such beneficial interests within such
participants will be effected only through, records maintained by such
participants. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
The foregoing limitations and such laws may impair the ability to own,
transfer or pledge beneficial interests in Registered Global Securities.
As long as the Depositary, or its nominee, is the registered owner of a
Registered Global Security, the Depositary or such nominee, as the case may
be, will be considered the sole owner or holder of the Debt Securities
represented by such Registered Global Security for all purposes under the
Indenture. Except as specified below, owners of beneficial interests in a
Registered Global Security will not be entitled to have Debt Securities
represented by such Registered Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Debt Securities in
certificated form and will not be considered the Holders thereof for any
purposes under the Indenture (Section 2.06). Accordingly, each Person owning a
beneficial interest in a Registered Global Security must rely on the
procedures of the Depositary and, if such Person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder of Debt Securities under the Indenture. The
Depositary may grant proxies and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a holder of Debt Securities is entitled to give or take
under the Indenture.
5
The Company understands that, under existing industry practices, if the
Company requests any action of holders of Debt Securities or any owner of a
beneficial interest in a Registered Global Security desires to give any notice
or take any action a holder of Debt Securities is entitled to give or take
under the Indenture, the Depositary would authorize the participants holding
the relevant beneficial interests to give such notice or take such action, and
such participants would authorize the beneficial owners owning through such
participants to give such notice or take such action or would otherwise act
upon the instructions of the beneficial owners owning through them.
The Depositary or a nominee thereof, as holder of record of a Registered
Global Security, will be entitled to receive payments of principal and
interest for payment to beneficial owners in accordance with customary
procedures established from time to time by the Depositary. On the date
hereof, the agent for the payment, transfer and exchange of the Securities is
the Trustee therefor, acting through its Corporate Trust Office located in the
Borough of Manhattan, The City of New York.
The Company expects that the Depositary, upon receipt of any payment of
principal or interest in respect of a Registered Global Security, will
immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Registered Global Security as shown on the records of the Depositary.
The Company also expects that payments by participants to owners of beneficial
interests in a Registered Global Security held through such participants will
be governed by standing instructions and customary practices, and will be the
responsibility of such participants. None of the Company, the Trustee or any
agent of the Company or the Trustee shall have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in a Registered Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. (Section 2.13)
If the Depositary is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered or in good standing
under the Exchange Act, and a successor depositary registered as a clearing
agency under the Exchange Act is not appointed by the Company within 90 days,
if the Company determines that Debt Securities shall no longer be maintained
as Registered Global Securities, or, if at any time an Event of Default shall
have occurred and be continuing under the Indenture, the Company will issue
Debt Securities in definitive certificated form in exchange for the Registered
Global Securities. (Section 2.06)
In the event that the book-entry system is discontinued, the following
provisions shall apply. The Trustee or any successor registrar under the
Indenture shall keep a register for the Debt Securities in definitive
certificated form at its Corporate Trust Office. Subject to the further
conditions contained in the Indenture, Debt Securities in definitive
certificated form may be transferred or exchanged for one or more Debt
Securities in different authorized denominations upon surrender thereof at the
Corporate Trust Office of the Trustee or any successor Registrar under the
Indenture by the registered Holders or their duly authorized attorneys. Upon
surrender of any Debt Security to be transferred or exchanged, the Trustee or
any successor registrar under the Indenture shall record the transfer or
exchange in the Security Register and the Company shall issue, and the Trustee
shall authenticate and deliver, new Debt Securities in definitive certificated
form appropriately registered and in appropriate authorized denominations
(Section 2.06). The Trustee shall be entitled to treat the registered Holders
of the Debt Securities in definitive certificated form, as their names appear
in the Security Register as of the appropriate date, as the owners of such
Debt Securities for all purposes under the Indenture. (Section 2.13)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company shall not consolidate or merge with any other Person, sell,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets as an entirety in one transaction or series of
transactions to any Person, or allow another Person to sell, transfer, lease
or otherwise
6
dispose of substantially all of its assets to the Company unless (a) either
(i) the Company shall be the surviving Person or (ii) such Person shall be a
corporation organized and validly existing under the laws of the United States
of America or any State thereof or the District of Columbia and shall
expressly assume by a supplemental indenture all of the Company's obligations
under the Debt Securities and under the Indenture; (b) immediately before and
after such transaction or each element of such series, no Default or Event of
Default shall have occurred and be continuing; and (c) certain other
conditions are met. Upon any such consolidation, merger, sale, transfer, lease
or other disposition, the successor corporation formed by such consolidation,
or into which the Company is merged, or to which such sale, transfer, lease or
other disposition is made, shall succeed to, and be substituted for, and may
exercise every right and power of the Company under the Indentures and under
the Debt Securities. (Section 5.02)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Debt Securities of any series: (a) failure to pay any installment of interest
on any Debt Security of such series when due and the continuance of such
failure for 30 days; (b) failure to pay the principal of any Debt Security of
such series when due; (c) failure to deposit any sinking fund payment, when
due, in respect of any Debt Security of such series; (d) failure for 60 days
after notice to the Company by the Trustee, or by the Holders of 25% in
aggregate principal amount of the Debt Securities of such series then
outstanding, to perform or observe any other covenant, condition or agreement
in the Debt Securities of such series or in the Indenture (other than a
covenant included in the Indenture solely for the benefit of a series of Debt
Securities other than that series); (e) certain events of bankruptcy,
insolvency or reorganization of the Company; or (f) any other Event of Default
established for the Debt Securities of such series (Section 6.01).
The Indenture provides that, if an Event of Default with respect to the
Debt Securities of any series then outstanding thereunder occurs and is
continuing, then, either the Trustee for or the Holders of not less than 25%
in aggregate principal amount of the Debt Securities of any such affected
series then outstanding (each such series treated as a separate class) by
notice in writing to the Company (and to the Trustee if given by the Holders),
may declare the entire principal (or, if the Debt Securities of any such
series are Original Issue Discount Securities, such portion of the principal
amount as may be established for such series) of all Debt Securities of such
affected series, and the interest accrued thereon, if any, to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable (Section 6.02). However, at any time after a
declaration of acceleration with respect to Debt Securities of any series has
been made, but before a judgment or decree based on such acceleration has been
obtained, the Holders of a majority in principal amount of the Debt Securities
of that series may, under certain circumstances, rescind and annul such
declaration. (Section 6.02)
The Company is required to furnish to the Trustee annually an Officer's
Certificate as to the Company's compliance with all conditions and covenants
under the Indenture. The Company must notify the Trustee within five days of
any Default or Event of Default. (Section 4.06)
The Indenture provides that the Trustee thereunder will, within 60 days
after the occurrence of a Default with respect to the Debt Securities of any
series, give to the Holders of the Debt Securities notice of all Defaults with
respect to such series known to such Trustee, provided that, except in the
case of a Default in payment on the Debt Securities or sinking fund
installment with respect thereto, the Trustee may withhold such notice if and
so long as a Responsible Officer in good faith determines that withholding
such notice is in the interest of the Holders of the Debt Securities (Section
7.05). "Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default. (Section 1.01)
The Indenture provides that the holders of a majority in aggregate
principal amount of the then outstanding Debt Securities thereunder, by notice
to the Trustee therefor, may direct the time, method
7
and place of conducting any proceeding for any remedy available to such
Trustee, or exercising any trust or power conferred on such Trustee. (Section
6.05)
Subject to the further conditions contained in the Indenture, the holders
of a majority in aggregate principal amount outstanding of the Debt Securities
of any series may waive, on behalf of the holders of all Debt Securities of
such series, any past Default or Event of Default and its consequences except
a Default or Event of Default (a) in the payment of the principal of or
interest, if any, on any Debt Security of such series or (b) in respect of a
covenant or provision of such Indenture which cannot under the terms of the
Indenture be amended or modified without the consent of the holder of each
outstanding Debt Security adversely affected thereby. (Section 6.04)
The applicable Prospectus Supplement will describe any provisions for
Events of Default applicable to the Debt Securities of any series in addition
to, in substitution for, or in modification of, the provisions described
above.
CERTAIN COVENANTS OF THE COMPANY
Definitions
"Attributable Debt" is defined to mean, as to any particular lease, the
total net amount of rent (discounted at a rate per annum equivalent to the
interest rate inherent in such lease, as determined in good faith by the
Company, compounded semiannually) required to be paid during the remaining
term of such lease, including any period for which such lease has been
extended or may, at the option of the lessor, be extended. (Section 1.01)
"Consolidated Net Tangible Assets" is defined as the total amount of
assets of the Company and its Restricted Subsidiaries (less applicable
reserves and other properly deductible items) after deducting (i) all current
liabilities (excluding any liabilities constituting Funded Debt by reason of
being renewable or extendible), (ii) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles,
(iii) investments in and advances to Subsidiaries which are not Restricted
Subsidiaries, and (iv) minority interests in the equity of Restricted
Subsidiaries. (Section 1.01)
"Funded Debt" is defined to mean all indebtedness for borrowed money
maturing more than 12 months after the time of computation thereof, guarantees
of such indebtedness of others (except guarantees of collection arising in the
ordinary course of business), and all obligations in respect of lease rentals
which, under generally accepted accounting principles, are shown on a balance
sheet as a non-current liability. (Section 1.01)
"Principal Property" is defined to mean any building, structure or other
facility (together with the land on which it is erected and fixtures
comprising a part thereof) now owned or hereafter acquired by the Company or
any Restricted Subsidiary and used primarily for manufacturing, processing or
warehousing and located in the United States (excluding its territories and
possessions, but including Puerto Rico), the gross book value (without
deduction of any depreciation reserves) of which is in excess of 2.0% of
Consolidated Net Tangible Assets, other than any such building, structure or
other facility or portion thereof which, in the opinion of the Board of
Directors of the Company, is not of material importance to the total business
conducted by the Company and its Restricted Subsidiaries as an entirety.
(Section 1.01)
"Restricted Subsidiary" is defined to mean any Subsidiary substantially
all of the property and operations of which are located in the United States
(excluding its territories and possessions, but including Puerto Rico), and
which owns or leases a Principal Property, except a Subsidiary which is
primarily engaged in the business of a finance company. (Section 1.01)
8
"Subsidiary" is defined to mean a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and by one or
more other Subsidiaries. (Section 1.01)
Restrictions on Secured Debt
If the Company or any Restricted Subsidiary shall incur, issue, assume or
guarantee any Debt secured by a Mortgage on any Principal Property or on any
shares of stock or Debt of any Restricted Subsidiary, the Company will secure,
or cause such Restricted Subsidiary to secure, the Debt Securities (and, if
the Company so elects, any other Debt of the Company or such Restricted
Subsidiary which is not subordinate to the Debt Securities) equally and
ratably with (or prior to) such secured Debt, unless after giving effect
thereto the aggregate amount of all such Debt so secured, together with all
Attributable Debt of the Company and its Restricted Subsidiaries in respect of
certain sale and leaseback transactions involving Principal Properties, would
not exceed 10% of Consolidated Net Tangible Assets. This restriction will not
apply to, and there shall be excluded in computing secured Debt for the
purpose of such restriction, Debt secured by (a) Mortgages existing on
properties on the date of the Indenture, (b) Mortgages on properties, shares
of stock or Debt existing at the time of acquisition thereof (including
acquisition through merger or consolidation), purchase money Mortgages and
construction Mortgages, (c) Mortgages on property of, or on any shares of
stock or Debt of, any corporation existing at the time such corporation
becomes a Restricted Subsidiary, (d) Mortgages in favor of Federal and State
governmental bodies to secure progress, advance or other payments pursuant to
any contract or provision of any statute, (e) Mortgages in favor of the
Company or a Restricted Subsidiary, (f) Mortgages in connection with the
issuance of certain tax-exempt industrial development bonds, (g) Mortgages
under workers' compensation laws, unemployment insurance laws or similar
legislation, or certain deposits including those to secure statutory
obligations or certain bonds (or pledges or deposits for similar purposes in
the ordinary course of business), or liens imposed by law and certain other
liens or other encumbrances, and (h) subject to certain limitations, any
extension, renewal or replacement of any Mortgage referred to in the foregoing
clauses (a) through (g), inclusive. (Section 4.04)
Restrictions on Sale and Leasebacks
Neither the Company nor any Restricted Subsidiary may enter into any sale
and leaseback transaction involving the taking back of a lease, for a period
of three or more years, of any Principal Property, the acquisition, completion
of construction or commencement of full operation of which has occurred more
than 120 days prior thereto, unless (a) the commitment to enter into such sale
and leaseback transaction was obtained during such 120 day period, (b) the
Company or such Restricted Subsidiary could create Debt secured by a Mortgage
on such Principal Property as described under "Restrictions on Secured Debt"
above in an amount equal to the Attributable Debt with respect to such sale
and leaseback transaction without equally and ratably securing the Debt
Securities, (c) the Company, within 120 days after the sale or transfer shall
have been made, applies to the retirement of its Funded Debt an amount (the
"Designated Amount"), subject to credits for certain voluntary retirements of
Funded Debt, equal to the greater of (i) the net proceeds of the sale of such
Principal Property and (ii) the fair market value of such Principal Property,
or (d) the Company or any Restricted Subsidiary, within a period commencing
180 days prior to and ending 180 days after the sale or transfer, has expended
or reasonably expects to expend within such period any monies to acquire or
construct any Principal Property or Properties in which event the Company or
such Restricted Subsidiary may enter into such sale and leaseback transaction,
but (unless certain other conditions are met) only to the extent that the
Designated Amount in respect thereof is less than such monies expended or to
be expended. This restriction will not apply to any sale and leaseback
transactions between the Company and a Restricted Subsidiary or between a
Restricted Subsidiary and another Restricted Subsidiary. (Section 4.05)
9
MODIFICATION AND WAIVER
The Indenture contains provisions permitting the Company and the Trustee
to enter into one or more supplemental indentures without the consent of the
holders of Debt Securities in order (a) to evidence the succession of another
corporation to the Company and the assumption of the covenants of the Company
by such successor, (b) to provide for a successor Trustee with respect to the
Debt Securities of all or any series, (c) to establish the forms and terms of
the Debt Securities of any series, (d) to provide for uncertificated or
unregistered Debt Securities, or (e) to cure any ambiguity or correct any
mistake or to make any change that does not materially adversely affect the
legal rights of any holder of the Debt Securities under such Indenture.
(Section 9.01)
The Indenture also contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the then outstanding Debt Securities of any series, to execute
supplemental indentures adding any provisions to or changing or eliminating
any of the provisions of the Indenture or any supplemental indenture or
modifying the rights of the holders of such Debt Securities, except that no
such supplemental indenture, or any amendment or waiver, may, without the
consent of the holder of each Debt Security, (a) extend the stated maturity of
the principal of, or any sinking fund obligation or any installment of
interest on, such holder's Debt Security, or reduce the principal amount
thereof or the rate of interest thereon (including any amount in respect of
original issue discount), or any premium payable with respect thereto, or
adversely affect the rights of such Holder under any mandatory redemption or
repurchase provision or any right of redemption or repurchase at the option of
the Company or such Holder, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon an
acceleration of the maturity thereof or the amount thereof provable in
bankruptcy, or change any place of payment where, or the currency in which,
any Debt Security or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or
after the due date therefor, or change the manner of determining any of the
foregoing; (b) reduce the percentage in principal amount of outstanding Debt
Securities of the relevant series, the consent of whose Holders is required
for any such supplemental indenture, for any waiver of compliance with certain
provisions of this Indenture or certain Defaults and their consequences
provided for in this Indenture; (c) waive a Default in the payment of
principal of or interest on any Debt Security of such Holder; (d) change any
obligation of the Company to maintain an office or agency in the places and
for the purposes in the Indenture provided; or (e) modify any of the foregoing
provisions, except to increase any such percentage or to provide that certain
other provisions of the Indenture cannot be modified or waived without the
consent of the Holder of each outstanding Debt Security affected thereby
(Section 9.02). After a supplemental indenture, amendment or waiver becomes
effective, the Company shall mail a notice to the holders of the Debt
Securities affected thereby briefly describing the supplemental indenture,
amendment or waiver. (Section 9.02)
DEFEASANCE AND COVENANT DEFEASANCE
Unless the terms of the Debt Securities of any series provide otherwise,
the Company may elect either (a) to defease and be discharged from any and all
obligations with respect to (i) Debt Securities of any series payable within
one year or (ii) other Debt Securities of any series upon certain conditions
described below (except as otherwise provided in the Indenture) ("defeasance")
or (b) to be released from its obligations with respect to certain covenants
applicable to the Debt Securities of any series ("covenant defeasance"), upon
(or, with respect to defeasance of Debt Securities payable later than one year
from the date of defeasance, on the 91st day after) the deposit with the
Trustee, in trust for such purpose, of money and/or U.S. Government
Obligations which through the payment of principal and interest in accordance
with their terms will provide money in an amount sufficient without
reinvestment to pay the principal of and interest on the Debt Securities and
the satisfaction of certain other conditions set forth in such Indenture. As a
condition to defeasance of any Debt Securities of any series payable later
than one year from the time of defeasance, the Company must deliver to the
10
Trustee an Opinion of Counsel (who may be an employee of or counsel for the
Company) or a ruling of the Internal Revenue Service to the effect that
holders of the Debt Securities will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be subject
to Federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such defeasance or covenant
defeasance had not occurred. (Article 8)
The Company may exercise either defeasance option with respect to the Debt
Securities of any series notwithstanding its prior exercise of its covenant
defeasance option with respect thereto. If the Company exercises its
defeasance option, payment of the Debt Securities of any series may not be
accelerated because of a Default or an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Debt Securities of
any series may not be accelerated by reason of an Event of Default with
respect to the covenants to which such covenant defeasance is applicable. If
such acceleration were to occur by reason of another Event of Default, the
realizable value at the acceleration date of the money and U.S. Government
Obligations in the defeasance trust could be less than the principal and
interest then due on the Debt Securities, in that the required deposit in the
defeasance trust is based upon scheduled cash flow rather than market value,
which will vary depending upon interest rates and other factors. The Company
will, however, remain liable for such payments at the time of the
acceleration.
GOVERNING LAW
The Indenture and the Debt Securities are governed by and construed in
accordance with the laws of the State of New York. (Section 10.07)
THE TRUSTEE
The Company maintains a banking relationship with the Trustee.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities.
Warrants may be issued independently or together with any Debt Securities
offered by any Prospectus Supplement and, if issued together with any Debt
Securities, may be attached to or separate from such Debt Securities.
The following description sets forth certain general terms and provisions
of the Warrants to which any Prospectus Supplement may relate. The particular
terms of the Warrants offered by any Prospectus Supplement and the extent, if
any, to which such general terms may apply to the Warrants so offered will be
described in the Prospectus Supplement relating to such Warrants.
The Offered Warrants (as defined below) are to be issued under Warrant
Agreements (each a "Warrant Agreement") to be entered into between the Company
and a bank or trust company, as Warrant Agent (the "Warrant Agent"), all as
set forth in the Prospectus Supplement relating to the particular issue of
Warrants and shall be evidenced by Warrant Certificates (each a "Warrant
Certificate"). A copy of the forms of Warrant Agreement and Warrant
Certificate are on file with the Commission and are incorporated herein by
reference as exhibits to the Registration Statement of which this Prospectus
is a part. The following summary of certain provisions of the forms of Warrant
Agreement and Warrant Certificate does not purport to be complete and is
qualified in its entirety by reference to the Warrant Agreement and the
Warrant Certificate.
GENERAL
The Prospectus Supplement or Prospectus Supplements relating to any
Warrants will describe the terms of the Warrants offered thereby (the "Offered
Warrants"), the Warrant Agreement relating to
11
such Warrants and the Warrant Certificates representing such Warrants,
including the following: (a) the offering price; (b) the currency or
currencies for which the Offered Warrants may be purchased; (c) the
designation, aggregate principal amount, currency or currencies and terms of
the Debt Securities purchasable upon exercise of the Offered Warrants and the
procedures and conditions relating to the exercise of such Offered Warrants;
(d) if applicable, the designation and terms of the Debt Securities with which
the Offered Warrants are issued and the number of Offered Warrants issued with
each such Debt Security; (e) if applicable, the date on and after which the
Offered Warrants and such related Debt Securities will be separately
transferable; (f) the principal amount of Debt Securities purchasable upon
exercise of one Offered Warrant and the price and currency at which such
principal amount of Debt Securities may be purchased upon such exercise; (g)
the date on which the right to exercise the Offered Warrants shall commence
and the date (the "Expiration Date") on which such right shall expire; (h)
federal income tax consequences; and (i) any additional terms of the Offered
Warrants.
Warrant Certificates will be issued only in fully registered form and may
be exchanged for new Warrant Certificates of different denominations, may be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Warrant Agent or any other office indicated in the
Prospectus Supplement describing the terms of the Offered Warrants. Prior to
the exercise of their Offered Warrants, holders of Offered Warrants will not
have any of the rights of holders of the Debt Securities purchasable upon such
exercise, including the right to receive payments of principal or interest on
the Debt Securities purchasable upon such exercise or to enforce covenants in
the Indenture, except as otherwise provided in the Indenture or pursuant
thereto.
EXERCISE OF WARRANTS
Each Offered Warrant will entitle the holder to purchase such principal
amount of Debt Securities at such exercise price as shall in each case be set
forth in, or calculable from, the Prospectus Supplement relating to the
Offered Warrants. Offered Warrants may be exercised at any time up to 5:00
P.M., New York time, on the Expiration Date and in the manner set forth in the
Prospectus Supplement relating to such Warrants. After the close of business
on the Expiration Date (or such later date to which such Expiration Date may
be extended by the Company), unexercised Offered Warrants will become void.
Offered Warrants may be exercised by delivery to the Warrant Agent of
payment as provided in the Prospectus Supplement describing the terms of the
Offered Warrants of the amount required to purchase the Debt Securities
purchasable upon such exercise together with certain information set forth on
the reverse side of the Warrant Certificate. Offered Warrants will be deemed
to have been exercised upon receipt by the Warrant Agent of the exercise
price, subject to the receipt within five business days of the Warrant
Certificate evidencing such Offered Warrants. Upon receipt of such payment and
the Warrant Certificate properly completed and duly executed at the corporate
trust office of the Warrant Agent or any other office indicated in the
Prospectus Supplement describing the terms of the Offered Warrants, the
Company will, as soon as practicable, issue and deliver the Debt Securities
purchasable upon such exercise. If fewer than all of the Offered Warrants
represented by such Warrant Certificate are exercised, a new Warrant
Certificate will be issued for the remaining amount of Warrants.
12
PLAN OF DISTRIBUTION
General
The Company may sell the Securities through underwriters or dealers,
directly to purchasers or through agents or through a combination of any such
methods of sale. If an underwriter or underwriters are utilized in the sale,
the Company will execute an underwriting agreement with such underwriters and
the terms of the transaction will be set forth in the Prospectus Supplement,
which will be used by the underwriters to make resales of the Securities in
respect of which this Prospectus is delivered to the public.
In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities for whom
they may act as agents in the form of discounts, concessions or commissions.
Any underwriting compensation paid by the Company to underwriters or agents in
connection with the offering of the Securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers, and the names
of such underwriters, dealers and agents, will be set forth in the applicable
Prospectus Supplement to the extent required. Underwriters, dealers and agents
that participate in the distribution of Securities may be deemed to be
underwriters and any discounts or commissions received by them and any profit
on the resale of Securities by them may be deemed to be underwriting discounts
and commissions under the Securities Act.
During and after the offering, underwriters may purchase and sell the
Securities in the open market. These transactions may include overallotment
and stabilizing transactions and purchases to cover short positions created by
underwriters in connection with the offering. Underwriters may also impose a
penalty bid, whereby selling concessions allowed to broker-dealers in respect
of the Securities sold in the offering for their account may be reclaimed by
underwriters if such Securities are repurchased by underwriters in stabilizing
or covering transactions. These activities may stabilize, maintain or
otherwise affect the market price of the Securities which may be higher than
the price that might otherwise prevail in the open market; and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected in the over-the-counter market or otherwise.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of the Securities may
be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
Delayed Delivery Arrangements
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase the Securities from the Company pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such institutions must be
approved by the Company. The obligations of any purchaser under any such
contract will not be subject to any conditions except that (i) the purchase of
the Securities shall not at the time of delivery be prohibited under the laws
of the jurisdiction to which such purchaser is subject, and (ii) if the
Securities are also being sold to underwriters, the Company shall have sold to
such underwriters the Securities not sold for delayed delivery. The
underwriters and such other persons will not have any responsibility in
respect of the validity or performance of such contracts.
13
VALIDITY OF SECURITIES
Unless otherwise indicated in the Prospectus Supplement with respect to
any Securities, the validity of the Securities will be passed upon for the
Company by John W. Galiardo, Vice Chairman and General Counsel of the Company,
and for the underwriters by Sullivan & Cromwell, 125 Broad Street, New York,
New York 10004. As of August 31, 1999, Mr. Galiardo owned 210,968 shares of
the Company's common stock, had options to acquire 1,597,474 shares, was
entitled to receive 37,008 shares under the Company's Stock Award Plan and had
rights to 1,629 shares under the Company's 1996 Directors' Deferral Plan. In
addition, Mr. Galiardo had a vested interest, as of August 31, 1999, under the
Company's Savings Incentive Plan in 17,895 shares of the Company's common
stock and in 525 shares of the Company's Series B ESOP Convertible Preferred
Stock.
EXPERTS
The consolidated financial statements of the Company, incorporated by
reference into the Company's Annual Report on Form 10-K for the year ended
September 30, 1998 (the "1998 10-K"), and the related schedule thereto
included in the 1998 10-K, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon included therein and/or
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
14
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely
on any unauthorized information or representations. This prospectus is an
offer to sell only the notes offered hereby, but only under circumstances and
in jurisdictions where it is lawful to do so. This information contained in
this prospectus is current only as of its date.
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TABLE OF CONTENTS
Prospectus Supplement
Page
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Use of Proceeds............................................................ S-2
Description of Notes....................................................... S-2
Selected Consolidated Financial Data....................................... S-4
Underwriting............................................................... S-5
Prospectus
Available Information...................................................... 1
Incorporation of Certain Documents by Reference............................ 1
The Company................................................................ 2
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 3
Description of Debt Securities............................................. 3
Description of Warrants.................................................... 11
Plan of Distribution....................................................... 13
Validity of Securities..................................................... 14
Experts.................................................................... 14
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$200,000,000
Becton, Dickinson
and Company
7.15% Notes
due October 1, 2009
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[LOGO] BD
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Goldman, Sachs & Co.
Salomon Smith Barney
Chase Securities Inc.
Banc One Capital Markets, Inc.
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