AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 2003
REGISTRATION NO. 333-104657
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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BROWN-FORMAN CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 2080 61-0143150
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or organization) Classification Code Number) Identification No.)
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850 DIXIE HIGHWAY, LOUISVILLE, KENTUCKY 40210, (502) 585-1100
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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MICHAEL B. CRUTCHER, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
BROWN-FORMAN CORPORATION
850 DIXIE HIGHWAY
LOUISVILLE, KENTUCKY 40210
(502) 585-1100
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
With copies of all communications to:
ANDREW R. BROWNSTEIN, ESQ. ERNEST W. WILLIAMS, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ OGDEN NEWELL & WELCH PLLC
51 WEST 52ND STREET 1700 PNC PLAZA
NEW YORK, NEW YORK 10019 500 WEST JEFFERSON STREET
(212) 403-1000 LOUISVILLE, KENTUCKY 40202
(502) 582-1601
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: Upon
consummation of the Exchange Offer referred to herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities or accept any offer to buy these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED APRIL 29, 2003
PROSPECTUS
[BROWN-FORMAN LOGO]
BROWN-FORMAN CORPORATION
EXCHANGE OFFER FOR
$250,000,000 2 1/8% NOTES DUE 2006
AND
$350,000,000 3% NOTES DUE 2008
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We are offering, upon the terms and subject to the conditions set forth in
this prospectus and the accompanying letter of transmittal, to exchange an
aggregate principal amount of up to $250,000,000 of our 2 1/8% Notes due 2006
and $350,000,000 of our 3% Notes due 2008, which have been registered under the
Securities Act of 1933 (and which we refer to as the "exchange notes"), for an
equal principal amount of our outstanding 2 1/8% Notes due 2006 and 3% Notes due
2008, in integral multiples of $1,000. When we refer to "old notes," we are
referring to the outstanding 2 1/8% Notes due 2006 and the outstanding 3% Notes
due 2008.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 2003, UNLESS EXTENDED.
TERMS OF THE EXCHANGE OFFER
- We will exchange all old notes that are validly tendered and not
withdrawn prior to the expiration of the exchange offer.
- You are required to make the representations described on page 18 to us.
- You may withdraw tendered old notes at any time prior to the expiration
of the exchange offer.
- The terms of the exchange notes are identical in all material respects
(including principal amount, interest rate, maturity and redemption
rights) to the old notes for which they may be exchanged, except that the
exchange notes generally will not be subject to transfer restrictions or
be entitled to registration rights, and the exchange notes will not have
the right to earn additional interest under circumstances relating to our
registration obligations.
- We will not receive any cash proceeds from the exchange offer.
- There is no existing market for the exchange notes to be issued, and we
do not intend to apply for their listing or quotation on any securities
exchange or market.
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF FACTORS THAT
YOU SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2003.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-4 under the Securities Act of 1933 (the
"Securities Act") relating to the exchange offer that incorporates important
business and financial information about us that is not included in or delivered
with this prospectus. This information is available from us without charge to
holders of the old notes as specified below. If we have made references in this
prospectus to any contracts, agreements or other documents and also filed any of
those contracts, agreements or other documents as exhibits to the registration
statement, you should read the relevant exhibit for a more complete
understanding of the document or the matter involved.
You may obtain copies of this information and the documents incorporated by
reference in this prospectus at no charge by writing or telephoning us at the
following address or telephone number: Brown-Forman Corporation, 850 Dixie
Highway, Louisville, Kentucky 40210 USA, Attention: Lawson Whiting, Assistant
Vice President and Director of Investor Relations, telephone number (502)
774-7074.
TO OBTAIN TIMELY DELIVERY OF ANY OF OUR FILINGS, AGREEMENTS OR OTHER
DOCUMENTS, YOU MUST MAKE YOUR REQUEST TO US NO LATER THAN , 2003. IN
THE EVENT THAT WE EXTEND THE EXCHANGE OFFER, YOU MUST SUBMIT YOUR REQUEST AT
LEAST FIVE BUSINESS DAYS BEFORE THE EXPIRATION DATE OF THE EXCHANGE OFFER, AS
EXTENDED. WE MAY EXTEND THE EXCHANGE OFFER IN OUR SOLE DISCRETION. SEE "THE
EXCHANGE OFFER" FOR MORE DETAILED INFORMATION.
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 additional, different, or inconsistent information. If anyone provides you
with additional, different, or inconsistent information, you should not rely on
it. You should assume that the information contained or incorporated by
reference in this prospectus is accurate only as of the date on the front cover
of this prospectus. Our business, financial condition, results of operations,
and prospects may have changed since that date.
TABLE OF CONTENTS
Prospectus Summary.......................................... 1
Risk Factors................................................ 10
Forward-Looking Statements.................................. 12
Exchange Offer.............................................. 13
Use of Proceeds............................................. 22
Capitalization.............................................. 23
Description of Certain Indebtedness......................... 24
Description of the Exchange Notes........................... 26
Registration Rights......................................... 38
Certain U.S. Federal Income Tax Considerations.............. 41
Plan of Distribution........................................ 43
Legal Matters............................................... 44
Experts..................................................... 44
Certain Documents Incorporated by Reference................. 44
Available Information....................................... 45
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As used in this prospectus the terms "Brown-Forman," "the Company," "we,"
"our," and "us" refer to Brown-Forman Corporation and its subsidiaries as a
combined entity, except where it is clear that the terms mean only Brown-Forman
Corporation. For purposes of the sections entitled "Description of the Exchange
Notes" and "Description of Certain Indebtedness," whenever we refer to
"Brown-Forman" or "us" or use the terms "we" or "our," we are referring to
Brown-Forman Corporation and not any of our subsidiaries. References to "$" and
"dollars" are to U.S. dollars.
Certain market data contained or incorporated by reference in this
prospectus are based on independent industry publications and reports by market
research firms. Although we believe these sources are reliable, we have not
independently verified the information and cannot guarantee its accuracy and
completeness. Some data are also based on our good faith estimates, which are
derived from our review of internal surveys, as well as the independent sources
referred to above.
i
PROSPECTUS SUMMARY
The following summary highlights selected information contained or
incorporated by reference in this prospectus and does not contain all the
information that may be important to you. You should carefully read this entire
prospectus, including the financial data and related notes and the documents
incorporated by reference in this prospectus, before making a decision to
exchange your old notes for exchange notes.
BROWN-FORMAN CORPORATION
Brown-Forman is one of the leading global spirits companies, producing and
marketing premium branded spirits and wines that are sold in more than 135
countries. Our portfolio of strong premium spirits brands includes Jack
Daniel's(R), Southern Comfort(R), Canadian Mist(R) and Finlandia Vodka(R), the
latter of which we own an 80% stake; our major wine brands include Fetzer(R) and
Bolla(R). We also market certain premium spirit and wine brands that we do not
own such as Korbel(R)(1) California Champagne, Glenmorangie(R) Single Malt
Scotch, and Appleton(R) Rums under sales and distribution agreements. In
addition, we manufacture and market consumer durables under some of the most
well-recognized fine china, crystal, flatware and luggage and leather goods
brands in the United States. The Company was founded in 1870 by George Garvin
Brown and descendents of the Brown family remain active in the Company to this
day including our current Chairman and CEO, Owsley Brown II, the great-grandson
of the founder.
For the fiscal year ended April 30, 2002, we generated net sales of $2,224
million and net income of $228 million. For the nine-month period ended January
31, 2003, we generated net sales of $1,807 million and net income of $187
million. The Company operates in two business segments: Wine and Spirits, which
contributed approximately 90% of our operating income for the nine-month period
ended January 31, 2003, and Consumer Durables, which generated the remaining
10%.
WINE AND SPIRITS
Through our ownership of leading premium spirits brands, Brown-Forman is
one of the largest global spirits companies in the world. Through its first 85
years, Brown-Forman was primarily a Bourbon company, marketing brands such as
Early Times(R) and Old Forester(R). Starting in the mid-1950s, the Company began
a series of acquisitions, including the purchase of Jack Daniel's(R) Tennessee
Whiskey in 1956, and the subsequent acquisitions of Canadian Mist(R) Canadian
whisky, Southern Comfort(R) liqueur, a minority equity position in the company
that owns Glenmorangie Single Malt Scotch, an 80% investment in Finlandia(R)
Vodka Worldwide and Tuaca(R) liqueur. Beginning in the 1990s, we also acquired
premium wine companies including Fetzer(R) Vineyards California wines, Bolla(R)
Italian wines and California's Sonoma-Cutrer(R) Vineyards. In addition to the
brands that we own, we also market Korbel California Champagnes, Appleton(R)
Estate Jamaican rum, Amarula(R) cream liqueur from South Africa and Michel
Picard(R) French wines.
Our primary spirits brand is Jack Daniel's, which is the fifth-largest
premium spirits brand and the largest selling American whiskey brand in the
world according to volume statistics recently published by a leading trade
publication. We have been able to grow the Jack Daniel's brand and increase its
pricing through a careful and consistent program of advertising and promotional
support. Other leading brands for Brown-Forman include Southern Comfort, the
third-largest selling liqueur in the United States, and Canadian Mist, the
second-largest selling Canadian whisky worldwide, according to the recently
published volume statistics referenced above. Our largest wine brands are
Fetzer(R) Vineyards and Bolla, two of the leading premium wine brands in the
United States generally selling in the $7-10 per bottle price range according to
information published by a leading consumer market research firm. In addition,
we have been the exclusive sales and marketing agent in the United States since
1965 for Korbel California Champagnes, the largest selling premium champagne in
the retail channel in the United States according to information published by
the same consumer market research firm.
In August 2002, we initiated a new strategic plan in our Spirits and Wine
segment designed to enhance further our focus on brand-building activities in
the Company's beverage business. Our new strategic direction
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(1) Korbel, Glenmorangie, Appleton, Amarula and Michel Picard are
trademarks registered by their respective owners.
1
focuses on four strategies: building strong consumer franchises; winning at the
point of purchase; improving resource allocation; and improving our
brand-building culture. We have a disciplined approach to brand-building
supported by advertising and promotional support which we believe should result
in sustained, profitable growth for our brands over the long term. Our sales and
marketing teams are focused on growing our portfolio in both the United States
as well as in many international markets. With a particular emphasis on growing
Jack Daniel's and Southern Comfort, we believe that our wine and spirits
business is well-positioned to continue to grow globally.
In the United States, we sell spirits and wines either through wholesale
distributors or directly to state governments in those states that control
alcohol sales. The Alcohol and Tobacco Tax and Trade Bureau of the United States
Treasury Department regulates the wine and spirits industry with respect to
production, blending, bottling, sales, advertising and transportation of
industry products. Also, each state regulates advertising, promotion,
transportation, sale, and distribution of such products. Outside the United
States, we typically distribute our products by selecting the best local
distributor for our brands in each specific market.
CONSUMER DURABLES
Our Consumer Durables business consists of a portfolio of premium consumer
brands led by Lenox(R), Gorham(R) and Hartmann(R) that hold significant
positions in their industries. We believe we are the largest domestic
manufacturer and marketer of fine china dinnerware and the only significant
domestic manufacturer of fine quality china giftware. We sell fine china
dinnerware, crystal stemware and giftware, stainless steel flatware, and
silver-plated and metal giftware under both the Lenox and Gorham brands.
Dansk(R) is our contemporary tabletop, houseware and giftware brand. We sell
premium casual dinnerware and fine china giftware under the Lenox trademark, and
sterling silver flatware and sterling silver giftware under the Gorham and Kirk
Stieff(R) trademarks. Hartmann is our luggage, business case, and personal
leather accessories brand. In addition, in the direct response channel, we sell
collectible and home decor products in the United States under the Lenox brand
and outside the United States primarily under the Brooks & Bentley(R) brand.
We market our products domestically through department, specialty, jewelry
and Company-owned stores. We also sell our products domestically through the
institutional, incentive, premium, business gift and military exchange
distribution channels, and internationally through authorized retailers, duty
free stores and distributors. We sell collectible and home decor products both
domestically and in the United Kingdom through the direct response channel,
including mail-order, catalogs and the Internet. In the wholesale channel,
Company-employed sales representatives and, where appropriate, independent
commissioned sales representatives and independent distributors sell our
consumer durables products.
In order to improve the strategic focus and profitability of our consumer
durables business, we embarked on a series of business improvement initiatives
in August 2001. The initiatives included closing three manufacturing plants,
reducing the workforce in our consumer durables segment by approximately 600
employees and writing down the value of impaired equipment. We are replacing the
output of plants we closed by shifting a portion of our production to two of our
other facilities and by outsourcing the remainder. In connection with these
initiatives we incurred costs of $17 million and expect to realize the full
benefits from these initiatives beginning in fiscal 2004.
CORPORATE INFORMATION
The Company was incorporated under the laws of the State of Delaware in
1933, successor to a business founded in 1870 as a partnership and subsequently
incorporated under the laws of the Commonwealth of Kentucky in 1901. Our
principal executive offices are located at 850 Dixie Highway, Louisville,
Kentucky 40210 (mailing address: P.O. Box 1080, Louisville, Kentucky
40201-1080), and our telephone number is (502) 585-1100. Our website address is
www.brown-forman.com. Information included or referred to on our website is not
part of this prospectus.
Additional information about us, including our audited financial statements
and a more detailed description of our business, is contained in the documents
incorporated by reference in this prospectus. See "Certain Documents
Incorporated by Reference."
2
SUMMARY TERMS OF THE EXCHANGE OFFER
On March 13, 2003, we completed the private offering of $250 million
aggregate principal amount of 2 1/8% Notes due 2006 and $350 million aggregate
principal amount of 3% Notes due 2008, which we refer to in this prospectus as
the "old notes." We entered into a registration rights agreement with the
initial purchasers of the old notes, in which we agreed to deliver to you this
prospectus and to use our reasonable best efforts to complete an exchange offer
within 180 days after the date of original issuance of the old notes. Below is a
summary of the exchange offer.
The Exchange Offer............ We are offering to exchange:
- up to $250 million aggregate principal amount
of our 2 1/8% Notes due 2006 for an equal
principal amount of old 2 1/8% Notes due
2006, in integral multiples of $1,000, and
- up to $350 million aggregate principal amount
of our 3% Notes due 2008 for an equal
principal amount of old 3% Notes due 2008, in
integral multiples of $1,000.
Expiration of the Exchange
Offer; Withdrawal of Tender... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 2003, or a
later date and time to which we may extend it.
We do not currently intend to extend the
expiration of the exchange offer. You may
withdraw your tender of old notes in the
exchange offer at any time before the
expiration of the exchange offer. Any old notes
not accepted for exchange for any reason will
be returned without expense to you promptly
after the expiration or termination of the
exchange offer.
Conditions to the Exchange
Offer......................... The exchange offer is not conditioned upon any
minimum aggregate principal amount of old notes
being tendered for exchange. The exchange offer
is subject to customary conditions, which we
may waive. Please read "The Exchange
Offer -- Conditions" for more information
regarding the conditions to the exchange offer.
Procedures for Tendering
Notes......................... To tender old notes held in book-entry form
through the Depository Trust Company ("DTC"),
you must transfer your old notes into the
exchange agent's account in accordance with
DTC's Automated Tender Offer Program, or ATOP,
system. In lieu of delivering a letter of
transmittal to the exchange agent, a
computer-generated message, in which the holder
of the old notes acknowledges and agrees to be
bound by the terms of the letter of
transmittal, must be transmitted by DTC on
behalf of a holder and received by the exchange
agent before 5:00 p.m., New York City time, on
the expiration date. In all other cases, a
letter of transmittal must be manually executed
and received by the exchange agent before 5:00
p.m., New York City time, on the expiration
date.
By signing, or agreeing to be bound by, the
letter of transmittal, you will represent to us
that, among other things:
- any exchange notes to be received by you will
be acquired in the ordinary course of your
business;
- you are not engaged in, and do not intend to
engage in, the distribution of the exchange
notes, and you have no arrangement or
understanding with any person to participate
in the distribution of the exchange notes;
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- you are not our "affiliate" (as defined in
Rule 405 under the Securities Act);
- if you are a broker-dealer, you will receive
exchange notes for your own account in
exchange for old notes that were acquired as
a result of market-making activities or other
trading activities and you acknowledge that
you will deliver a prospectus in connection
with any resale of these exchange notes;
- if you are a broker-dealer, you did not
purchase the old notes to be exchanged for
the exchange notes from us in the initial
offering of the old notes; and
- you are not acting on behalf of any person
who could not truthfully and completely make
the above representations.
Special Procedures for
Beneficial Owners............. If you are a beneficial owner whose old notes
are registered in the name of a broker, dealer,
commercial bank, trust company or other
nominee, and you want to tender old notes in
the exchange offer, you should contact the
registered owner promptly and instruct the
registered holder to tender on your behalf. If
you wish to tender on your own behalf, you
must, before completing and executing the
letter of transmittal and delivering your old
notes, either make appropriate arrangements to
register ownership of the old notes in your
name or obtain a properly completed bond power
from the registered holder.
Guaranteed Delivery
Procedures.................... If you wish to tender your old notes, and time
will not permit your required documents to
reach the exchange agent by the expiration
date, or the procedure for book-entry transfer
cannot be completed on time, you may tender
your old notes under the procedures described
in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Effect on Holders of
Outstanding Notes............. As a result of making this exchange offer, and
upon acceptance for exchange of all validly
tendered old notes, we will have fulfilled some
of our obligations under the registration
rights agreement, and, accordingly, there will
be no increase in the interest rate on the old
notes under the registration rights agreement
if the old notes were eligible for exchange,
but not exchanged, in the exchange offer. If
you are a holder of old notes and you do not
tender your old notes in the exchange offer,
you will continue to hold your old notes and
will be entitled to the rights and subject to
the limitations applicable to the old notes in
the indenture.
Any trading market for the old notes could be
adversely affected if some but not all of the
old notes are tendered and accepted in the
exchange offer.
Consequences of Failure to
Exchange...................... All untendered old notes will remain subject to
the restrictions on transfer provided for in
the old notes and in the indenture. Generally,
the old notes that are not exchanged for
exchange notes in the exchange offer will
remain restricted securities, and may not be
offered or sold, unless registered under the
Securities Act, except
4
pursuant to an exemption from, or in a
transaction not subject to, the Securities Act
and applicable state securities laws.
Certain U.S. Federal Income
Tax Considerations............ The exchange of old notes for exchange notes in
the exchange offer should not be a taxable
event for U.S. federal income tax purposes. See
"Certain U.S. Federal Income Tax
Considerations" for a more detailed description
of the tax consequences of the exchange.
Resale........................ Under existing interpretations of the
Securities Act by the staff of the SEC
contained in several no-action letters to third
parties, and subject to the immediately
following sentence, we believe that the
exchange notes will generally be freely
transferable by holders after the exchange
offer without further compliance with the
registration and prospectus delivery
requirements of the Securities Act (subject to
certain representations required to be made by
each holder of old notes, as set forth under
"Exchange Offer -- Procedures for Tendering").
However, any holder of old notes who:
- is one of our "affiliates" (as defined in
Rule 405 under the Securities Act);
- does not acquire the exchange notes in the
ordinary course of business;
- intends to distribute the exchange notes as
part of the exchange offer; or
- is a broker-dealer who purchased old notes
from us in the initial offering of the old
notes for resale pursuant to Rule 144A or any
other available exemption under the
Securities Act,
will not be able to rely on the interpretations
of the staff of the SEC, will not be permitted
to tender old notes in the exchange offer and,
in the absence of any exemption, must comply
with the registration and prospectus delivery
requirements of the Securities Act in
connection with any resale of the exchange
notes.
Each broker-dealer that receives exchange notes
for its own account under the exchange offer in
exchange for old notes that were acquired by
the broker-dealer as a result of market-making
or other trading activity must acknowledge that
it will deliver a prospectus in connection with
any resale of the exchange notes. See "Plan of
Distribution."
Use of Proceeds............... We will not receive any cash proceeds from the
issuance of the exchange notes pursuant to the
exchange offer.
Exchange Agent................ National City Bank is the exchange agent for
the exchange offer. The address and telephone
number of the exchange agent are set forth in
"Exchange Offer -- Exchange Agent."
5
SUMMARY OF TERMS OF EXCHANGE NOTES
The summary below describes the principal terms of the exchange notes.
Certain of the terms and conditions described below are subject to important
limitations and exceptions. The "Description of the Exchange Notes" section of
this prospectus contains a more detailed description of the terms and conditions
of the exchange notes.
The exchange notes will be identical in all material respects to the old
notes for which they have been exchanged, except:
- the offer and sale of the exchange notes will have been registered under
the Securities Act, and thus the exchange notes generally will not be
subject to the restrictions on transfer applicable to the old notes or
bear restrictive legends;
- the exchange notes will not be entitled to registration rights; and
- the exchange notes will not have the right to earn additional interest
under circumstances relating to our registration obligations.
Issuer........................ Brown-Forman Corporation
Securities Offered............ $250 million aggregate principal amount of
2 1/8% Notes due 2006, which have been
registered under the Securities Act. We refer
to these notes as the "2006 exchange notes."
$350 million aggregate principal amount of 3%
Notes due 2008, which have been registered
under the Securities Act. We refer to these
notes as the "2008 exchange notes."
Maturity...................... March 15, 2006 for the 2006 exchange notes.
March 15, 2008 for the 2008 exchange notes.
Interest Payment Dates........ March 15 and September 15 of each year,
beginning on September 15, 2003.
Ranking....................... The exchange notes will be unsecured,
unsubordinated debt of ours and rank equally
with the old notes and all of our other
existing and future unsecured, unsubordinated
debt. As of January 31, 2003, after giving
effect to the offering of the old notes, the
application of a portion of the net proceeds
form the offering of the old notes to fund our
recently completed issuer self tender offer and
the remainder to reduce debt then-outstanding
under our commercial paper program, we had
approximately $638.3 million of senior
unsecured debt. Of that amount, approximately
$10.2 million was indebtedness of our
subsidiaries. The liabilities of our
subsidiaries will be effectively senior to the
exchange notes. The indenture does not restrict
the amount of indebtedness that we or our
subsidiaries may incur.
Optional Redemption........... We may redeem all of the 2008 exchange notes at
any time, or a portion of the 2008 exchange
notes from time to time, at a redemption price
as described in "Description of the Exchange
Notes -- Optional Redemption."
The 2006 exchange notes will not be redeemable
prior to maturity.
Certain Covenants............. The indenture governing the 2006 exchange notes
and the 2008 exchange notes contains covenants
that, among other things, limit our ability and
the ability of our subsidiaries to:
- incur, issue, or create liens on certain of
our assets to secure other indebtedness;
6
- engage in sale and leaseback transactions;
and
- consolidate with or merge into, or transfer
or lease all or substantially all of our
assets to, any other party.
These covenants are subject to important
exceptions and qualifications that are
described under "Description of the Exchange
Notes -- Certain Covenants."
Form and Denomination......... The 2006 exchange notes and the 2008 exchange
notes will be issued in denominations of $1,000
and any integral multiple of $1,000.
The 2006 exchange notes and the 2008 exchange
notes will be represented by one or more
permanent global certificates in fully
registered, book-entry form without interest
coupons, will be deposited with the trustee as
custodian for DTC, and will be registered in
the name of Cede & Co. or another nominee
designated by DTC, except in limited
circumstances.
Lack of Public Market......... There is no existing trading market for either
the 2006 exchange notes or the 2008 exchange
notes, and there can be no assurance regarding
any future development of a trading market for
such exchange notes or the ability of holders
of such exchange notes to sell their exchange
notes at all or the price at which such holders
may be able to sell their exchange notes. We do
not intend to apply for listing or quotation of
either the 2006 exchange notes or the 2008
exchange notes on any securities exchange or
market.
Risk Factors.................. See "Risk Factors" for a discussion of some of
the key factors you should carefully consider
before deciding to exchange your old notes for
exchange notes.
7
SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
We derived the following summary consolidated financial information for
each of the three fiscal years in the period ended April 30, 2002 from
Brown-Forman's audited financial statements contained in our annual report on
Form 10-K for the fiscal year ended April 30, 2002. We derived the following
summary information for the fiscal years ended April 30, 1998 and 1999 from
Brown-Forman's audited financial statements. We derived the following summary
consolidated financial information for the nine months ended January 31, 2002
and 2003 from Brown-Forman's unaudited condensed consolidated financial
statements contained in our quarterly report on Form 10-Q for the quarter ended
January 31, 2003. Certain prior year amounts have been reclassified to conform
with the current year presentation, primarily related to shipping and handling
charges for one of our divisions. Our summary selected consolidated financial
information set forth below should be read in conjunction with our audited
consolidated financial statements and other financial information contained in
our annual report on Form 10-K for the fiscal year ended April 30, 2002 and with
our unaudited condensed consolidated financial statements and other financial
information contained in our quarterly report on Form 10-Q for the quarter ended
January 31, 2003.
NINE MONTHS
ENDED
TWELVE MONTHS ENDED APRIL 30, JANUARY 31,
------------------------------------------ ---------------
1998 1999 2000 2001 2002 2002 2003
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA AND FINANCIAL RATIOS)
INCOME STATEMENT DATA:
Net sales.................................. $1,916 $2,021 $2,147 $2,195 $2,224 $1,697 $1,807
Cost of sales.............................. 959 1,001 1,042 1,042 1,091 838 912
------ ------ ------ ------ ------ ------ ------
Gross profit............................... 957 1,020 1,105 1,153 1,133 859 895
Operating expenses......................... 650 698 757 779 780 585 608
------ ------ ------ ------ ------ ------ ------
Operating income........................... 307 322 348 374 353 274 287
Interest expense, net...................... 11 4 5 8 5 4 2
Taxes on income............................ 111 116 125 133 120 93 98
------ ------ ------ ------ ------ ------ ------
Net income................................. $ 185 $ 202 $ 218 $ 233 $ 228 $ 177 $ 187
====== ====== ====== ====== ====== ====== ======
Earnings per share (basic and diluted)..... $ 2.67 $ 2.93 $ 3.18 $ 3.40 $ 3.33 $ 2.58 $ 2.73
Weighted number of shares
basic.................................... 68.933 68.603 68.510 68.476 68.339 68.341 68.400
diluted.................................. 68.987 68.690 68.576 68.568 68.484 68.469 68.584
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................... $1,494 $1,735 $1,802 $1,939 $2,016 $1,940 $2,141
Long-term debt............................. $ 50 $ 53 $ 41 $ 40 $ 40 $ 40 $ 40
Stockholders' equity....................... $ 817 $ 917 $1,048 $1,187 $1,311 $1,260 $1,409
Cash dividends declared per common share... $ 1.10 $ 1.15 $ 1.21 $ 1.28 $ 1.36 $ 1.36 $ 1.45
OTHER KEY MEASURES
Ratio of earnings to fixed charges(1)...... 13.7x 16.5x 15.0x 14.8x 18.9x 18.5x 23.6x
Pro forma ratio of earnings to fixed
charges:
Assuming refinancing of existing
debt(2)................................ 18.9x 23.2x
Assuming issuance of additional
debt(3)................................ 10.2x 11.7x
Cash flows from operations................. $ 220 $ 213 $ 241 $ 231 $ 250 $ 220 $ 178
Gross margin............................... 49.9% 50.5% 51.4% 52.6% 50.9% 50.7% 49.5%
Operating margin........................... 16.0% 15.9% 16.2% 17.0% 15.9% 16.1% 15.9%
Effective tax rate......................... 37.6% 36.5% 36.5% 36.3% 34.5% 34.5% 34.3%
Return on average invested capital(4)...... 20.4% 19.8% 18.4% 17.9% 15.9%
Return on average common stockholders'
equity(5)................................ 24.3% 23.6% 22.4% 21.0% 18.5%
Total debt to total capital................ 16.7% 24.5% 20.3% 17.1% 13.7% 13.8% 12.2%
Total cash dividends paid to net income.... 41.2% 39.3% 38.1% 37.7% 40.8% 39.1% 39.3%
8
---------------
(1) For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of income before income taxes, excluding undistributed
minority interest in income of affiliates and excluding fixed charges. Fixed
charges consist of interest charges, whether expensed or capitalized, and
that portion of rental expense we believe to be representative of interest.
(2) Pro forma earnings to fixed charges ratio giving effect to the repayment of
$25.6 million of our existing commercial paper with a portion of the
proceeds of the offering of the old notes as if this refinancing had
occurred on May 1, 2001 for the year ended April 30, 2002, and on May 1,
2002 for the nine months ended January 31, 2003.
(3) Pro forma earnings to fixed charges ratio giving effect to the refinancing
of $25.6 million of our existing commercial paper with a portion of the
proceeds of the offering of the old notes and the issuance of an additional
$572.5 million of debt from the offering of the old notes as if the offering
had occurred on May 1, 2001 for the year ended April 30, 2002, and on May 1,
2002 for the nine months ended January 31, 2003.
(4) We define return on average invested capital as the sum of net income
(excluding extraordinary items) and after-tax interest expense, divided by
average invested capital. Invested capital is the sum of all
interest-bearing debt and preferred and common equity.
(5) We define return on average common stockholders' equity as income applicable
to common stock divided by average common stockholders' equity.
---------------------
RECENT DEVELOPMENTS
COMPLETION OF SHARE REPURCHASE
On February 3, 2003, we announced an offer to repurchase up to 1.5 million
shares of our Class A common stock and 6.8 million shares of our Class B common
stock at a price between $63.00 and $73.00 per share. The offer was in the form
of a "Dutch Auction" tender offer where the final price (for each class of
common stock) is determined based upon the number of shares, and the respective
prices, tendered. The tender offer expired on March 4, 2003. Based on the final
count by the depositary for the tender offer, the Company accepted for purchase
at a price of $73.00 per share all of the 470,673 shares of Class A common stock
properly tendered in accordance with the terms of the tender offer and, for a
price of $70.50 per share, 7,590,607 shares of Class B common stock properly
tendered at $70.50 or less per share.
We financed this tender offer with a portion of the proceeds from the
private placement of $600 million of the old notes.
PURCHASE OF REMAINING STAKE IN TUACA LIQUEUR
On February 11, 2003, we acquired for $65.3 million an additional 55%
interest in Distillerie Tuoni e Canepa, the Italian owner and producer of Tuaca
liqueur, increasing our ownership to 100%. We have been distributing Tuaca in
the United States since May 1999 and acquired our initial 45% stake in Tuoni e
Canepa in December 2000.
9
RISK FACTORS
You should carefully consider the following factors in addition to the
other information set forth in this prospectus and the documents incorporated by
reference in this prospectus before deciding to exchange your old notes for
exchange notes.
RISKS RELATING TO OUR BUSINESS
General
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY UNFAVORABLE ECONOMIC CONDITIONS
IN THE UNITED STATES AND ABROAD.
Our business is subject to changes in global economic conditions. The bulk
of our business is in the United States and our business prospects generally
depend heavily on the state of the U.S. economy. If the U.S. economy does not
rebound, our earnings will be weaker. Earnings could be adversely affected by
terrorist attacks, such as those of September 11, 2001 and related subsequent
events, including the U.S. response, other hostile acts, retaliation, and
threats of any of these. Earnings could also be hurt by the United States'
current war with Iraq or if the United States went to war with Korea or another
country deemed to be harboring terrorists or otherwise a threat to U.S.
interests.
Profits from our international beverage business may be adversely affected
if the U.S. dollar strengthens against other currencies, or if economic
conditions deteriorate or there is an increase in anti-American sentiment in the
principal countries to which we export our beverage products, including the
United Kingdom, Germany, Italy, Spain, Australia, France and Japan. The
long-term outlook for our beverage business anticipates continued success of
Jack Daniel's Tennessee Whiskey, Southern Comfort, and our other core wine and
spirits brands. This assumption is based in part on favorable demographic trends
in the United States and many international markets for the sale of wine and
spirits. Current expectations for our global beverage business may not be met if
these demographic trends do not translate into corresponding sales increases.
DEMAND FOR OUR PRODUCTS MAY BE ADVERSELY AFFECTED BY CHANGES IN CONSUMER
PREFERENCES AND TASTES.
We operate in highly competitive markets. Our products include many of the
world's best known brand names in wines and spirits, fine china, crystal
stemware and luggage. Maintaining our competitive position depends on our
continued ability to offer products that have a strong appeal to consumers.
Consumer preferences may shift due to a variety of factors, including changes in
demographic and social trends, changes in dining, recreational or leisure
activity patterns and a downturn in economic conditions.
Wine and Spirits
NATIONAL AND LOCAL GOVERNMENTS MAY ADOPT REGULATIONS THAT COULD INCREASE
OUR COSTS OR OUR LIABILITIES OR COULD LIMIT OUR WINES AND SPIRITS BUSINESS
ACTIVITIES.
Our operations are subject to extensive regulatory requirements regarding
advertising, marketing, labeling, distribution and production. Legal or
regulatory measures against beverage alcohol could adversely affect our
business. In particular, governmental bodies in countries where we operate may
impose or increase limitations on advertising and promotional activities, new
labeling or production requirements, restrictions on retail outlets in which our
products may be sold, or other restrictions on marketing and distribution.
Regulatory authorities under whose laws we operate may also have enforcement
powers that can subject us to actions such as product recall, seizure of
products or other sanctions, which could have an adverse effect on our sales or
damage our reputation.
In addition, the wine and spirits business is highly tax sensitive.
Increases in state or federal excise taxes in the U.S. would depress our
domestic wine and spirits business, both through reducing overall consumption
and by encouraging consumers to switch to lower-taxed categories of beverage
alcohol. No legislation to increase U.S. federal excise taxes on distilled
spirits is currently pending, but future increases are possible. We are also
cognizant that the current fiscal crisis faced by many state governments may
lead to excise tax increases in some key markets. Tax rates also affect beverage
alcohol markets outside the United States, but the impact of those changes in
any one country is less likely to be significant to our overall business.
Nevertheless, the cumulative effect of such tax increases over time would hurt
sales.
10
IF THE SOCIAL ACCEPTABILITY OF OUR PRODUCTS DECLINES, OR IF LITIGATION IS
DIRECTED AT THE BEVERAGE ALCOHOL INDUSTRY, OUR SALES VOLUME COULD DECREASE AND
OUR WINE AND SPIRITS BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED.
Our ability to market and sell our alcohol beverage products depends
heavily on both governmental policy towards alcohol beverage products and the
attitude of society in general toward drinking them. In recent years, there has
been increased social and political attention directed at the beverage alcohol
industry. The recent attention has focused largely over public health concerns
related to alcohol abuse, including drunk driving, underage drinking and health
consequences from the misuse of beverage alcohol. If the social acceptability of
beverage alcohol were to decline significantly, sales of our products could
materially decrease. Our sales would also suffer if governments sought to ban or
restrict advertising or promotional activities, to limit hours or places of
sale, or took other actions designed to discourage alcohol consumption.
Similarly, recent litigation against the tobacco industry (and, to a lesser
extent, the gun and fast food industries) could be a precedent for litigation
against the alcohol beverage industry. If our industry were to become involved
in litigation of the type brought against other industries, such as tobacco, our
wine and spirits business could be materially adversely affected.
OUR WINE BUSINESS MAY BE ADVERSELY AFFECTED BY PRODUCTION COSTS.
Our California-based wine operations have entered into long term contracts
with various growers and wineries to supply portions of our future grape
requirements. Most of the contracts call for prices to be determined based on
market conditions, within a certain range, and most of the contracts also have
minimum tonnage requirements. Although these contracts provide some protection
in times of rising grape prices, the contracts result in above-market costs
during times of declining prices. In today's environment of very low grape
prices, Fetzer is paying above-market costs for its raw materials, resulting in
declining gross margins this fiscal year. There can be no assurances as to the
future prevailing market prices for grapes or our ability, relative to our
competitors, to take advantage of oversupply conditions.
ANY FUTURE CONSOLIDATION AMONG SPIRITS PRODUCERS COULD HINDER THE
DISTRIBUTION OF OUR SPIRITS PRODUCTS INTERNATIONALLY.
We have not made major investments in overseas distribution networks, but
rather we mostly use other spirits producers to distribute and market our
products outside the United States. While this approach has not in the past
negatively affected our wine and spirits business, further consolidation among
spirits producers could in the future hinder the distribution of our wine and
spirits products abroad as a result of reduced attention and resource allocation
to our brands by spirits producers on whom we rely for distribution, due to our
brands representing a smaller portion of their business and/or a changing
competitive environment.
Consumer Durables
OUR CONSUMER DURABLES BUSINESS IS HEAVILY DEPENDENT ON DEPARTMENT STORE
SALES.
Our consumer durables segment depends upon a strong economy more than our
wine and spirits segment. Department stores are the most important sales channel
for fine china and dinnerware. If there is further deterioration in the
department store business, or more consolidation, it could hurt our sales.
Similarly, sales could be adversely affected if department stores devote less
space to fine china and dinnerware products. Hartmann Luggage's business has
suffered from the decline in travel since the events of September 11, 2001.
Future growth in that business depends partly on a stronger travel environment.
RISKS RELATING TO THE EXCHANGE OFFER
THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES.
The exchange notes will constitute new issues of securities with no
established trading market. If a trading market does not develop or is not
maintained, holders of exchange notes may find it difficult or impossible to
resell their exchange notes. If a trading market were to develop, the exchange
notes may trade at prices that are higher or lower than their principal amount
or purchase price, depending on many factors including prevailing interest
rates, our operating results and financial condition, and the market for similar
securities. Accordingly, there can be no assurance regarding any future
development of a trading market for
11
the exchange notes or the ability of holders of the exchange notes to sell their
exchange notes at all or the price at which such holders may be able to sell
their exchange notes.
IF YOU DO NOT EXCHANGE YOUR OLD NOTES, THEY MAY BE DIFFICULT TO RESELL.
If may be difficult for you to sell old notes that are not exchanged in the
exchange offer, since any old notes not exchanged will continue to be subject to
the restrictions on transfer described in the legend on the global security
representing the outstanding old notes. These restrictions on transfer exist
because we issued the old notes pursuant to an exemption from the registration
requirements of the Securities Act and applicable state securities laws.
Generally, the old notes that are not exchanged for exchange notes will remain
restricted securities. Accordingly, those old notes may not be offered or sold,
unless registered under the Securities Act and applicable state securities laws,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws.
To the extent any old notes are tendered and accepted in the exchange
offer, the trading market, if any, for the old notes that remain outstanding
after the exchange offer would be adversely affected due to a reduction in
market liquidity.
FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus and other materials
filed or to be filed by us with the SEC (as well as information included in oral
statements or other written statements made or to be made by us or our
representatives) contains or may contain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934 (the "Exchange Act"). These statements can be identified by
the fact that they do not relate strictly to historical or current facts and may
include the words "may," "could," "should," "would," "believe," "expect,"
"anticipate," "estimate," "intend," "plan," "project," "continue," "predict," or
other words or expressions of similar meaning. The forward-looking statements
include statements that reflect our management's beliefs, plans, objectives,
goals, expectations, anticipations, and intentions with respect to our financial
condition, results of operations, future performance, and business, including
statements relating to our business strategy and our current and future
development plans. We have based these forward-looking statements on our
management's current expectations about future events or results. Actual events
or results may differ materially.
The potential risks and uncertainties that could cause our actual financial
condition, results of operations, and future performance to differ materially
from those expressed or implied in this prospectus include but are not limited
to the matters discussed under the "Risk Factors" section of this prospectus and
the following:
- further deterioration of the U.S. economy,
- significant strengthening of the U.S. dollar against other currencies,
- deterioration in economic conditions in principal countries to which we
export beverage products, including changes in the levels of consumer
spending,
- a decline in discretionary consumer spending,
- further weakening of the pricing environment in the U.S. wine business,
- an increase in U.S. federal excise taxes or the aggregate effect of
excise tax increases in a number of states,
- alcohol advertising restrictions, limitations on hours or places of sale
or other measures adopted to restrict beverage sales (whether in the U.S.
or abroad),
- a decline in sales of consumer durables products to department stores, or
a reduction in retail space in department stores devoted to tableware,
giftware and/or luggage products,
- "tobacco style" mass litigation against the beverage alcohol industry,
- lower levels of consumer confidence potentially translating into
lessening demand for consumer durables, and
12
- increased costs of complying with environmental laws and regulations
(including at our facilities and at third party sites).
Other factors, unrelated to our specific business, could affect earnings,
including:
- the impact of the Iraq war, a future conflict in the Middle East or
Korea, or other outbreak of hostilities or new terrorist attacks and
related events,
- anti-American sentiment against American-made products in foreign markets
as a result of events in the Middle East, and
- a lack of investor confidence relating to perceived inadequacies in the
financial reporting systems of U.S. companies.
We urge you to review carefully this prospectus, particularly the "Risk
Factors" section, for more complete discussion of the risks of an investment in
the exchange notes.
From time to time, oral or written forward-looking statements are also
included in our reports on Forms 10-K, 10-Q, 8-K, proxy statements, press
releases, and other materials released to the public. Although we believe that
at the time made, the expectations reflected in all of these forward-looking
statements are and will be reasonable, any or all of the forward-looking
statements in this prospectus, our reports on Forms 10-K, 10-Q, and 8-K, proxy
statements, and any other public statements that are made by us may prove to be
incorrect. This may occur as a result of inaccurate assumptions or as a
consequence of known or unknown risks and uncertainties. Many factors discussed
in this prospectus, certain of which are beyond our control, will be important
in determining our future performance. Consequently, actual results may differ
materially from those that might be anticipated from forward-looking statements.
In light of these and other uncertainties, you should not regard the inclusion
of a forward-looking statement in this prospectus (including the documents
incorporated by reference) or other public communications that we might make as
a representation by us that our plans and objectives will be achieved, and you
should not place undue reliance on such forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise,
except as otherwise required by law. However, your attention is directed to any
further disclosures made on related subjects in our subsequent reports filed
with the SEC on Forms 10-K, 10-Q, and 8-K, and our proxy statement.
EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the issuance of the old notes on March 13, 2003, we
entered into a registration rights agreement which provides for the exchange
offer. A copy of the registration rights agreement is filed as an exhibit to the
registration statement of which this prospectus is a part. Under the
registration rights agreement we agreed to use our reasonable best efforts to
file and cause to become effective a registration statement with respect to an
offer to exchange the old notes for the exchange notes. We also agreed to use
our reasonable best efforts to cause the exchange offer to be consummated within
180 days following the original issuance of the old notes. We are making the
exchange offer to comply with our contractual obligations under the registration
rights agreement. Except under limited circumstances described under
"Registration Rights -- Shelf Registration," upon completion of the exchange
offer, our obligations with respect to the registration of the old notes will
terminate.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance of it would not be in compliance with the securities or
blue sky laws of that jurisdiction.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, which together constitute the exchange offer,
we will accept for exchange any old notes properly tendered and not withdrawn
before expiration of the exchange offer. The date of acceptance for exchange of
the old notes
13
and completion of the exchange offer, is the exchange date, which will be the
first business day following the expiration date unless we extend the date as
described in this document. We will issue $1,000 principal amount of 2006
exchange notes in exchange for each $1,000 principal amount of old 2006 notes
surrendered under the exchange offer and $1,000 principal amount of 2008
exchange notes in exchange for each $1,000 principal amount of old 2008 notes
surrendered under the exchange offer. The old notes may be tendered only in
integral multiples of $1,000. The exchange notes will be delivered on the
earliest practicable date following the exchange date.
Interest on the exchange notes will accrue from the last payment date on
which interest was paid on the old note surrendered in exchange therefor or, if
no interest has been paid on the old notes surrendered, from March 13, 2003.
Accordingly, holders of exchange notes on the relevant record date for the first
interest payment date following the consummation of the exchange offer will
receive interest accruing from the most recent date on which interest has been
paid or, if no interest has been paid, from March 13, 2003. Old notes accepted
for exchange will cease to accrue interest from and after the date of
consummation of the exchange offer. Holders of old notes whose old notes are
accepted for exchange will not receive any payment in respect of accrued
interest on such old notes otherwise payable on any interest payment date which
occurs on or after the consummation of the exchange offer.
The form and terms of the exchange notes will be identical in all material
respects to the form and terms of the old notes, except:
- the offer and sale of the exchange notes will have been registered under
the Securities Act, and thus the exchange notes generally will not be
subject to the restrictions on transfer applicable to the old notes or
bear restrictive legends;
- the exchange notes will not be entitled to registration rights under the
registration rights agreement; and
- the exchange notes will not have the right to earn additional interest
under circumstances relating to our registration obligations.
The exchange notes will evidence the same debt as the old notes. The
exchange notes will be issued under and entitled to the benefits of the same
indenture that authorized the issuance of the old notes. Consequently, (1) both
the old 2006 notes and the 2006 exchange notes will be treated as a single
series of debt securities under the indenture and (2) both the old 2008 notes
and the 2008 exchange notes will be treated as a single series of debt
securities under the indenture, except where the indenture treats all series as
a single class. For a description of the indenture, see "Description of Exchange
Notes."
The exchange offer is not conditioned upon any minimum aggregate principal
amount of old notes being tendered for exchange. As of the date of this
prospectus, $250 million aggregate principal amount of the old 2006 notes are
outstanding and $350 million aggregate principal amount of the old 2008 notes
are outstanding. This prospectus and the letter of transmittal are being sent to
all registered holders of old notes. There will be no fixed record date for
determining registered holders of old notes entitled to participate in the
exchange offer.
We intend to conduct the exchange offer in accordance with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations of the SEC. Old notes that are not exchanged in the exchange offer
will remain outstanding and continue to accrue interest and will be entitled to
the rights and benefits their holders have under the indenture.
We will be deemed to have accepted for exchange properly tendered old notes
when we have given oral or written notice of the acceptance to the exchange
agent. The exchange agent will act as agent for the holders of old notes who
surrender them in the exchange offer for the purposes of receiving the exchange
notes from us and delivering the exchange notes to their holders. The exchange
agent will make the exchange as promptly as practicable on or after the date of
acceptance for exchange of the old notes.
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. We
will pay all charges and expenses, other than applicable taxes described below,
in connection with
14
the exchange offer. You should read "-- Fees and Expenses" for more details
regarding fees and expenses incurred in the exchange offer.
EXPIRATION OF THE EXCHANGE OFFER; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time, on
, 2003. We can extend the exchange offer in our sole discretion, in
which case the term "expiration date" means the latest date and time to which we
extend the exchange offer. If we decide to extend the exchange offer period, we
will then delay acceptance of any old notes by giving notice of an extension as
described below. During any extension period, all old notes previously tendered
will remain subject to the exchange offer and may be accepted for exchange by
us. We will return any old notes not accepted for exchange to the tendering
holder after the expiration or termination of the exchange offer.
Our obligation to accept old notes for exchange in the exchange offer is
subject to the conditions described below under "-- Conditions." We may decide
to waive any of the conditions in our discretion. Furthermore, we expressly
reserve the right to amend or terminate the exchange offer, and not to accept
for exchange any old notes not previously accepted for exchange, upon the
occurrence of any of the conditions of the exchange offer specified below under
the same heading. By press release or other public announcement we will give
oral or written notice of any extension, amendment, non-acceptance or
termination as promptly as practicable. 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 will 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.
We reserve the right to amend the terms of the exchange offer in any
manner. If we amend the exchange offer in a manner that we determine constitutes
a material change, we will disclose the amendment by means of a prospectus
supplement. If we make such a material change less than five to ten business
days, depending on the significance of the amendment, before the expiration of
the exchange offer, we will extend the offer so that you have at least five to
ten business days to tender or withdraw. We will notify you of any extension of
the exchange offer by means of a press release or other public announcement no
later than 9:00 a.m., New York City time, on the first business day after the
previously scheduled expiration time.
CONDITIONS
Despite any other term of the exchange offer, or any extension of the
exchange offer, we will not be required to accept for exchange, or to exchange,
any old notes for any exchange notes and, as described below, may terminate the
exchange offer, or may waive any of the conditions to or amend the exchange
offer, if any of the following conditions has occurred or exists:
- any action or proceeding is instituted or threatened in any court or by
or before any governmental agency relating to the exchange offer that, in
our reasonable judgment, might materially impair our ability to proceed
with the exchange offer; or
- any law, statute, rule, or regulation, order, or SEC staff interpretation
is proposed, adopted, enacted, entered, or issued that, in our reasonable
judgment, might materially impair our ability to proceed with the
exchange offer.
These conditions are solely for our benefit and we may assert them
regardless of the circumstances that may give rise to them. If we determine in
our sole discretion that any of the foregoing events or conditions has occurred
or exists, we may, subject to applicable law, terminate the exchange offer,
whether or not any old notes have been accepted for exchange, or may waive any
such condition or otherwise amend the terms of the exchange offer in any
respect. See "-- Expiration of the Exchange Offer; Extensions; Amendments"
above. If we fail at any time to exercise any of the foregoing rights, this
failure will not constitute a waiver of that right. Each of these rights will be
deemed an ongoing right that we may assert at any time or at various times.
We will not accept for exchange any old notes tendered, and will not issue
exchange notes in exchange for any old notes, if at that time a stop order is
threatened or in effect with respect to the registration statement of which this
prospectus constitutes a part or the qualification of the indentures under the
Trust Indenture Act of 1939.
15
In addition, we will not be obligated to accept for exchange the old notes
of any holder that has not made to us:
- the representations described under "-- Procedures for Tendering" and
"Plan of Distribution"; and
- any other representations that may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available to
us an appropriate form for registration of the exchange notes under the
Securities Act.
PROCEDURES FOR TENDERING
We have forwarded to you, along with this prospectus, a letter of
transmittal relating to this exchange offer. A holder need not submit a letter
of transmittal if the holder tenders old notes in accordance with the procedures
mandated by DTC's Automated Tender Offer Program ("ATOP"). To tender old notes
without submitting a letter of transmittal, the electronic instructions sent to
DTC and transmitted to the exchange agent must contain your acknowledgment of
receipt of and your agreement to be bound by and to make all of the
representations contained in the letter of transmittal. In all other cases, a
letter of transmittal must be manually executed and delivered as described in
this prospectus.
Only a holder of record of old notes may tender old notes in the exchange
offer. To tender in the exchange offer, a holder must comply with all applicable
procedures of DTC and either:
- complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal; have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires; and deliver the
letter of transmittal or facsimile to the exchange agent prior to the
expiration date; or
- in lieu of delivering a letter of transmittal, instruct DTC to transmit
on behalf of the holder a computer-generated message to the exchange
agent in which the holder of the old notes acknowledges and agrees to be
bound by the terms of the letter of transmittal, which computer-generated
message must be received by the exchange agent prior to 5:00 p.m., New
York City time, on the expiration date.
In addition, either:
- the exchange agent must receive the old notes along with the letter of
transmittal; or
- with respect to the old notes, the exchange agent must receive, before
expiration of the exchange offer, timely confirmation of book-entry
transfer of old notes into the exchange agent's account at DTC, according
to the procedure for book-entry transfer described below; or
- the holder must comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under "-- Exchange Agent" before expiration of the
exchange offer. To receive confirmation of valid tender of old notes, a holder
should contact the exchange agent at the telephone number listed under
"-- Exchange Agent".
The tender by a holder that is not withdrawn before expiration of the
exchange offer will constitute an agreement between that holder and us in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal. Only a registered holder of old
notes may tender the old notes in the exchange offer. If a holder completing a
letter of transmittal tenders less than all of old notes held by this holder,
this tendering holder should fill in the applicable box of the letter
transmittal. The amount of old notes delivered to the exchange agent will be
deemed to have been tendered unless otherwise indicated.
If old notes, the letter of transmittal or any other required documents are
physically delivered to the exchange agent, the method of delivery is at the
holder's election and risk. Rather than mail these items, we recommend that
holders use an overnight or hand delivery service. In all cases, holders should
allow sufficient time to assure delivery to the exchange agent before expiration
of the exchange offer. Holders should not send the letter of transmittal or old
notes to us. Holders may request their respective brokers, dealers, commercial
banks, trust companies or other nominees to effect the above transactions for
them.
16
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct it to
tender on the owner's behalf. If the beneficial owner wishes to tender on its
own behalf, it must, prior to completing and executing the letter of transmittal
and delivering its old notes, either:
- make appropriate arrangements to register ownership of the old notes in
the owner's name; or
- obtain a properly completed bond power from the registered holder of old
notes.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
If the applicable letter of transmittal is signed by the record holder(s)
of the old notes tendered, the signature must correspond with the name(s)
written on the face of the old notes without alteration, enlargement or any
change whatsoever. If the applicable letter of transmittal is signed by a
participant in DTC, the signature must correspond with the name as it appears on
the security position listing as the holder of the old notes.
A signature on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible guarantor institution. Eligible guarantor institutions
include banks, brokers, dealers, municipal securities dealers, municipal
securities brokers, government securities dealers, government securities
brokers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. The signature need not
be guaranteed by an eligible guarantor institution if the old notes are
tendered:
- by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
- for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes, the old notes must be endorsed or
accompanied by a properly completed bond power. The bond power must be signed by
the registered holder as the registered holder's name appears on the old notes
and an eligible guarantor institution must guarantee the signature on the bond
power.
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, these
persons should so indicate when signing. Unless we waive this requirement, they
should also submit evidence satisfactory to us of their authority to deliver the
letter of transmittal.
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, acceptance and withdrawal of
tendered old notes. Our determination will be final and binding. We reserve the
absolute right to reject any old notes not properly tendered or any old notes
the acceptance of which would, in the opinion of our counsel, be unlawful. We
also reserve the right 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 the time that we determine. Although we intend to
notify holders of defects or irregularities with respect to tenders of old
notes, neither we, the exchange agent nor any other person will incur any
liability for failure to give such notification. Tenders of old notes will not
be deemed made until those defects or irregularities have been cured or waived.
Any old notes received by the exchange agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the exchange agent without cost to the tendering holder, unless
otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.
In all cases, we will issue exchange notes for old notes that we have
accepted for exchange under the exchange offer only after the exchange agent
timely receives:
- the old notes or a timely book-entry confirmation that the old notes have
been transferred into the exchange agent's account at DTC; and
17
- a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
Holders should receive copies of the applicable letter of transmittal with
the prospectus. A holder may obtain additional copies of the applicable letter
of transmittal for the old notes from the exchange agent at its offices listed
under "-- Exchange Agent". By signing the letter of transmittal, or causing DTC
to transmit an agent's message to the exchange agent, each tendering holder of
old notes will represent to us that, among other things:
- any exchange notes to be received by the holder will be acquired in the
ordinary course of its business;
- the holder is not engaged in, and does not intend to engage in, the
distribution of the exchange notes, and the holder has no arrangement or
understanding with any person to participate in the distribution of the
exchange notes;
- the holder is not our "affiliate" (as defined in Rule 405 under the
Securities Act);
- if the holder is a broker-dealer, that it will receive exchange notes for
its own account in exchange for old notes that were acquired as a result
of market-making activities or other trading activities and that it will
deliver a prospectus in connection with any resale of these exchange
notes;
- if the holder is a broker-dealer, that it did not purchase the old notes
to be exchanged for the exchange notes from us in the initial offering of
the old notes; and
- the holder is not acting on behalf of any person who could not truthfully
and completely make the foregoing representations.
DTC 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.
With respect to the old notes, the exchange agent and DTC have confirmed
that any financial institution that is a participant in DTC may utilize the DTC
Automated Tender Offer Program procedures to tender old notes.
With respect to the old notes, any participant in DTC may make book-entry
delivery of old notes by causing DTC to transfer the old notes into the exchange
agent's account in accordance with DTC's Automated Tender Offer Program
procedures for transfer.
However, the exchange for the old notes so tendered will only be made after
a book-entry confirmation of such book-entry transfer of old notes into the
exchange agent's account, and timely receipt by the exchange agent of an agent's
message and any other documents required by the letter of transmittal. The term
"agent's message" means a message, transmitted by DTC and received by the
exchange agent and forming part of a book-entry confirmation, which states that
DTC has received an express acknowledgment from a participant tendering old
notes that are the subject of the book-entry confirmation that the participant
has received and agrees to be bound by the terms of the letter of transmittal,
and that we may enforce that agreement against the participant.
GUARANTEED DELIVERY PROCEDURES
Holders wishing to tender their old notes but whose old notes are not
immediately available or who cannot deliver their old notes, the letter of
transmittal or any other required documents to the exchange agent or cannot
comply with the applicable procedures described above before expiration of the
exchange offer may tender if:
- the tender is made through an eligible guarantor institution;
- before expiration of the exchange offer, the exchange agent receives from
the eligible guarantor institution either a properly completed and duly
executed notice of guaranteed delivery, by facsimile
18
transmission, mail or hand delivery, or a properly transmitted agent's
message and notice of guaranteed delivery:
- setting forth the name and address of the holder and the registered
number(s) and the principal amount of old notes tendered;
- stating that the tender is being made by guaranteed delivery;
- guaranteeing that, within three New York Stock Exchange trading days
after expiration of the exchange offer, the letter of transmittal, or
facsimile thereof, together with the old notes or a book-entry transfer
confirmation, and any other documents required by the letter of
transmittal will be deposited by the eligible guarantor institution with
the exchange agent; and
- the exchange agent receives the properly completed and executed letter
of transmittal, or facsimile thereof, as well as all tendered old notes
in proper form for transfer or a book-entry transfer confirmation, and
all other documents required by the letter of transmittal, within three
New York Stock Exchange trading days after expiration of the exchange
offer.
Upon request to the exchange agent, a 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 in this prospectus, holders of old notes may
withdraw their tenders at any time before expiration of the exchange offer.
For a withdrawal to be effective: the exchange agent must receive a
computer-generated notice of withdrawal transmitted by DTC on behalf of the
holder in accordance with the standard operating procedures of DTC, or a written
notice of withdrawal, which may be by telegram, telex, facsimile transmission or
letter, at one of the addresses set forth below under "-- Exchange Agent".
Any notice of withdrawal must:
- specify the name of the person who tendered the old notes to be
withdrawn;
- identify the old notes to be withdrawn, including the principal amount of
the old notes to be withdrawn; and
- where certificates for old notes have been transmitted, specify the name
in which the old notes were registered, if different from that of the
withdrawing holder.
If certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of those certificates, the
withdrawing holder must also submit:
- the serial numbers of the particular certificates to be withdrawn; and
- a signed notice of withdrawal with signatures guaranteed by an eligible
guarantor institution, unless the withdrawing holder is an eligible
guarantor institution.
If old notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old notes and
otherwise comply with the procedures of the facility.
We will determine all questions as to the validity, form and eligibility,
including time of receipt, of notices of withdrawal, and our determination shall
be final and binding on all parties. We will deem any old notes so withdrawn not
to have been validly tendered for exchange for purposes of the exchange offer.
We will return any old notes that have been tendered for exchange but that are
not exchanged for any reason to their holder without cost to the holder. In the
case of old notes tendered by book-entry transfer into the exchange agent's
account at DTC, according to the procedures described above, those old notes
will be credited to an account maintained with DTC, for old notes, as soon as
practicable after withdrawal, rejection of tender or termination of the exchange
offer. You may retender properly withdrawn old notes by following one of the
procedures described under "-- Procedures for Tendering" above at any time on or
before expiration of the exchange offer.
19
A holder may obtain a form of the notice of withdrawal from the exchange
agent at its offices listed under "-- Exchange Agent".
RESALE OF EXCHANGE NOTES
Under existing interpretations of the Securities Act by the staff of the
SEC contained in several no-action letters to third parties, and subject to the
immediately following sentence, we believe that the exchange notes will
generally be freely transferable by holders after the exchange offer without
further compliance with the registration and prospectus delivery requirements of
the Securities Act (subject to certain representations required to be made by
each holder of old notes, as set forth under "Exchange Offer -- Procedures for
Tendering"). However, any holder of old notes who is one of our "affiliates" (as
defined in Rule 405 under the Securities Act), who does not acquire the exchange
notes in the ordinary course of business, who intends to distribute the exchange
notes as part of the exchange offer, or who is a broker-dealer who purchased old
notes from us in the initial offering of the old notes for resale pursuant to
Rule 144A or any other available exemption under the Securities Act, (1) will
not be able to rely on the interpretations of the staff of the SEC, (2) will not
be permitted to tender old notes in the exchange offer and (3) in the absence of
any exemption, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale of the exchange
notes.
With regard to broker-dealers, only broker-dealers that acquired the old
notes for their own accounts as a result of market-making activities or other
trading activities may participate in the exchange offer. Each such
broker-dealer that receives exchange notes for its own account in exchange for
the old notes must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange notes. Please see "Plan of Distribution" for
more details regarding the transfer of exchange notes.
EXCHANGE AGENT
National City Bank has been appointed as exchange agent for the exchange
offer. You should direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for the notice of guaranteed delivery or the notice of withdrawal to
the exchange agent addressed as follows:
To: National City Bank (as "Exchange Agent")
By Mail or by Overnight Courier: By Hand:
Corporate Trust Operations Corporate Trust Operations
Locator 5352 -- Earl Hunt Locator 5352 -- Earl Hunt
Third Floor -- North Annex Third Floor -- North Annex 4100
4100 West 150th Street West 150th Street
Cleveland, Ohio 44135 Cleveland, Ohio 44135
or
The Depository Trust Company
Transfer Agent Drop Service
55 Water Street
Jeanette Park Entrance
New York, New York 10041
By Facsimile Transmission (for Eligible Institutions Only):
(502) 581-4198
Confirm by Telephone:
(502) 581-7354
Delivery of the letter of transmittal to an address other than as shown
above or transmission via facsimile other than as set forth above does not
constitute a valid delivery of the letter of transmittal.
20
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, we may make additional solicitations by
telegraph, telephone or in person by our officers and regular employees and
those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses.
We will pay the cash expenses to be incurred in connection with the
exchange offer, including the following:
- SEC registration fees;
- fees and expenses of the exchange agent and trustee;
- our accounting and legal fees; and
- our printing and mailing costs.
TRANSFER TAXES
We will pay all transfer taxes, if any, applicable to the exchange of old
notes under the exchange offer. The tendering holder, however, will be required
to pay any transfer taxes, whether imposed on the registered holder or any other
person, if:
- certificates representing old notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of old notes
tendered;
- exchange notes are to be delivered to, or issued in the name of, any
person other than the registered holder of the old notes;
- tendered old notes are registered in the name of any person other than
the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of old
notes under the exchange offer.
If satisfactory evidence of payment of transfer taxes is not submitted with
the letter of transmittal, the amount of any transfer taxes will be billed to
the tendering holder.
ACCOUNTING TREATMENT
We will record the exchange notes in our accounting records at the same
carrying value as the old notes, which is the aggregate principal amount, as
reflected in our accounting records on the date of exchange. Accordingly, we
will not recognize any gain or loss for accounting purposes in connection with
the exchange offer. We will record the expenses of the exchange offer as
incurred.
CONSEQUENCES OF FAILURE TO TENDER
All untendered old notes will remain subject to the restrictions on
transfer provided for in the old notes and in the indenture. Generally, the old
notes that are not exchanged for exchange notes pursuant to the exchange offer
will remain restricted securities. Accordingly, such old notes may be resold
only:
- to us (upon redemption thereof or otherwise),
- pursuant to a registration statement which has been declared effective
under the Securities Act,
- for so long as the old notes are eligible for resale pursuant to Rule
144A, to a person the holder of the old notes and any person acting on
its behalf reasonably believes is a "qualified institutional buyer" as
defined in Rule 144A, that purchases for its own account or for the
account of another qualified institutional buyer, in each case to whom
notice is given that the transfer is being made in reliance on Rule 144A,
21
- pursuant to an exemption from the registration requirements of the
Securities Act provided by Rule 144 thereunder (if applicable), or
- pursuant to another available exemption from the registration
requirements of the Securities Act,
in each case subject to compliance with any applicable state or other
securities laws.
OTHER
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. We urge you to consult your financial and tax
advisors in making your own decision on what action to take.
We may in the future seek to acquire untendered old notes in open market or
privately negotiated transactions, through subsequent exchange offers or
otherwise. However, we have no present plans to acquire any old notes that are
not tendered in the exchange offer or to file a registration statement to permit
resales of any untendered old notes.
USE OF PROCEEDS
We will not receive cash proceeds from the issuance of the exchange notes
under the exchange offer. In consideration for issuing the exchange notes in
exchange for old notes as described in this prospectus, we will receive old
notes of equal principal amount. The old notes surrendered in exchange for the
exchange notes will be retired and cancelled.
22
CAPITALIZATION
The following table sets forth:
- our actual consolidated capitalization as of January 31, 2003; and
- adjusted consolidated capitalization as of January 31, 2003, after giving
effect to:
- the repurchase of 470,763 shares of Class A common stock at a price of
$73.00 per share and 7,590,607 shares of Class B common stock accepted
for purchase at a price of $70.50 per share,
- the issuance of $250 million aggregate principal amount of 2 1/8% Notes
due 2006 and $350 million aggregate principal amount of 3% Notes due
2008, net of discount of $1.9 million, and
- the use of $595.1 million of proceeds, net of issuance costs of $3
million, from that offering to fund our share repurchase described above
and repay a portion of our outstanding commercial paper.
You should read this information together with the consolidated financial
statements and related notes and the other financial information incorporated by
reference in this prospectus.
AS OF JANUARY 31, 2003
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN MILLIONS)
SHORT-TERM DEBT:
Commercial paper............................................ $ 155.6 $ 130.0(c)
-------- --------
LONG-TERM DEBT:
Medium-term notes, due 2005................................. 30.0 30.0
Variable rate industrial revenue bonds, due through 2026.... 10.2 10.2
2 1/8% Notes due 2006....................................... -- 249.5
3% Notes due 2008........................................... -- 348.6
-------- --------
Total long-term debt...................................... 40.2 638.3
-------- --------
STOCKHOLDERS' EQUITY:
Capital stock Class A common stock, voting, $0.15 par value;
authorized shares, 30,000,000; issued shares,
28,988,091................................................ 4.3 4.3
Class B common stock, nonvoting, $0.15 par value; authorized
shares, 60,000,000; issued shares, 40,008,147............. 6.0 6.0
Retained earnings........................................... 1,448.1 1,448.1
Treasury stock, at cost..................................... (35.6)(a) (605.1)(b)(c)
Accumulated other comprehensive loss........................ (14.0) (14.0)
-------- --------
Total stockholders' equity................................ 1,408.8 839.3(c)
-------- --------
Total debt and stockholders' equity....................... $1,604.6 $1,607.6
======== ========
---------------
(a) Reflects 96,831 shares of Class A common stock and 477,790 shares of Class B
common stock held in treasury.
(b) Reflects 567,594 shares of Class A common stock and 8,068,397 shares of
Class B common stock held in treasury.
(c) A dispute exists regarding the tender of 154,925 Class B shares. These
shares were accepted for tender but have not yet been received. Without
taking into effect those shares, commercial paper, treasury stock, and total
stockholders' equity, as adjusted, would be $119.1 million, $(594.2)
million, and $850.2 million, respectively.
23
DESCRIPTION OF CERTAIN INDEBTEDNESS
The following description of some important terms of some of our
indebtedness is not complete and does not contain all the information that is
important to you. For a more complete understanding of our indebtedness, we
encourage you to obtain and read the agreements and documents governing the
credit agreements and the medium-term notes described below, all of which we
will provide to you upon your request. See "Additional Information." In the
following description, the words "we" and "our" refer to Brown-Forman
Corporation only, and do not include any subsidiaries of Brown-Forman
Corporation.
CREDIT AGREEMENTS
364-Day Credit Agreement and Five-Year Credit Agreement. We have a 364-Day
Credit Agreement dated as of October 19, 2001, amended and restated as of
October 11, 2002 (the "364-Day Credit Agreement"), and a Five-Year Credit
Agreement, dated as of October 19, 2001 (the "Five-Year Credit Agreement"), each
of which provides a $200 million revolving credit commitment to us from a
syndicate of domestic and international banks. These credit agreements allow us
to borrow funds on an unsecured basis and all such borrowings will become due no
later than October 10, 2003, in the case of the 364-Day Credit Agreement, and
October 19, 2006, in the case of the Five-Year Credit Agreement. We may prepay
loans made under either credit agreement at any time without premium or penalty
(except eurodollar breakage fees, if any). We may use these credit agreements as
support for our issuance of Section 4(2) commercial paper and for working
capital and general corporate purposes.
In general, borrowings under these credit agreements bear interest at one
of two floating rates selected by us, which will be either (i) a base rate equal
to the higher of a reference prime rate or the federal funds rate, plus 0.50%;
or (ii) a reference eurodollar rate, adjusted for statutory reserves, plus a
spread ranging from 0.11% to 0.625%, in the case of the 364-Day Credit
Agreement, and ranging from 0.090% to 0.600%, in the case of the Five-Year
Credit Agreement. The applicable spread for each credit agreement is determined
on the basis of our debt ratings by S&P and Moody's from time to time in effect,
which ratings are also used in determining the applicable facility fee, which
may range from 0.04% to 0.125% of the aggregate commitments under the 364-Day
Credit Agreement and from 0.06% to 0.150% of the aggregate commitments under the
Five-Year Credit Agreement. In addition, at any time that the amount drawn under
either facility is greater than 50% of the commitments under such facility, we
must pay an additional utilization fee of 0.05% per annum with respect to such
facility.
We may also elect to borrow funds under these credit agreements on a
competitive bid basis in which lenders submit bids specifying the interest rate
they propose to apply. We are not required to accept any of the proposed rates.
However, if we do accept loans at a bid rate, we cannot reject loans from
another participating lender who submits a lower bid rate.
These credit agreements contain conditions to funding, representations and
warranties, affirmative covenants and negative covenants which are customary for
these types of facilities. The most restrictive covenant in these credit
agreements requires that we maintain a ratio of consolidated total debt to
consolidated net worth, as such terms are defined in the credit agreements, of
not more than 2 to 1.
We can increase the amount the lenders are committed to lending us under
either of these credit agreements provided that the total amount of commitments
under the Five-Year Credit Agreement and the 364-Day Credit Agreement do not
exceed $600 million less the amount of any reductions in the commitments under
either credit agreement. Our borrowings under these credit agreements, which
have not been guaranteed by any of our subsidiaries, rank on parity in right of
payment with all of our other unsecured and unsubordinated indebtedness from
time to time outstanding. There were no amounts outstanding under either of
these facilities as of January 31, 2003 or as of the date of this prospectus.
Terminated Credit Agreement. On February 25, 2003 we entered into a
364-Day Interim Credit Agreement (the "Interim Credit Agreement") which
initially provided a $700 million revolving credit commitment to us from a
syndicate of banks. Effective March 17, 2003, and pursuant to the terms of the
Interim Credit Agreement, we elected to terminate the lenders' aggregate
commitments under the Interim Credit Agreement. At that time, there were no
amounts outstanding under the Interim Credit Agreement.
24
MEDIUM-TERM NOTES
We have outstanding $20 million aggregate principal amount of 7.38%
medium-term notes issued in May 1995 and $10 million aggregate principal amount
of 6.82% medium-term notes issued in June 1995. The 7.38% medium-term notes
mature on May 10, 2005 and the 6.82% medium-term notes mature on June 1, 2005.
Interest on all of these medium-term notes is payable semi-annually on May 1 and
November 1. The indebtedness evidenced by the medium-term notes, which has not
been guaranteed by any of our subsidiaries, is unsecured and ranks on parity in
right of payment with all of our other unsecured and unsubordinated indebtedness
from time to time outstanding. The trust indenture under which the medium-term
notes were issued contains negative covenants restricting and limiting our
ability to engage in certain activities, including, but not limited to:
- limitations on our ability to incur secured indebtedness, subject to
certain exceptions, unless concurrently with the issuance of such
indebtedness, the medium-term notes are secured equally and ratably with
such indebtedness;
- restrictions on sale and leaseback transactions; and
- restrictions on consolidations, mergers and sales of assets.
At January 31, 2003, we had available for issuance $220 million of debt
securities under the SEC shelf registration statement pursuant to which we
issued the 7.38% medium-term notes and the 6.82% medium-term notes.
INDUSTRIAL REVENUE BONDS
At January 31, 2003, our subsidiaries had approximately $10.2 million of
indebtedness primarily relating to the following issues of industrial revenue
bonds:
- approximately $5.5 million aggregate principal amount due 2014, issued in
1991 by the Granville County Industrial Facilities and Pollution Control
Financing Authority of Granville County, North Carolina to finance the
construction of a china manufacturing facility operated by Lenox,
Incorporated, a wholly owned subsidiary of the Company ("Lenox");
- approximately $2 million aggregate principal amount due 2005, issued in
1995 by the Rhode Island Industrial Facilities Corporation to finance the
purchase by Lenox of equipment for use in the manufacturing of fine
silver and stainless steel flatware; and
- $2.2 million aggregate principal amount due 2026, issued in 1992 by the
Industrial Development Board of Wilson County, Tennessee to finance an
expansion project for a manufacturing facility operated by Hartmann
Luggage Company ("Hartmann").
Lenox or Hartmann, as applicable, must pay the principal and interest due
on the above bonds pursuant to loan agreements entered into with the issuing
authority. Each of the above issues of revenue bonds currently has a variable
interest rate, which Lenox or Hartmann, as applicable, may convert to a fixed
rate at any time; however, neither the variable interest rate nor the fixed
interest rate under any of the bond issues may exceed 15%. The bondholders of
each of the bond issues may require Lenox or Hartmann, as applicable, to redeem
the bonds at any time prior to their conversion to a fixed interest rate. In
addition, Lenox or Hartmann, as applicable, may redeem the bonds (1) at any time
prior to their conversion to a fixed interest rate, (2) five years (in the case
of the 2014 bonds and the 2026 bonds) or three years (in the case of the 2005
bonds) after the applicable conversion date and (3) at any time if the financed
project cannot be completed or continued due to extraordinary events. The bonds
must also be redeemed in the event of certain determinations by the Internal
Revenue Service. We unconditionally guaranteed the full and prompt payment of
principal and interest on each of the issues of revenue bonds and other required
payments under the related indentures and loan agreements.
25
DESCRIPTION OF THE EXCHANGE NOTES
You can find the definitions of certain terms used in this description
under the subheading "-- Certain Definitions." In this description, the words
"we", "us" and "our" refer to Brown-Forman Corporation only, and do not include
any subsidiaries of Brown-Forman Corporation.
We are issuing the 2006 exchange notes and the 2008 exchange notes under
the same indenture, dated as of March 13, 2003, between us and National City
Bank, as trustee, under which we issued the old 2006 notes and the old 2008
notes. The terms of the 2006 exchange notes and the 2008 exchange notes include
those stated in the indenture and those made part of the indenture by reference
to the Trust Indenture Act of 1939, as amended. Because this section is a
summary, it does not describe every aspect of the indenture. We urge you to read
the indenture because it, and not this description, defines your rights as a
holder of exchange notes. The indenture has been filed as an exhibit to the
registration statement of which this prospectus is a part and is incorporated by
reference in this prospectus. You may obtain a copy of the indenture by
requesting one from us. See "Additional Information." Certain capitalized terms
used in this description but not defined below under "-- Certain Definitions"
have the meanings assigned to them in the indenture.
As described under "Exchange Offer" we agreed with the initial purchasers
of the old 2006 notes and the old 2008 notes to file a registration statement
enabling eligible holders to exchange the old 2006 and the old 2008 notes for
exchange notes having identical terms in all material respects, except for
certain provisions relating to transfer restrictions, registration rights and
additional interest. The old 2006 notes along with the 2006 exchange notes, and
the old 2008 notes along with the 2008 exchange notes, each constitute a single
series of securities under the indenture and therefore, when a vote of a single
series is contemplated, will vote together as a single class for purposes of
determining whether holders of the requisite percentage in aggregate principal
amount of notes of a series have taken actions or exercised rights they are
entitled to take or exercise under the indenture. In this "Description of
Exchange Notes";
- we refer to the old 2006 notes and the 2006 exchange notes together as
the "2006 notes";
- we refer to the old 2008 notes and the 2008 exchange notes together as
the "2008 notes"; and
- we refer to any and all notes issued under the indenture collectively as
the "notes."
We do not intend to apply for listing or quotation of the 2006 exchange
notes or the 2008 exchange notes on any securities exchange or automated
quotation system.
PRINCIPAL, MATURITY, AND INTEREST
As of the date of this prospectus, $250 million in aggregate principal
amount of the old 2006 notes and $350 million in aggregate principal amount of
the old 2008 notes issued under the indenture are outstanding. The 2006 exchange
notes will be limited to $250 million aggregate principal amount and the 2008
exchange notes will be limited to $350 million aggregate principal amount. After
completion of the exchange offer, we may reopen either series and issue an
unlimited aggregate principal amount of additional notes of either series from
time to time. The exchange notes and the old notes of the applicable series and
any additional notes of that series subsequently issued under the indenture
would be treated as a single class for all purposes under the indenture,
including, without limitation, waivers, amendments, redemptions and offers to
purchase, except where all series of notes are treated under the indenture as a
single class. We will issue 2006 exchange notes and 2008 exchange notes in
denominations of $1,000 and integral multiples of $1,000.
The 2006 exchange notes will mature on March 15, 2006, and the 2008
exchange notes will mature on March 15, 2008, unless redeemed prior to that
date, as described under "-- Optional Redemption." Interest on the 2006 exchange
notes will accrue at the rate of 2.125% per year, and interest on the 2008
exchange notes will accrue at the rate of 3.0% per year. We will pay interest on
the 2006 exchange notes and the 2008 exchange notes semi-annually in arrears on
March 15 and September 15, commencing on September 15, 2003. We will make each
interest payment to the persons who are the registered holders of the exchange
notes on the immediately preceding March 1 and September 1, respectively.
Interest on the 2006 exchange notes and the 2008 exchange notes will accrue
from the last interest payment date on which interest was paid on the old note
surrendered in exchange therefor or, if no interest has
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been paid on the old notes surrendered, from the date of its original issue.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
RANKING
The payment of principal, interest, and premium, if any, on the 2006
exchange notes and the 2008 exchange notes are our general unsecured senior
obligations and will rank equally with all of our other senior unsecured
indebtedness from time to time outstanding. As of January 31, 2003, after giving
effect to the offering of the old notes, the application of a portion of the net
proceeds form the offering of the old notes to fund our recently completed
issuer self tender offer and the remainder to reduce debt then-outstanding under
our commercial paper program, we had approximately $638.3 million of senior
unsecured debt. Of that amount, approximately $10.2 million was indebtedness of
our subsidiaries. See "Description of Certain Indebtedness." Because the
creditors of our subsidiaries have direct claims on the subsidiaries and their
assets, the claims of holders of our debt securities are "structurally
subordinated" to any existing and future liabilities of our subsidiaries. This
means that the creditors of the subsidiaries have priority in their claims on
the assets of our subsidiaries over our creditors. In addition, a substantial
portion of our ordinary course liabilities, including accounts payable and
accrued liabilities, as reflected on our consolidated balance sheet at January
31, 2003, were incurred by our subsidiaries. The indenture does not contain any
covenants or provisions that would afford the holders of the exchange notes
protection in the event of a highly leveraged or similar transaction.
OPTIONAL REDEMPTION
The 2008 notes will be redeemable in whole or in part at any time and from
time to time, at our option, at a redemption price equal to the greater of:
- 100% of the principal amount of the 2008 notes to be redeemed; or
- the sum of the present values of the remaining scheduled payments of
principal and interest on the 2008 notes to be redeemed (exclusive of
interest accrued to the date of redemption) discounted to the date of
redemption on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the then current Treasury Rate (as defined
below) plus 15 basis points.
We will pay accrued and unpaid interest on the principal amount of such
2008 notes being redeemed to the date of redemption.
The 2006 notes will not be redeemable prior to maturity.
Notice of redemption will be mailed at least 30 days but no more than 60
days before the redemption date to each holder of 2008 notes to be redeemed, at
its registered address. The notice of redemption for the 2008 notes will state
among other things, the amount of such 2008 notes to be redeemed, the redemption
date, and the place or places that payment will be made upon presentation and
surrender of 2008 notes to be redeemed. Unless we default in the payment of the
redemption prices, interest will cease to accrue at the redemption date on any
2008 notes that have been called for redemption.
MANDATORY REDEMPTION; SINKING FUND
No mandatory redemption obligation will be applicable to the 2006 exchange
notes or the 2008 exchange notes. Neither the 2006 exchange notes nor the 2008
exchange notes will be subject to, nor have the benefit of, a sinking fund.
CERTAIN COVENANTS
Limitation on Liens
The indenture provides that if we or any of our Subsidiaries (as defined
below) incurs, issues, assumes or guarantees any Indebtedness secured by a
Mortgage (as defined below) on any Principal Property (as defined below) of ours
or of any Subsidiary or on any shares of capital stock or Indebtedness (to us or
any other Subsidiary) of any Subsidiary that owns Principal Property, we will
secure, or cause such Subsidiary to secure, the outstanding notes equally and
ratably with such secured Indebtedness, unless after giving effect thereto the
aggregate amount of all such secured Indebtedness, together with all
Attributable Debt (as defined below), of
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ours and of our Subsidiaries in respect of sale and lease-back transactions
involving Principal Properties (other than certain sale and lease-back
transactions that are permitted under "Limitation on Sale and Leaseback
Transactions") would constitute less than 15% of our and our consolidated
Subsidiaries' Consolidated Net Assets (as defined below) upon such incurrence,
issuance, assumption or guarantee. This restriction will not apply in the case
of:
- Mortgages affecting property of any corporation existing at the time such
corporation becomes a Subsidiary or at the time it is acquired by us or a
Subsidiary or arising thereafter under contractual commitments entered
into prior to and not in contemplation of such corporation's becoming a
Subsidiary or being acquired by us or a Subsidiary;
- Mortgages existing at the time of acquisition of the property affected by
such Mortgage, or Mortgages incurred to secure payment of all or part of
the purchase price of such property or to secure Indebtedness incurred
prior to, at the time of, or within 180 days after, the acquisition of
such property for the purpose of financing all or part of the purchase
price of such property (provided such Mortgages are limited to such
property and improvements to such property);
- Mortgages placed into effect prior to, at the time of, or within 180 days
of completion of construction of new facilities (or any improvements to
existing facilities) to secure all or part of the cost of construction or
improvement of such facilities, or to secure Indebtedness incurred to
provide funds for any such purpose (provided such Mortgages are limited
to the property or portion thereof upon which the construction being so
financed occurred and improvements the cost of construction of which is
being so financed);
- Pledges or deposits in the ordinary course of business and in connection
with bids, tenders, contracts or statutory obligations or to secure
surety or performance bonds;
- liens imposed by law, such as carriers', warehousemen's and mechanics'
and materialmen's liens, arising in the ordinary course of business;
- liens for taxes or assessments or governmental charges or levies, so long
as such taxes or assessments or governmental charges or levies are not
due and payable, or the same can be paid thereafter without penalty, or
the same are being contested in good faith;
- minor encumbrances, easements or reservations which do not in the
aggregate materially adversely affect the value of the properties or
impair their use;
- Mortgages in respect of judgments that do not result in an event of
default under the indenture;
- Mortgages which secure only debt owing by a Subsidiary to us or to a
Subsidiary of ours;
- Mortgages required by any contract or statute in order to permit us or a
Subsidiary to perform any contract or subcontract made by it with or at
the request of the United States of America or any state, or any
department, agency, instrumentality or political subdivision of any of
the foregoing or the District of Columbia, and Mortgages on property
owned or leased by us or a Subsidiary (a) to secure any Indebtedness
incurred for the purpose of financing (including any industrial
development bond financing) all or any part of the purchase price or the
cost of constructing, expanding or improving the property subject thereto
(provided such Mortgages are limited to the property or portion thereof
upon which the construction being so financed occurred and the
improvements the cost of construction of which is being so financed), or
(b) needed to permit the construction, improvement, attachment or removal
of any equipment designed primarily for the purpose of air or water
pollution control, provided that such Mortgages shall not extend to other
property or assets of us or any Subsidiary;
- landlords' liens on property held under lease;
- Mortgages, if any, in existence on the date the old 2006 notes and old
2008 notes were issued; and
- certain extensions, renewals, replacements or refundings of Mortgages
referred to in the foregoing clauses.
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Limitation on Sale and Leaseback Transactions
The indenture provides that neither we nor any of our Subsidiaries may,
after the effective date of the indenture, enter into any sale and lease-back
transaction involving any Principal Property acquired or placed into service
more than 180 days prior to such transaction, whereby such property has been or
is to be sold or transferred by us or any Subsidiary, unless:
- we or such Subsidiary would at the time of entering into such transaction
be entitled to create Indebtedness secured by a Mortgage on such property
as described in "-- Limitations on Liens" above in an amount equal to the
Attributable Debt with respect to the sale and lease-back transaction
without equally and ratably securing the outstanding notes; or
- we apply to the retirement or prepayment (other than any mandatory
retirement or prepayment) of our Funded Debt (as defined below), or to
the acquisition, development or improvement of Principal Property, an
amount equal to the net proceeds from the sale of the Principal Property
so leased within 180 days of the effective date of any such sale and
lease-back transaction, provided that the amount to be applied to the
retirement or prepayment of our Funded Debt shall be reduced by the
principal amount of any notes delivered by us to the trustee within 180
days after such sale and lease-back transaction for retirement and
cancellation.
This restriction will not apply to any sale and lease-back transaction (i)
involving the taking back of a lease for a period of three years or less; (ii)
involving industrial development or pollution control financing; or (iii)
between us and a Subsidiary or between Subsidiaries.
Merger, Consolidation or Sale of Assets
The indenture prohibits us from merging into or consolidating with any
other person or selling, leasing or conveying substantially all of our assets
and the assets of our Subsidiaries, taken as a whole, to any person, unless:
- either we are the continuing corporation or the successor corporation or
the person which acquires by sale, lease or conveyance substantially all
our or our Subsidiaries' assets is a corporation organized under the laws
of the United States, any state thereof, or the District of Columbia, and
expressly assumes the due and punctual payment of the principal of, and
premium, if any, and interest on all the notes and the due and punctual
performance and observance of every covenant and condition of the
indenture to be performed or observed by us, by supplemental indenture
satisfactory to the trustee, executed and delivered to the trustee by
such corporation;
- we, such successor corporation, or such person shall not, immediately
after giving effect to the transaction, be in default in the performance
of any such covenant or condition; and
- we have delivered to the trustee an officers' certificate and an opinion
of counsel each stating that such transaction and such supplemental
indenture comply with the indenture provisions and that all conditions
precedent in the indenture relating to such transaction have been
complied with.
Upon any consolidation or merger with or into any other person or any sale,
conveyance, lease, or other transfer of all or substantially all of our or our
Subsidiaries' assets to any person, the successor person shall succeed to, and
be substituted for, us under the indenture, the notes and the registration
rights agreement described under "Exchange Offer" and "Registration Rights," and
we shall be relieved of all obligations and covenants under the indenture, the
notes, and the registration rights agreement to the extent we were the
predecessor person.
CERTAIN DEFINITIONS
"Attributable Debt" means, with respect to any sale and lease-back
transaction, as of any particular time, the present value discounted at the rate
of interest implicit in the terms of the lease (as determined in good faith by
us) of the obligations of the lessee under such lease for net rental payments
during the remaining term of the lease (including any period for which such
lease has been extended or may, at our option, be extended).
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ("Remaining Life") of the 2008
29
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 such 2008 notes.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest Reference Treasury Dealer
Quotations, or (2) if the trustee obtains fewer than five such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Consolidated Net Assets" means the aggregate amount of assets (less
applicable reserves and other properly deductible items) after deducting all
current liabilities (excluding any portion of current liabilities constituting
Funded Debt by reason of being renewable or extendable), all as set forth on the
balance sheet for the most-recently ended fiscal quarter of the person for which
such determination is being made and computed in accordance with generally
accepted accounting principles.
"Funded Debt" means all indebtedness for money borrowed classified as
long-term debt on the audited balance sheet for the most-recently ended fiscal
period (or if incurred subsequent to the date of such balance sheet, would have
been so classified) of the person for which the determination is being made.
"Indebtedness" means:
- any liability of any person for borrowed money, or evidenced by a bond,
note, debenture, or similar instrument (including purchase money
obligations but excluding Trade Payables), or for the payment of money
relating to a lease that is required to be classified as a capitalized
lease obligation in accordance with generally accepted accounting
principles;
- any of the foregoing liabilities of another that a person has guaranteed,
that is recourse to such person, or that is otherwise its legal
liability;
- mandatorily redeemable preferred or preference stock of one of our
Subsidiaries held by anyone other than us or one of our Subsidiaries; and
- any amendment, supplement, modification, deferral, renewal, extension, or
refunding of any liability of the types referred to in the foregoing
clauses.
"Independent Investment Banker" means one of the Reference Treasury Dealers
that we appoint to act as the Independent Investment Banker from time to time.
"Mortgage" means, with respect to an asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"Principal Property" means all real property, fixtures, machinery and
equipment located within the United States directly engaged in our or our
Subsidiaries' manufacturing activities, including manufacturing and processing
facilities, except any such real property, fixtures, machinery and equipment
which our board of directors determines is not material to our business and our
Subsidiaries' business taken as a whole.
"Reference Treasury Dealer" means each of Banc of America Securities LLC,
J.P. Morgan Securities Inc. and Banc One Capital Markets, Inc. and their
respective successors and two other firms that are primary U.S. Government
securities dealers (each a "Primary Treasury Dealer") which we specify from time
to time, provided, however, that if any of them ceases to be a Primary Treasury
Dealer, we will substitute another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and 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 such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
"Significant Subsidiary" means each Subsidiary which is a "significant
subsidiary" as defined in Rule 1-02(w) of Regulation S-X, as amended or modified
and in effect from time to time.
"Subsidiary" means any corporation, partnership or other entity of which at
the time of determination we own or control directly or indirectly capital stock
or equivalent interests having more than 50% of the total
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voting power of the capital stock or equivalent interests then outstanding and
normally entitled to vote in the election of directors, managers or trustees
thereof.
"Trade Payables" means accounts payable or any other Indebtedness or
monetary obligations to trade creditors created or assumed in the ordinary
course of business in connection with the obtaining of materials, finished
products, inventory or services.
"Treasury Rate" means, with respect to any redemption date, the rate per
year equal to: (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, provided that,
if no maturity is within three months before or after the Remaining Life of the
2008 notes to be redeemed, 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 those 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 year 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.
EVENTS OF DEFAULT AND REMEDIES
An "Event of Default" with respect to the 2006 notes or the 2008 notes will
occur if:
- we default in the payment of interest on the notes of the applicable
series (including additional interest) when the same becomes due and
payable and such default continues for a period of 30 days;
- we default in payment of the principal of or premium, if any, on such
series of notes when the same becomes due and payable, either at
maturity, upon any redemption, by declaration, or otherwise;
- we fail, for 60 days after written notice from the trustee or holders of
at least 25% in aggregate principal amount of the notes including any
related additional notes, if any, then outstanding of all series (treated
as a single class), to observe or perform any of our other covenants or
agreements contained in the indenture or the notes;
- we default in:
-- the payment of any scheduled principal of or interest on any of our
Indebtedness or any Indebtedness of any of our Subsidiaries (other than
the notes), aggregating more than $35 million in principal amount, when
due and payable after giving effect to any applicable grace period, or
-- the performance of any other term or provision of any of our
Indebtedness or any Indebtedness of any of our Subsidiaries (other than
the notes) in excess of $35 million principal amount that results in
such Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not have been rescinded or annulled, or such
Indebtedness shall not have been discharged, within a period of 15 days
after there has been given to us by the trustee or to us and the
trustee by the holders of at least 25% in aggregate principal amount of
the notes then outstanding of all series (treated as a single class), a
written notice specifying such default or defaults;
31
- one or more judgments, decrees, or orders is entered against us or any of
our Significant Subsidiaries by a court from which no appeal may be or is
taken for the payment of money, either individually or in the aggregate,
in excess of $35 million, and the continuance of such judgment, decree,
or order remains unsatisfied and in effect for any period of 45
consecutive days after the amount of the judgment, decree or order is due
without a stay of execution; and
- certain events of bankruptcy, insolvency or reorganization occur with
respect to us or any of our Significant Subsidiaries.
In the case of an Event of Default arising from certain events of
bankruptcy, insolvency or reorganization with respect to us or any of our
Significant Subsidiaries, all outstanding notes will become due and payable
immediately without further action or notice. If any Event of Default in the
payment of any interest or additional interest on, or the principal of, notes of
any series occurs and is continuing, the trustee or the holders of at least 25%
in aggregate principal amount of the then outstanding notes of such series may
declare the principal amount and accrued interest of all the notes of such
series to be due and payable immediately by notice in writing to us (and to the
trustee, if given by the holders of such notes), specifying the respective Event
of Default. If any other Event of Default occurs and is continuing, the trustee
or the holders of at least 25% in aggregate principal amount of the then
outstanding notes of all series (treated as a single class) may declare the
principal amount and accrued interest of all the notes to be due and payable
immediately by notice in writing to us (and to the trustee, if given by the
holders of such notes), specifying the respective Event of Default.
The indenture provides that the trustee will, within 90 days after the
occurrence of a default with respect to a series of notes, give to the holders
of such notes notice of all defaults known to it unless such default shall have
been cured.
The indenture provides that the holders of a majority in aggregate
principal amount of the outstanding notes of a series affected (or, if all
series are affected, a majority in aggregate principal amount of outstanding
notes of all series, treated as a single class) may direct the time, method, and
place of conducting any proceeding for any remedy available to the trustee for
such series, or exercising any trust or power conferred on such trustee.
The holders of a majority in aggregate principal amount of the notes of all
series then outstanding, by notice to the trustee, may on behalf of the holders
of all of the notes waive any existing default or Event of Default and its
consequences under the indenture except (i) a continuing default or Event of
Default in the payment of interest or additional interest on, or the principal
of, any notes and (ii) in respect of a covenant or provision of the indenture,
which cannot be modified or amended without the consent of the holders of 100%
of the aggregate principal amount of the then outstanding notes affected by such
modification or amendment.
We are required to deliver to the trustee annually a statement regarding
compliance with the indenture. Upon becoming aware of any default or Event of
Default, we are required to deliver to the trustee a statement specifying such
default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, AND STOCKHOLDERS
None of our directors, officers, employees, incorporators, or shareholders,
as such, past, present or future, or any of their successors shall have any
liability either directly or through us, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, whatsoever for any of our obligations, covenants or agreements under
either series of notes, the indenture, or for any claim based on, in respect of,
or by reason of, such obligations, covenants or agreements or their creation or
implied therefrom. By accepting an exchange note, each holder of exchange notes
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes of each series. The waiver may not be
effective to waive liabilities under the federal securities laws.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the outstanding notes of either series ("Legal
Defeasance") except for:
- the rights of holders of outstanding notes of such series to receive
payments in respect of the principal of, or interest or premium and
additional interest, if any, on, such notes when such payments are due
from the trust referred to below;
- our obligations with respect to such notes concerning issuing temporary
notes, registration of notes, mutilated, destroyed, lost, or stolen
notes, and the maintenance of an office or agency for payment and holding
money for payments held in trust;
- the rights, powers, trusts, duties, and immunities of the trustee, and
our obligations in connection therewith; and
- the Legal Defeasance provisions of the indenture.
In addition, we may, at our option and at any time, elect to have our
obligations released with respect to certain covenants that are described in the
indenture ("Covenant Defeasance") as they relate to a particular series and
thereafter any omission to comply with those covenants shall not constitute a
default or Event of Default with respect to the notes of the applicable series.
If a Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the notes of either series.
In order to exercise either Legal Defeasance or Covenant Defeasance:
- we must irrevocably deposit with the trustee, in trust, for the benefit
of the holders of the notes of the applicable series, cash in U.S.
dollars, obligations issued or guaranteed as to principal and interest by
the United States or by a person controlled or supervised by and acting
as an instrumentality of the government of the United States pursuant to
authority granted by the Congress of the United States, maturing as to
principal and interest at such times and in such amounts as will insure
the availability of cash, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, or interest and
premium and additional interest, if any, on, the outstanding notes of
such series on the stated maturity or on the applicable redemption date,
as the case may be, and we must specify whether the notes are being
defeased to maturity or to a particular redemption date;
- in the case of Legal Defeasance, we shall have delivered to the trustee
an opinion of counsel reasonably acceptable to the trustee confirming
that (a) we have received from, or there has been published by, the
Internal Revenue Service a ruling or (b) since the date of the indenture,
there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel
shall confirm that, the holders of the outstanding notes of such series
will not recognize income, gain, or loss for federal income tax purposes
as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner, and at the same times
as would have been the case if such Legal Defeasance had not occurred;
- in the case of Covenant Defeasance, we shall have delivered to the
trustee an opinion of counsel reasonably acceptable to the trustee
confirming that the holders of the outstanding notes of such series will
not recognize income, gain, or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner, and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
- in the case of Covenant Defeasance, no default or Event of Default in
respect of such series shall have occurred and be continuing either: (a)
on the date of such deposit or (b) insofar as Events of Default from
bankruptcy, insolvency or reorganization events are concerned, at any
time in the period ending on the 121st day after the date of deposit;
- such Legal Defeasance or Covenant Defeasance will not result in a breach
or violation of or constitute a default under any agreement or instrument
to which we or any of our Significant Subsidiaries are a party or by
which we or any of our Significant Subsidiaries are bound;
33
- such Covenant Defeasance does not cause the trustee to have a conflict of
interest for purposes of the Trust Indenture Act with respect to any of
the notes;
- we must deliver to the trustee an officers' certificate stating that the
deposit was not made by us with the intent of preferring the holders of
notes over our other creditors with the intent of defeating, hindering,
delaying or defrauding our creditors or the creditors of others;
- we must deliver to the trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent relating to the Legal
Defeasance or the Covenant Defeasance have been complied with; and
- we must deliver an opinion of counsel stating that the Legal Defeasance
or the Covenant Defeasance does not violate applicable law or require
registration under the Investment Company Act of 1940.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture and
the notes of either series may be amended or supplemented with the consent of
the holders (voting as a single class) of at least a majority in principal
amount of the notes of all series then outstanding and affected by such
modification or amendment such series (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, notes), and any existing default or compliance with any provision of the
indenture or such notes may be waived with the consent of the holders (voting as
a single class) of a majority in principal amount of the notes of all series
then outstanding and affected by such waiver (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, notes).
Without the consent of each holder of notes affected, an amendment or
waiver may not (with respect to any notes held by a non-consenting holder):
- reduce the percentage of the aggregate principal amount of outstanding
notes of the applicable series the consent of whose holders is necessary
to an amendment, supplement or waiver;
- reduce the principal of or extend the fixed maturity of such note or
alter the provisions, or waive any payment, with respect to the
redemption of such notes;
- reduce the rate of or change the time for payment of interest on such
notes;
- waive a default or Event of Default in the payment of principal of, or
interest or premium, or additional interest, if any, on, such notes
(except a rescission of acceleration of the notes of such series by the
holders of at least a majority in aggregate principal amount of such
notes and a waiver of the payment default that resulted from such
acceleration);
- make any note payable in money other than U.S. dollars;
- make any change in the provisions of the indenture relating to waivers of
past defaults or the rights of holders of notes to receive payments of
principal of, or interest or premium or additional interest, if any, on,
such notes; or
- make any change in the preceding amendment and waiver provisions.
Notwithstanding the preceding, without the consent of any holder of notes,
we and the trustee may amend or supplement the indenture or the notes:
- to cure any ambiguity, defect, or inconsistency;
- to convey, transfer, assign, mortgage or pledge to the trustee as
security for such notes any property or assets;
- to provide for uncertificated notes in addition to or in place of
certificated notes;
- to provide for the assumption of our obligations to holders of notes in
the case of a merger or consolidation or sale or other disposition of all
or substantially all of our assets;
- to evidence and provide for a successor trustee;
- to make any change that would provide any additional rights or benefits
to the holders of notes of either or both series or that does not
adversely affect the legal rights under the indenture of any such holder;
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- to comply with requirements of the SEC in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act;
- to provide for the issuance of additional notes of either series in
accordance with the limitations set forth in the indenture; or
- to allow any subsidiary to guarantee the notes of either series.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. We may change
the paying agent or registrar without prior notice to the holders of the notes,
and we or any of our Subsidiaries may act as paying agent or registrar.
TRANSFER AND EXCHANGE
The 2006 exchange notes and the 2008 exchange notes may be transferred or
exchanged in accordance with the indenture. The registrar and the trustee may
require a holder of exchange notes, among other things, to furnish appropriate
endorsements and transfer documents and we may require a holder to pay any taxes
and fees required by law or permitted by the indenture. We are not required to
transfer or exchange any exchange note selected for redemption. Also, we are not
required to transfer or exchange any exchange note for a period of 15 days
before a selection of notes to be redeemed.
The registered holder of an exchange note will be treated as its owner for
all purposes.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of ours, the indenture limits its right
to obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. The trustee will
be permitted to engage in other transactions, but if it acquires any conflicting
interest, it must eliminate such conflict within 90 days or apply to the SEC for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
of a series affected (or, if all series are affected, a majority in aggregate
principal amount of outstanding notes of all series treated as a single class)
will have the right to direct the time, method, and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that if an Event of Default shall
occur and be continuing, the trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless such holder shall have offered to the trustee security
and indemnity satisfactory to it against any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the 2006 exchange notes and the 2008 exchange
notes will be issued in registered, global form in minimum denominations of
$1,000 and integral multiples of $1,000 in excess of $1,000.
Exchange notes of each series will be in book-entry form and represented by
one or more permanent global certificates in fully registered, global form
without interest coupons. We refer to these collectively as the "global exchange
notes." The global exchange notes will be deposited upon issuance with the
trustee as custodian for DTC, in New York, New York, and registered in the name
of DTC or its nominee, in each case for credit to an account of a direct or
indirect participant in DTC as described below.
Except as set forth below, the global exchange notes may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the global exchange notes may not be
exchanged for exchange notes in certificated form except in the limited
circumstances described below. See "-- Exchange of global exchange notes for
certificated exchange notes." Except in the limited circumstances described
below, owners of beneficial interests in the global exchange notes will not be
entitled to receive physical delivery of exchange notes in certificated form.
35
Transfers of any interests in the global exchange notes will be subject to
the applicable rules and procedures of DTC and its direct or indirect
participants, which may change from time to time.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC are
provided solely as a matter of convenience. These operations and procedures are
solely within the control of DTC and are subject to changes by DTC from time to
time. We do not take any responsibility for these operations and procedures, and
we urge investors to contact DTC or its participants directly to discuss these
matters.
DTC has advised us that DTC is a limited-purpose trust company created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
(collectively, the "Indirect Participants"). Persons who are not Participants
may beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interests in, and
transfers of ownership interests in, each security held by or on behalf of DTC
are recorded on the records of the Participants and the Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
- upon deposit of the global exchange notes, DTC will credit the accounts
of Participants with the principal amount of exchange notes represented
by such global exchange notes; and
- ownership of these interests in the global exchange notes will be shown
on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners
of beneficial interests in the global exchange notes).
Investors in the global exchange notes who are Participants in DTC's system
may hold their interests therein directly through DTC. Investors in the global
exchange notes who are not Participants may hold their interests therein
indirectly through organizations which are Participants in such system. The laws
of some states may require that certain persons take physical delivery in
definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a global exchange note to such persons will be
limited to that extent. Because DTC can act only on behalf of Participants,
which in turn act on behalf of themselves or Indirect Participants, the ability
of a person having beneficial interests in a global exchange note to pledge or
transfer such interests to persons that do not participate in the DTC system, or
otherwise take actions in respect of such interests, may be affected by the lack
of a physical certificate evidencing such interests.
SO LONG AS DTC OR ITS NOMINEE IS THE REGISTERED OWNER OF THE GLOBAL
EXCHANGE NOTES, DTC OR SUCH NOMINEE, AS THE CASE MAY BE, WILL BE CONSIDERED THE
SOLE OWNER OR HOLDER OF THE INTERESTS REPRESENTED BY THE GLOBAL EXCHANGE NOTES
FOR ALL PURPOSES UNDER THE INDENTURE. EXCEPT AS DESCRIBED BELOW, OWNERS OF
BENEFICIAL INTERESTS IN THE GLOBAL EXCHANGE NOTES WILL NOT HAVE EXCHANGE NOTES
REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF EXCHANGE NOTES
IN CERTIFICATED FORM, AND WILL NOT BE CONSIDERED THE REGISTERED 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 UNDER THE
INDENTURE. ACCORDINGLY, EACH HOLDER OWNING A BENEFICIAL INTEREST IN A GLOBAL
EXCHANGE NOTE MUST RELY ON THE PROCEDURES OF DTC AND, IF THE HOLDER IS NOT A
PARTICIPANT OR INDIRECT PARTICIPANT, ON THE PROCEDURES OF THE PARTICIPANT AND
ANY OTHER INTERMEDIARIES THROUGH WHICH THE HOLDER OWNS ITS INTEREST, TO EXERCISE
ANY RIGHTS OF A HOLDER OF EXCHANGE NOTES UNDER THE INDENTURE OR THE GLOBAL
EXCHANGE NOTE.
Payments in respect of the principal of, and interest and premium, if any,
and additional interest, if any, on, a global exchange note registered in the
name of DTC or its nominee will be payable to DTC or such nominee in its
capacity as the registered holder under the indenture. Under the terms of the
indenture, we and the trustee will treat the persons in whose names the exchange
notes, including the global exchange notes, are
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registered as the owners thereof for the purpose of receiving payments and for
all other purposes. Consequently, neither we, the trustee nor any agent of ours
or of the trustee has or will have any responsibility or liability for:
- any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interest in the global exchange notes or for
maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the
beneficial ownership interests in the global exchange notes; or
- any other matter relating to the actions and practices of DTC or any of
its Participants or Indirect Participants.
DTC has advised us that its current practice, upon receipt of any payment
in respect of securities such as the exchange notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant Participant is credited with an
amount proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of exchange
notes will be governed by standing instructions and customary practices and will
be the responsibility of the Participants or the Indirect Participants and will
not be the responsibility of DTC, the trustee or us. Neither we nor the trustee
will be liable for any delay by DTC or any of its Participants in identifying
the beneficial owners of the exchange notes, and we and the trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of exchange notes only at the direction of one or more Participants to
whose account DTC has credited the interests in the global exchange notes and
only in respect of such portion of the aggregate principal amount of the
exchange notes of the applicable series as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under such exchange notes, DTC reserves the right to exchange the global
exchange notes for exchange notes in certificated form, and to distribute such
exchange notes to its Participants.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the global exchange notes among participants in DTC, they are
under no obligation to perform or to continue to perform such procedures, and
may discontinue such procedures at any time. Neither we nor the trustee nor any
of our or their respective agents will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing DTC's
operations.
EXCHANGE OF GLOBAL EXCHANGE NOTES FOR CERTIFICATED EXCHANGE NOTES
A global exchange note is exchangeable for definitive exchange notes in
registered certificated form ("certificated exchange notes") if:
- DTC (a) notifies us that it is unwilling or unable to continue as
depositary for the global exchange notes and we fail to appoint a
successor depositary or (b) has ceased to be a clearing agency registered
under the Exchange Act;
- we, at our option, notify the trustee in writing that we elect to cause
the issuance of the certificated exchange notes; or
- there shall have occurred and be continuing a default or Event of Default
with respect to the notes of the applicable series.
In addition, beneficial interests in a global exchange note may be
exchanged for certificated exchange notes upon prior written notice given to the
trustee by or on behalf of DTC in accordance with the indenture. In all cases,
certificated exchange notes delivered in exchange for any global exchange note
or beneficial
37
interests in global exchange notes will be registered in the names, and issued
in any approved denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures).
SAME-DAY SETTLEMENT AND PAYMENT
We will make payments in respect of the exchange notes represented by the
global exchange notes (including principal, premium, if any, interest and
additional interest, if any) by wire transfer of immediately available funds to
the accounts specified by the global exchange note holder. We will make all
payments of principal, interest and premium and additional interest, if any,
with respect to any certificated exchange notes by wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address. The exchange notes represented by the global exchange notes are
expected to trade in DTC's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such exchange notes will, therefore, be
required by DTC to be settled in immediately available funds. We expect that
secondary trading in any certificated exchange notes will also be settled in
immediately available funds.
GOVERNING LAW
The indenture, the exchange notes and notes are governed by, and construed
in accordance with, the laws of the State of New York.
REGISTRATION RIGHTS
In connection with the issuance of the old notes on March 13, 2003, we
entered into a registration rights agreement with the initial purchasers of the
old notes under which we agreed to conduct this exchange offer and, in
circumstances described under "-- Shelf Registration" below, register the resale
of outstanding old notes.
Because this section is a summary, it does not describe every aspect of the
registration rights agreement. This summary is subject to, and qualified in its
entirety by reference to, all the provisions of the registration rights
agreement, including definitions of certain terms used in it.
EXCHANGE OFFER
We agreed in the registration rights agreement to use our reasonable best
efforts to:
- file a registration statement relating to the exchange offer for the old
notes, of which this prospectus is a part, with the SEC no later than the
90th day after the issue date of the old notes;
- have the exchange offer registration statement declared effective under
the Securities Act by the SEC no later than the 150th day after the issue
date of the old notes;
- cause the exchange offer registration statement to remain effective until
the closing of the exchange offer; and
- complete the exchange offer no later than 180 days after the issue date
of the old notes (the "exchange offer consummation deadline").
If you wish to exchange your old notes for exchange notes in the exchange
offer, you are required to make certain representations described under
"Exchange Offer -- Procedures for Tendering" and in the letter of transmittal.
Under the registration rights agreement, we are required, subject to the
terms of that agreement, to allow any broker-dealer which acquired the old notes
for its own account as a result of market making or other trading activities and
other persons, if any, required to deliver a prospectus meeting the requirements
of the Securities Act to use the prospectus contained in the exchange offer
registration statement in connection with the resale of such exchange notes. A
broker-dealer or any other person that delivers such a prospectus to purchasers
in connection with such resales will be subject to certain civil liability
provisions under the Securities Act and will be bound by the provisions of the
registration rights agreement (including certain indemnification rights and
obligations). See "Plan of Distribution" for further details.
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SHELF REGISTRATION
We may be required to file a shelf registration statement to permit certain
holders of Registrable Notes (as defined below) who are not eligible to
participate in the exchange offer to resell the Registrable Notes periodically
without being limited by the transfer restrictions.
We will be required to file a shelf registration statement only if:
- there is a change in applicable law or interpretations thereof by the
staff of the SEC, and as a result we are not permitted to effect the
exchange offer as contemplated by the registration rights agreement;
- the exchange offer registration statement is not declared effective
within 150 days after the issue date of the old notes or the exchange
offer is not consummated on or before the exchange offer consummation
deadline, but we may terminate the shelf registration statement at any
time, without penalty, if the exchange offer registration statement is
declared effective or the exchange offer is consummated; or
- such registration is requested by any holder of the old notes after
consummation of the exchange offer but before the date that is 20 days
after the consummation of the exchange offer if such holder:
-- is an initial purchaser who purchased the old notes from us in the
original sale of the old notes, with respect to old notes not eligible
to be exchanged for exchange notes in the exchange offer or
-- is other than such an initial purchaser, if such holder is not eligible
to exchange the old notes for exchange notes in the exchange offer or
does not receive freely tradable exchange notes in the exchange offer
other than by reason of the holder being an affiliate of ours (it being
understood that the requirement that a broker-dealer deliver the
prospectus included in the exchange offer registration statement in
connection with sales of exchange notes will not result in such
exchange notes being not "freely tradable").
If a shelf registration statement is required, we will use our reasonable
best efforts to:
- file the shelf registration statement with the SEC within 60 days after
the earliest to occur of:
-- the day on which we determine that we are not permitted to effect the
exchange offer contemplated by the registration rights agreement;
-- the day on which we receive notice from a holder entitled to request
registration in accordance with the foregoing paragraph; or
-- the exchange offer consummation deadline;
- have the shelf registration statement be declared effective by the SEC no
later than the 90th day after the date on which we become obligated to
file such shelf registration; and
- to keep the shelf registration statement continuously effective for a
period of two years after the latest date on which any old notes are
originally issued (one year, if it is filed at the request of a holder of
old notes) or, if earlier, until all the Registrable Notes covered by the
shelf registration statement are sold thereunder, become eligible for
resale pursuant to Rule 144 under the Securities Act, or cease to be
Registrable Notes.
Notwithstanding the foregoing, we may, by notice to holders of Registrable
Notes, suspend the availability of a shelf registration statement and the use of
the related prospectus, if:
- such action is required by applicable law;
- our board of directors determines in good faith that such action would
impede, delay or otherwise interfere with any proposed or pending
material corporate transaction or that such action would require
disclosure of material non-public information, the disclosure of which at
such time would not be in our or our stockholders' best interests; or
- the existence of any fact or the happening of any event that makes any
statement of a material fact made in the shelf registration statement or
the related prospectus untrue or requires the making of any changes in or
additions to the registration statement or related prospectus to make the
statements therein not misleading.
39
The period for which we are obligated to keep the shelf registration
statement continuously effective will be extended by the period of such
suspension, but in no event past the second anniversary of the original issuance
date of the old notes (one year, if it is filed at the request of a holder of
old notes). Each holder of Registrable Notes will be required to discontinue
disposition of Registrable Notes pursuant to the shelf registration statement
upon receipt from us of notice of any events described in the preceding
paragraph or certain other events specified in the registration rights
agreement.
The shelf registration statement will permit only certain holders to resell
their old notes from time to time. In particular, these holders must:
- provide certain information in connection with the shelf registration
statement; and
- agree in writing to be bound by all provisions of the registration rights
agreement (including certain indemnification obligations).
A holder who sells old notes pursuant to the shelf registration statement
will be required to be named as a selling security holder in the prospectus and
to deliver a copy of the prospectus to purchasers. If we are required to file a
shelf registration statement, we will provide to each holder of the old notes
copies of the prospectus that is a part of the shelf registration statement and
notify each of these holders when the shelf registration statement becomes
effective. These holders will be subject to certain of the civil liability
provisions under the Securities Act in connection with those sales and will be
bound by the provisions of the registration rights agreement which are
applicable to these holders (including certain indemnification obligations).
"Registrable Notes" means the old notes; provided, however, that any old
notes shall cease to be Registrable Notes when:
- a registration statement with respect to such old notes shall have been
declared effective under the Securities Act and such old notes shall have
been disposed of pursuant to the registration statement;
- such old notes shall have been sold pursuant to Rule 144 under the
Securities Act (or any similar provision then in force) or shall have
become salable pursuant to Rule 144(k) under the Securities Act (or any
similar provision then in force);
- such old notes shall have ceased to be outstanding; or
- such old notes have been exchanged for exchange notes, the offer and sale
of which have been registered pursuant to the exchange offer registration
statement, upon consummation of the exchange offer, subject to certain
exceptions.
ADDITIONAL INTEREST
If a Registration Default (as defined below) occurs, then we will be
required to pay additional interest to each holder of Registrable Notes. During
the first 90-day period that a Registration Default occurs and is continuing, we
will pay additional interest on the Registrable Notes at a rate of 0.25% per
year. If a Registration Default occurs and is continuing for a period of more
than 90 days, then the amount of additional interest we are required to pay on
the Registrable Notes will increase, effective from and after the 90th day in
that period, by an additional 0.25% per year until all Registration Defaults
have been cured. However, in no event will the rate of additional interest
exceed 0.50% per year and we will not be required to pay additional interest for
more than one Registration Default at a time. This additional interest will
accrue only for those days that a Registration Default occurs and is continuing.
All accrued additional interest will be paid to the holders of the old notes in
the same manner as interest payments on the old notes, with payments being made
on the interest payment dates for the old notes. Following the cure of all
Registration Defaults, no more additional interest will accrue unless a
subsequent Registration Default occurs. Additional interest will not be payable
on any old notes other than Registrable Notes.
A "Registration Default" will occur if:
- we fail to file any of the registration statements required by the
registration rights agreement on or before the date specified for that
filing;
- any such registration statement is not declared effective by the SEC on
or prior to the date specified for its effectiveness;
40
- we fail to complete the exchange offer on or prior to the exchange offer
consummation deadline (other than in the event we file a shelf
registration statement because we determined that we are not permitted to
effect the exchange offer); or
- the shelf registration statement is declared effective but thereafter
ceases to be effective or, except as a result of specified matters
relating to selling holders, usable in connection with resales of the old
notes during the periods specified in the registration rights agreement,
except during limited periods as a result of the exercise by us of our
right to suspend use of the shelf registration statement and the related
prospectus as described under "-- Shelf Registration" above.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax
considerations relating to the exchange of the old notes for exchange notes, and
the ownership and disposition of notes, in each case, by holders thereof who are
U.S. persons. This summary does not purport to be a complete analysis of all the
potential tax considerations relating thereto. This summary is based upon the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
proposed, temporary and final regulations, rulings, and judicial decisions all
as in effect on the date hereof. These authorities may be changed, perhaps
retroactively, so as to result in U.S. federal income tax consequences different
from those set forth below. We have not sought any ruling from the Internal
Revenue Service or an opinion of counsel with respect to the statements made and
the conclusions reached in the following summary, and there can be no assurance
that the Internal Revenue Service will agree with such statements and
conclusions. In this summary we refer to the old notes and the exchange notes
collectively as the "notes."
This summary assumes that the notes are held as capital assets and that the
holders of the notes are initial holders (within the meaning of applicable tax
regulations) of the old notes who purchased the old notes at their initial
offering price, that is, the initial price at which a substantial amount of the
old notes were sold to persons (other than bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers) for money. This summary does not address the tax
considerations arising under the laws of any foreign, state, or local
jurisdiction. This summary does not address all the potential tax considerations
relating to the notes, such as considerations relating to tax reporting,
disclosure or listing or considerations applicable to a holder's particular
circumstances or to holders that may be subject to special tax rules, including,
without limitation:
- holders subject to the alternative minimum tax;
- banks;
- tax-exempt organizations,
- insurance companies;
- dealers in securities or currencies;
- traders in securities or commodities or dealers in commodities that elect
to use a mark-to-market method of accounting;
- financial institutions;
- holders whose "functional currency" is not the U.S. dollar;
- persons that will hold the notes as a position in a hedging transaction,
"straddle," "constructive sale," "conversion transaction," or other risk
reduction transaction or as part of an integrated investment;
- foreign persons;
- retirement plans;
- RICs; or
- expatriates.
41
If a partnership holds notes, the tax treatment of a partner in the
partnership will generally depend upon the status of the partner and the
activities of the partnership. If you are a partner of a partnership holding our
notes, you should consult your tax advisor.
THIS SUMMARY OF CERTAIN U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL
INFORMATION ONLY AND IS NOT TAX ADVICE. YOU ARE URGED TO CONSULT YOUR TAX
ADVISOR WITH RESPECT TO THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS TO YOUR
PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE U.S.
FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN,
OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
EXCHANGE OFFER
Because the exchange notes should not differ materially in kind or extent
from the old notes, your exchange of old notes for exchange notes should not
constitute a taxable disposition of the old notes for U.S. federal income tax
purposes. As a result, you should not recognize taxable income, gain, or loss on
such exchange, your holding period for the exchange notes should generally
include the holding period for the old notes so exchanged, and your adjusted tax
basis in the exchange notes should generally be the same as your adjusted tax
basis in the old notes so exchanged.
PAYMENT OF INTEREST
The initial price at which a substantial amount of the old notes was sold
to persons (other than bond houses, brokers, or similar persons or organizations
acting in the capacity of underwriters, placement agents, or wholesalers) was
equal to an amount which was a de minimis discount to the stated principal
amount of the old notes. Based on the assumption that the likelihood of
additional interest being paid on the notes due to a Registration Default (as
described under "Registration Rights") was "remote" within the meaning of
applicable Treasury Regulations, the notes were not issued with more than a de
minimis amount of original issue discount, if any. In the case of the 2008
notes, we also assumed for purposes of this summary that the likelihood that we
will exercise our right (as described under "Description of the Exchange
Notes -- Optional Redemption") to redeem the 2008 notes at a price in excess of
the principal amount of the 2008 notes was "remote" within the meaning of
applicable Treasury Regulations. Thus, stated interest on the notes will
generally be taxable to you as ordinary income at the time it is paid or at the
time it accrues in accordance with your method of accounting for U.S. federal
income tax purposes.
We intend to take the position for U.S. federal income tax purposes that
any payments of additional interest, as described above under "Registration
Rights," would have been taxable to you as additional interest income when
received or accrued, in accordance with your method of tax accounting. This
position (and this summary) are based in part on the assumption that as of the
date of issuance of the old notes, the possibility that additional interest
would have to be paid was a remote contingency. Our determination that such
possibility was a remote contingency (and that the possibility of our redeeming
the 2008 notes at a price in excess of their principal amount was a remote
contingency) is binding on you, unless you explicitly disclose that you are
taking a different position to the Internal Revenue Service on your tax return
for the year during which you acquired the old notes. However, the Internal
Revenue Service may take a contrary position from that described above, which
could affect the timing and character of both your income, gain or loss from
holding or disposing of the notes and our deduction with respect to the payments
on the notes. If we are required to pay additional interest on the notes, you
should consult your tax advisors concerning the appropriate tax treatment of the
payment of such additional interest.
SALE, EXCHANGE, OR DISPOSITION OF NOTES
You will generally recognize gain or loss upon the sale, exchange,
redemption, retirement, or other taxable disposition of a note equal to the
difference between the amount realized upon the sale, exchange, redemption,
retirement, or other taxable disposition (less an amount attributable to any
accrued stated interest not previously included in income, which will be taxable
as ordinary income) and your adjusted tax basis in the note. Your adjusted tax
basis in a note will generally equal the amount you paid for the note.
Generally,
42
any gain or loss recognized on a disposition of the note will be capital gain or
loss and will be long-term capital gain or loss if, at the time of such sale,
exchange, redemption, retirement or other taxable disposition, the note has been
held for more than one year. The ability to deduct capital losses is subject to
limitation under U.S. federal income tax laws.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal and interest on the notes and the proceeds of sale of a
note unless you are an exempt recipient (such as a corporation). A backup
withholding tax at the rate of 30% will apply to such payments if you fail to
provide your taxpayer identification number or certification of exempt status or
have been notified by the Internal Revenue Service that you are subject to
backup withholding.
Any amounts withheld under the backup withholding rules will generally be
allowed as a refund or a credit against your U.S. federal income tax liability
provided the required information is furnished to the Internal Revenue Service.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of those exchange notes. 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 exchange notes received in exchange for old notes where the old
notes were acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days after the registration
statement of which this prospectus forms a part is declared effective or, if
earlier, until the date on which broker-dealers are no longer required to
deliver a prospectus in connection with market-making or other trading
activities, we will make this prospectus, as amended or supplemented, available
to any broker-dealer for use in connection with any resale of exchange notes.
Any broker-dealers required to use this prospectus and any amendments or
supplements to this prospectus for resales of the exchange notes must notify us
of this fact by checking the box on the letter of transmittal requesting
additional copies of these documents.
Notwithstanding the foregoing, we are entitled under the registration
rights agreement to suspend the use of this prospectus by broker-dealers under
specified circumstances. For example, we may suspend the use of this prospectus
if:
- our board of directors determines in good faith that such action would
impede, delay or otherwise interfere with any proposed or pending
material corporate transaction involving Brown-Forman or that such action
would require the disclosure of material non-public information, the
disclosure of which at such time would not be in the best interests of
Brown-Forman or its stockholders; or
- this prospectus contains an untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements
contained in this prospectus, in light of the circumstances under which
they were made, not misleading.
If we suspend the use of this prospectus, the 180-day period referred to
above will be extended by a number of days equal to the period of the suspension
(but in no event past the second anniversary of the date we issued the old
notes).
We will not receive any proceeds from any sales of the exchange notes by
broker-dealers. Exchange notes received by 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, through
the writing of options on the exchange notes or a combination of methods of
resale, at market prices prevailing at the time of resale, at prices related to
those prevailing market prices or at negotiated prices. Any resale may be made
directly to the purchaser or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from the broker-dealer
and/or the purchasers of the exchange notes. Any broker-dealer that resells the
exchange notes that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
the exchange notes may be deemed to be an
43
"underwriter" within the meaning of the Securities Act and any profit on any
resale of exchange notes and any commissions or concessions received by any of
those 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.
For a period of 180 days after the registration statement of which this
prospectus forms a part is declared effective or, if earlier, until the date on
which broker-dealers are no longer required to deliver a prospectus in
connection with market-making or other trading activities, we will promptly
provide additional copies of this prospectus and any amendment or supplement to
this prospectus to any broker-dealer that requests such documents in the letter
of transmittal.
We have agreed to pay the expenses incident to the exchange offer,
including the reasonable fees and disbursements of one legal counsel for the
holders of the old notes, other than commissions or concessions of any brokers
or dealers and the fees of any advisors or experts retained by the holders of
old notes (other than the legal counsel referred to above), and will indemnify
the holders of the exchange notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Ogden Newell & Welch PLLC, Louisville, Kentucky, will pass upon the
validity of the exchange notes and various legal matters for us in connection
with the exchange notes offered hereby.
EXPERTS
Our consolidated financial statements as of April 30, 2001 and April 30,
2002 and for each of the three years in the period ended April, 30 2002,
incorporated by reference in our annual report on Form 10-K for the year ended
April 30, 2002, have been incorporated by reference in this prospectus in
reliance upon the report, also incorporated by reference in this prospectus, of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
CERTAIN DOCUMENTS INCORPORATED BY REFERENCE
This prospectus incorporates by reference certain documents we have filed
or may file with the SEC. The following Brown-Forman documents are incorporated
by reference:
- Annual Report on Form 10-K for the fiscal year ended April 30, 2002;
- Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31,
2002, October 31, 2002 and January 31, 2003;
- Current Reports on Form 8-K (but excluding any materials furnished under
Item 9 thereof) filed with the SEC on August 13, 2002; August 21, 2002;
August 27, 2002; November 1, 2002; December 20, 2002; December 23, 2002;
February 26, 2003; and March 14, 2003;
- The portions of our Proxy Statement for our annual meeting of
stockholders held on July 25, 2002, filed with SEC on July 1, 2002, that
have been incorporated by reference in our Annual Report on Form 10-K for
the fiscal year ended April 30, 2002; and
- All documents filed by us with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and until the
expiration of the exchange offer, excluding any materials furnished
pursuant to Item 9 or Item 12 of Current Report on Form 8-K unless
otherwise expressly stated in such Current Report on Form 8-K.
References to "this prospectus" are intended to include the documents
incorporated by reference, which are an integral part of this prospectus. You
should obtain and review carefully copies of the documents incorporated by
reference. Any statement contained in the documents incorporated by reference in
this prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus modifies
or supersedes the statement. Information that we later file
44
with the SEC before the expiration date of the exchange offer will automatically
modify and supersede the information previously incorporated by reference in
this prospectus and the information set forth in this prospectus. Any statement
so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus. Any person obtaining a copy
of this prospectus may obtain without charge, upon written request to us, a copy
of the documents incorporated by reference. See "Additional Information."
AVAILABLE INFORMATION
We are subject to the informational reporting requirements of the Exchange
Act and, in accordance with the Exchange Act, we file reports, proxy and
information statements, and other information with the SEC. The reports, proxy
and information statements, and other information may be inspected and copied at
the public reference facilities of the SEC, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain copies of these
materials from the SEC by mail at prescribed rates. You should direct requests
to the SEC's Public Reference Section, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. The SEC also maintains a
website (http://www.sec.gov) that contains the reports, proxy and information
statements, and other information filed by us.
Our Class A common stock and Class B common stock are listed on the New
York Stock Exchange under the symbols "BF/A" and "BF/B," respectively. You may
inspect information filed by us at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005. You may obtain copies of this
information and the documents incorporated by reference in this prospectus at no
charge from us. See "Additional Information."
45
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BROWN-FORMAN
BROWN-FORMAN CORPORATION
2 1/8% NOTES DUE 2006
($250,000,000 PRINCIPAL AMOUNT OUTSTANDING)
AND
3% NOTES DUE 2008
($350,000,000 PRINCIPAL AMOUNT OUTSTANDING)
-----------------------------------------
OFFER TO EXCHANGE
-----------------------------------------
, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 145(a) and (b) of the Delaware General Corporation Law (the
"DGCL") provide generally that a corporation has the power to indemnify its
officers, directors, employees and agents against expenses, including attorneys'
fees, judgments, fines and settlement amounts actually and reasonably incurred
by them in connection with the defense of any action by reason of being or
having been directors, officers, employees or agents of the corporation (or
serving or having served in such positions in another entity at the request of
the corporation) if such person shall have acted in good faith and in a manner
the person reasonably believed to be in or not opposed to the best interests of
the corporation (and, with respect to any criminal action, had no reasonable
cause to believe the person's conduct was unlawful), except that if such action
shall be by or in the right of the corporation, no such indemnification shall be
provided as to any claim, issue or matter as to which such person shall have
been judged to have been liable to the corporation unless and only to the extent
that the Court of Chancery of the State of Delaware, or another court in which
the suit was brought, shall determine upon application that, despite the
adjudication of liability but in view of all of the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court deems proper.
Section 145(c) of the DGCL provides that to the extent that a present or
former director or officer of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Sections
145(a) and (b) of the DGCL, as described in the preceding paragraph, or in
defense of any claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
As permitted by Section 102(b)(7) of the DGCL, the Registrant's Certificate
of Incorporation provides that a director shall not be personally liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director, except that a director may be liable (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit.
In addition, the By-laws of the Registrant permit the Registrant's board of
directors to adopt a resolution providing for the indemnification of the
Registrant's officers and directors to the extent authorized by law.
A directors' and officers' insurance policy insures the Registrant's
directors and officers against liabilities incurred in their capacity as such
for which they are not otherwise indemnified, subject to certain exclusions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following exhibits are filed herewith or incorporated herein by
reference:
EXHIBIT
NO. DOCUMENT DESCRIPTION
------- --------------------
3.1 Restated Certificate of Incorporation (incorporated by
reference to Exhibit 3(i)(b) to Registrant's Quarterly
Report on Form 10-Q filed with the SEC on December 10,
1998).
II-1
EXHIBIT
NO. DOCUMENT DESCRIPTION
------- --------------------
3.2 The by-laws of Registrant (incorporated by reference to
Exhibit 99.1 to Registrant's Current Report on Form 8-K
filed with the SEC on August 13, 2002).
4.1* Indenture, dated as of March 13, 2003, between Brown-Forman
Corporation and National City Bank, as Trustee.
4.2* Registration Rights Agreement, dated March 13, 2003, among
Brown-Forman Corporation and Banc of America Securities LLC,
Banc One Capital Markets, Inc., J.P. Morgan Securities Inc.,
HSBC Securities Inc., SunTrust Capital Markets, Inc., Fifth
Third Securities, Inc. and U.S. Bancorp Piper Jaffray Inc.
5.1 Opinion of Ogden Newell & Welch PLLC.
12.1* Computation of Consolidated Ratios of Earnings to Fixed
Charges (set forth on page 8 of the prospectus forming part
of this registration statement).
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants for Brown-Forman Corporation.
23.2 Consent of Ogden Newell & Welch PLLC (included in Exhibit
5.1).
24.1* Powers of attorney.
25.1* Form T-1 Statement of Eligibility of National City Bank to
act as trustee under the Indenture.
99.1* Letter of Transmittal.
99.2* Notice of Guaranteed Delivery.
99.3* Letter to brokers, dealers, commercial banks, issuer
companies and other nominees.
99.4* Form of letter from brokers, dealers, commercial banks,
issuer companies and other nominees to their Clients.
99.5* Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
---------------
* Previously filed.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change in such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
II-2
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
(d) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
(e) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Louisville, State of
Kentucky, on April 29, 2003.
BROWN-FORMAN CORPORATION
By: /s/ MICHAEL B. CRUTCHER
-------------------------------------------
Name: Michael B. Crutcher
Title: Senior Vice President, General
Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
* Chairman of the Board, Chief April 29, 2003
------------------------------------------------ Executive Officer and Director
Owsley Brown II (Principal Executive Officer)
* Executive Vice President and Chief April 29, 2003
------------------------------------------------ Financial Officer
Phoebe A. Wood (Principal Financial Officer)
* Senior Vice President April 29, 2003
------------------------------------------------ (Principal Accounting Officer)
Lawrence K. Probus
* Director April 29, 2003
------------------------------------------------
Ina Brown Bond
Director
------------------------------------------------
Barry D. Bramley
* Director April 29, 2003
------------------------------------------------
Geo. Garvin Brown, III
Director
------------------------------------------------
Donald G. Calder
* Director April 29, 2003
------------------------------------------------
Owsley Brown Frazier
II-4
* Director April 29, 2003
------------------------------------------------
Richard P. Mayer
* Director April 29, 2003
------------------------------------------------
Stephen O'Neil
Director
------------------------------------------------
Matthew R. Simmons
* Director April 29, 2003
------------------------------------------------
William M. Street
Director
------------------------------------------------
Dace Brown Stubbs
* By: /s/ MICHAEL B. CRUTCHER
-----------------------------------------------
Michael B. Crutcher
Attorney-in-Fact
II-5
EXHIBIT INDEX
EXHIBIT
NO. DOCUMENT DESCRIPTION
------- --------------------
3.1 Restated Certificate of Incorporation (incorporated by
reference to Registrant's Quarterly Report on Form 10-Q
filed with the SEC on December 10, 1998).
3.2 The by-laws of Registrant (incorporated by reference to
Exhibit 99.1 to Registrant's Current Report on Form 8-K
filed with the SEC on August 13, 2002).
4.1* Indenture, dated as of March 13, 2003, between Brown-Forman
Corporation and National City Bank, as Trustee.
4.2* Registration Rights Agreement, dated March 13, 2003, among
Brown-Forman Corporation and Banc of America Securities LLC,
Banc One Capital Markets, Inc., J.P. Morgan Securities Inc.,
HSBC Securities Inc., SunTrust Capital Markets, Inc., Fifth
Third Securities, Inc. and U.S. Bancorp Piper Jaffray Inc.
5.1 Opinion of Ogden Newell & Welch PLLC.
12.1* Computation of Consolidated Ratios of Earnings to Fixed
Charges (set forth on page 8 of the prospectus forming part
of this registration statement).
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants for Brown-Forman Corporation.
23.2 Consent of Ogden Newell & Welch PLLC (included in Exhibit
5.1).
24.1* Powers of attorney.
25.1* Form T-1 Statement of Eligibility of National City Bank to
act as trustee under the Indenture.
99.1* Letter of Transmittal.
99.2* Notice of Guaranteed Delivery.
99.3* Letter to brokers, dealers, commercial banks, issuer
companies and other nominees.
99.4* Form of letter from brokers, dealers, commercial banks,
issuer companies and other nominees to their Clients.
99.5* Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
---------------
* Previously filed.