Filed pursuant to Rule 424(B)(2)
File Number 333-42206
Prospectus Supplement to Prospectus dated August 4, 2000
6.35% Notes due 2011
Target Corporation will pay interest on the Notes on January 15 and July 15 of each year, beginning July 15, 2001. The Notes will mature on January 15, 2011. We may redeem the Notes at our option at any time, either in whole or in part, at the redemption prices described in this prospectus supplement. The Notes will be represented by one or more global Notes registered in the name of The Depository Trust Company, which will act as Depositary.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
|Initial public offering price||99.772%||$||698,404,000|
|Proceeds, before expenses, to Target Corporation||99.122%||$||693,854,000|
The initial public offering price set forth above does not include accrued interest, if any. Interest on the Notes will accrue from January 10, 2001.
The underwriters will offer the Notes on a firm commitment basis, subject to various conditions. The underwriters expect to deliver the Notes in book-entry form only through the facilities of The Depository Trust Company against payment in New York, New York on January 10, 2001.
Joint Book-Running Managers
|Goldman, Sachs & Co.||Salomon Smith Barney|
|JP Morgan||Merrill Lynch & Co.|
Prospectus Supplement dated January 5, 2001.
You should read this prospectus supplement along with the prospectus that follows. Both documents contain information you should consider when making your investment decision. You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. Capitalized terms used but not defined in this prospectus supplement have the meanings specified in the accompanying prospectus.
The following discussion of the terms of the Notes supplements the description of the general terms and provisions of the Debt Securities contained in the accompanying prospectus and identifies any general terms and provisions described in the accompanying prospectus that will not apply to the Notes.
The Notes will be our general unsecured and senior obligations issued in an initial aggregate principal amount of $700,000,000. We will issue the Notes under an Indenture, dated as of August 4, 2000, as amended or supplemented from time to time (the "Indenture"), between us and Bank One Trust Company, N.A., as Trustee. You should read the accompanying prospectus for a general discussion of the terms and provisions of the Indenture.
We may, without the consent of the Holders of the Notes, issue additional notes from the series of Notes offered by this prospectus supplement. Any additional notes will have the same ranking, interest rate, maturity date and other terms as the Notes. Any additional notes, together with the Notes offered by this prospectus supplement, will constitute a single series of Debt Securities under the Indenture.
The Notes will mature on January 15, 2011 and will not be entitled to any sinking fund. We may redeem the Notes at our option at any time, either in whole or in part. See "Optional Redemption" below.
The Notes will bear interest at a rate of 6.35% per annum from January 10, 2001 or from the most recent interest payment date on which we paid or provided for interest on the Notes. We will pay interest on the Notes on each January 15 and July 15, commencing July 15, 2001, to the Person listed as the Holder of the Note (or any predecessor Note) in the Security Register at the close of business on the preceding January 1 or July 1, as the case may be.
The Notes will be issued only in denominations of $1,000 each or integral multiples of $1,000.
The Notes are subject to defeasance in the manner described under the heading "Description of Debt SecuritiesDefeasance" in the accompanying prospectus.
Settlement for the Notes will be made by the Underwriters in immediately available funds. The Notes will trade in the Depositary's settlement system until maturity. As a result, the Depositary will require secondary trading activity in the Notes to be settled in immediately available funds.
Meaning of Terms
We may redeem the Notes at our option as described below. See "Our Redemption Rights." The following terms are relevant to the determination of the redemption price.
When we use the term "Treasury Rate," we mean with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue. In determining this rate, we assume 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.
When we use the term "Comparable Treasury Issue," we mean the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Notes. "Independent Investment Banker" means each of Goldman, Sachs & Co. and Salomon Smith Barney Inc. or their respective successors as may be appointed from time to time by the Trustee after consultation with us; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "primary treasury dealer"), we shall substitute therefor another primary treasury dealer.
When we use the term "Comparable Treasury Price," we mean (A) the arithmetic average of the Reference Treasury Dealer Quotations for such redemption date after excluding the highest and lowest Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three Reference Treasury Dealer Quotations, the arithmetic average of all Reference Treasury Dealer Quotations for such redemption date. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the arithmetic 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 by 5:00 p.m. on the third business day preceding such redemption date. When we use the term "Reference Treasury Dealer," we mean each of Goldman, Sachs & Co. and Salomon Smith Barney Inc. and their respective successors and any other primary U.S. Government securities dealer in New York City selected by the Trustee after consultation with us.
When we use the term "Remaining Scheduled Payments," we mean with respect to any Note, the remaining scheduled payments of the principal and interest thereon that would be due after the related redemption date but for such redemption; provided, however, that, if such redemption date is not an interest payment date with respect to such Note, the amount of the next scheduled interest payment thereon will be reduced by the amount of interest accrued thereon to such redemption date.
Our Redemption Rights
We may redeem the Notes at our option at any time, either in whole or in part. If we elect to redeem the Notes, we will pay a redemption price equal to the greater of the following amounts, plus, in each case, accrued and unpaid interest thereon to the redemption date:
In determining the present values of the Remaining Scheduled Payments, we will discount such payments to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) using a discount rate equal to the Treasury Rate plus 20 basis points. A partial redemption of the Notes may be effected by such method as the Trustee shall deem fair and appropriate and may provide for the selection for redemption of portions (equal to the minimum authorized denomination for the Notes or any integral multiple thereof) of the principal amount of Notes of a denomination larger than the minimum authorized denomination for the Notes.
Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of the Notes to be redeemed.
Unless we default in payment of the redemption price, on and after the redemption date interest will cease to accrue on the Notes or portions thereof called for redemption.
Book Entry System
We will issue the Notes in the form of one or more fully registered global Notes which will be deposited with, or on behalf of, The Depositary Trust Company, New York, New York ("DTC"), which will act as Depositary. The Notes will be registered in the name of DTC or its nominee.
Ownership of beneficial interests in a global Note will be limited to DTC participants and to persons that may hold interests through institutions that have accounts with DTC ("participants"). Beneficial interests in a global Note will be shown on, and transfers of those ownership interests will be effected only through, records maintained by DTC and its participants for such global Note. The conveyance of notices and other communications by DTC to its participants and by its participants to owners of beneficial interests in the Notes will be governed by arrangements among them, subject to any statutory or regulatory requirements in effect.
DTC holds the securities of its participants and facilitates the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of its participants. The electronic book-entry system eliminates the need for physical certificates. DTC's participants include:
Banks, brokers, dealers, trust companies and others that clear through or maintain a custodial relationship with a participant, either directly or indirectly, also have access to DTC's book-entry system.
Principal and interest payments on the Notes represented by a global Note will be made to DTC or its nominee, as the case may be, as the sole registered owner and the sole Holder of the Notes represented by the global Note for all purposes under the Indenture. Accordingly, we, the Trustee and any paying agent will have no responsibility or liability for:
DTC has advised us that upon receipt of any payment of principal of or interest on a global Note, DTC will immediately credit, on its book-entry registration and transfer system, the accounts of participants with payments in amounts proportionate to their respective beneficial interests in the principal amount of such global Note as shown on DTC's records. The Underwriters will initially designate the accounts to be credited. Payments by participants to owners of beneficial interests in a global Note will be governed by standing instructions and customary practices, as is the case with securities held for customer accounts registered in "street name", and will be the sole responsibility of those participants.
If we redeem less than all of the global Notes, we have been advised that it is DTC's practice to determine by lot the amount of the interest of each participant in the global Notes to be redeemed.
A global Note can only be transferred:
Notes represented by a global Note can be exchanged for definitive Notes in registered form only if:
A global Note that can be exchanged under the preceding sentence will be exchanged for definitive Notes that are issued in authorized denominations in registered form for the same aggregate amount. Such definitive Notes will be registered in the names of the owners of the beneficial interests in such global Note as directed by DTC.
Except as provided above, (1) owners of beneficial interests in such global Note will not be entitled to receive physical delivery of Notes in definitive form and will not be considered the Holders of the Notes for any purpose under the Indenture and (2) no Notes represented by a global Note will be exchangeable. Accordingly, each person owning a beneficial interest in a global Note must rely on the procedures of DTC (and if such person is not a participant, on the procedures of the participant through which such person owns its interest) to exercise any rights of a Holder under the Indenture or such global Note. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of the securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a global Note.
We understand that under existing industry practices, if we request Holders to take any action, or if an owner of a beneficial interest in a global Note desires to take any action which a Holder is entitled to take under the Indenture, then (1) DTC would authorize the participants holding the relevant beneficial interests to take such action and (2) such participants would authorize the beneficial owners owning through such participants to take such action or would otherwise act upon the instructions of beneficial owners owning through them.
DTC has provided the following information to us. DTC is:
Concerning the Trustee
From time to time, we and certain of our subsidiaries maintain deposit accounts and conduct other banking transactions with the Trustee in the ordinary course of business. The Trustee also acts as the
transfer agent and registrar for our Common Stock and as the issuing and paying agent for our commercial paper.
We and the underwriters for the offering (the "Underwriters") named below have entered into an underwriting agreement with respect to the Notes. Subject to certain conditions, each Underwriter has severally agreed to purchase the total principal amount of Notes shown in the following table.
Goldman, Sachs & Co.
|Salomon Smith Barney Inc.||262,500,000|
|Chase Securities Inc.||87,500,000|
|Merrill Lynch, Pierce, Fenner & Smith
Notes sold by the Underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus supplement. Any Notes sold by the Underwriters to securities dealers may be sold at a discount from the initial public offering price of up to 0.40% of the principal amount of Notes. Any such securities dealers may resell any Notes purchased from the Underwriters to certain other brokers or dealers at a discount from the initial public offering price of up to 0.25% of the principal amount of Notes. If all the Notes are not sold at the initial offering price, the Underwriters may change the offering price and the other selling terms.
The Notes are a new issue of securities with no established trading market. The Underwriters have advised us that the Underwriters intend to make a market in the Notes but are not obligated to do so and may discontinue market making at any time without notice. Neither we nor the Underwriters can assure you as to the liquidity of the trading market for the Notes.
In connection with the offering, the Underwriters may purchase and sell the Notes in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the Underwriters of a greater total principal amount of Notes than they are required to purchase in the offering. Stabilizing transactions consist of certain bids or purchases made for the purpose of preventing or retarding a decline in the market price of the Notes while the offering is in progress. The Underwriters may also impose a penalty bid. This occurs when a particular Underwriter repays to the Underwriters a portion of the underwriting discount received by it because an Underwriter has repurchased Notes sold by or for the account of that particular Underwriter in stabilizing or short covering transactions. These activities by the Underwriters may stabilize, maintain or otherwise affect the market price of the Notes, which may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the Underwriters at any time. These transactions may be effected in the over-the-counter market or otherwise.
In addition to the underwriting discount discussed above, we estimate that we will spend approximately $100,000 for expenses in connection with this offering.
We have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933.
The Underwriters or their affiliates may be customers of, engage in transactions with and perform investment and/or commercial banking services for us in the ordinary course of business.
The validity of the Notes will be passed upon for us by Faegre & Benson LLP, Minneapolis, Minnesota, and for the Underwriters by King & Spalding, New York, New York. Faegre & Benson LLP may rely on King & Spalding as to matters of New York law, and King & Spalding may rely on Faegre & Benson LLP as to matters of Minnesota law.
|777 Nicollet Mall
Minneapolis, Minnesota 55402
Preferred Share Warrants
Common Stock Warrants
We will provide the specific terms of these securities in supplements to this prospectus.
You should read this prospectus and the applicable supplement carefully before you invest.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus is dated August 4, 2000
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission using a "shelf" registration process. Under this shelf process, we may sell:
either separately or in units, in one or more offerings up to a total dollar amount of $2,000,000,000. This prospectus provides you with a general description of those securities. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement together with the additional information described under the heading "Where You Can Find More Information."
The registration statement that contains this prospectus (including the exhibits to the registration statement) contains additional information about our company and the securities offered under this prospectus. That registration statement can be read at the SEC web site or at the SEC offices mentioned under the heading "Where You Can Find More Information."
We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. Our SEC filings are also available at the office of the New York Stock Exchange. For further information on obtaining copies of our public filings at the New York Stock Exchange, you should call (212) 656-5060.
We "incorporate by reference" into this prospectus the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus. Some information contained in this prospectus updates the information incorporated by reference, and information that we file subsequently with the SEC will automatically update this prospectus. In other words, in the case of a conflict or inconsistency between information set forth in this prospectus and information that we file later and incorporate by reference into this prospectus, you should rely on the information contained in the document that was filed later. We incorporate by reference the documents listed below and any filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the initial filing of the registration statement that contains this prospectus and prior to the time that we sell all the securities offered by this prospectus:
Shareholders and our definitive Notice and Proxy Statement for our 2000 Annual Meeting of Shareholders);
You may request a copy of these filings (other than an exhibit to a filing unless that exhibit is specifically incorporated by reference into that filing) at no cost, by writing to or telephoning us at the following address:
777 Nicollet Mall
Minneapolis, Minnesota 55402-2055
You should rely only on the information incorporated by reference or set forth in this prospectus or the applicable prospectus supplement. We have not authorized anyone else to provide you with additional or different information. We may only use this prospectus to sell securities if it is accompanied by a prospectus supplement. We are only offering these securities in states where the offer is permitted. You should not assume that the information in this prospectus or the applicable prospectus supplement is accurate as of any date other than the dates on the front of those documents.
We focus on general merchandise retailing through three operating divisions:
When we refer to "our company," "we," "our" and "us" in this prospectus under the headings "The Company," "Use of Proceeds" and "Ratios of Earnings to Fixed Charges and to Fixed Charges and Preferred Stock Dividends," we mean Target Corporation and its subsidiaries. When such terms are used elsewhere in this prospectus, we refer only to Target Corporation unless the context indicates otherwise.
The information below provides detail on the operations of our business segments.
||Fiscal Year Ended
||February 3, 1996*
||February 1, 1997
||January 31, 1998
||January 30, 1999
||January 29, 2000
||(Millions of Dollars)
|Pre-tax segment profit and earnings reconciliation|
|Total pre-tax segment profit||$||1,030||$||1,471||$||1,807||$||2,097||$||2,523|
|LIFO provision credit/(expense)||(17||)||(9||)||(6||)||18||7|
|Real estate repositioning||||(134||)|||||||
|Earnings before income taxes and extraordinary charges||$||501||$||783||$||1,326||$||1,556||$||1,936|
|Depreciation and amortization|
|Total depreciation and amortization||$||594||$||650||693||$||780||$||854|
|Total capital expenditures||$||1,522||$||1,301||$||1,354||$||1,657||$||1,918|
|Total segment EBITDA**||$||1,621||$||2,118||$||2,498||$||2,866||$||3,361|
|Total net assets||$||9,629||$||9,911||$||10,686||$||11,618||$||12,544|
|*||Consisted of 53 weeks.|
|**||Segment EBITDA is pre-tax segment profit before depreciation and amortization. Pre-tax segment profit is earnings before LIFO, securitization effects, interest, other expense, and unusual items. Our management uses EBITDA and pre-tax segment profit, among other standards, to measure operating performance. EBITDA and pre-tax segment profit supplement, and are not intended to represent measures of performance in accordance with, disclosures required by generally accepted accounting principles.|
|***||Net assets represent total assets (including sold securitized receivables) less non-interest bearing current liabilities.|
Each operating segment's assets and operating results include the retained securitized receivables held by Target Receivables Corporation and Retailers National Bank, as well as related income and expenses.
Unless the applicable prospectus supplement states otherwise, the net proceeds from the sale of the offered securities will be added to our general funds and may be used to:
Until the net proceeds have been used, they will be invested in short-term marketable securities.
||Fiscal Year Ended
||Three Months Ended
||February 3, 1996
||February 1, 1997
||January 31, 1998
||January 30, 1999
||January 29, 2000
||May 1, 1999
||April 29, 2000
|Ratio of Earnings to Fixed Charges||1.94x||2.46||3.65||4.18||4.96||3.74||4.19|
|Ratio of Earnings to Fixed Charges and|
|Preferred Stock Dividends||1.81x||2.30||3.40||3.92||4.69||3.50||4.19|
For purposes of calculating the ratios, fixed charges consist of:
The ratio of earnings to fixed charges is calculated as follows:
before extraordinary charges and income taxes) + (fixed charges) - (capitalized interest)
The ratio of earnings to fixed charges and preferred stock dividends is calculated as follows:
before extraordinary charges and income taxes) + (fixed charges) - (capitalized interest)
(fixed charges) + (pretax earnings required to cover preferred stock dividends)
Pretax earnings required to cover preferred stock dividends are calculated as follows:
stock dividends, as adjusted for the tax benefits related to unallocated shares
1 - (our effective income tax rate)
This section describes the general terms and provisions of the Debt Securities (as defined below). The prospectus supplement will describe the specific terms of the Debt Securities offered through that prospectus supplement and any general terms outlined in this section that will not apply to those Debt Securities.
The Debt Securities will be issued under an indenture (the "Indenture") between us and the trustee named in the applicable prospectus supplement (the "Trustee"). As used in this prospectus, "Debt Securities" means the debentures, notes, bonds and other evidences of indebtedness that we issue and the Trustee authenticates and delivers under the Indenture.
We have summarized certain terms and provisions of the Indenture in this section. The summary is not complete. We have also filed the form of the Indenture as an exhibit to the registration statement. You should read the form of Indenture for additional information before you buy any Debt Securities. The summary that follows includes references to section numbers of the Indenture so that you can more easily locate these provisions. Capitalized terms used but not defined in this summary have the meanings specified in the Indenture.
The Debt Securities will be our direct, senior, unsecured obligations. The Indenture does not limit the amount of Debt Securities that we may issue and permits us to issue Debt Securities from time to time. Debt Securities issued under the Indenture will be issued as part of a series that has been established by us pursuant to the Indenture. (Section 301) Unless a prospectus supplement relating to Debt Securities states otherwise, the Indenture and the terms of the Debt Securities will not contain any covenants designed to afford holders of any Debt Securities protection in a highly leveraged or other transaction involving us that may adversely affect holders of the Debt Securities. If we ever issue Bearer Securities we will summarize provisions of the Indenture that relate to Bearer Securities in the applicable prospectus supplement.
A prospectus supplement relating to a series of Debt Securities being offered will include specific terms relating to the offering. (Section 301) These terms will include some or all of the following:
the interest rate on the Debt Securities;
the date from which interest will accrue;
the record and interest payment dates for the Debt Securities;
the first interest payment date; and
any circumstances under which we may defer interest payments;
A "Holder," with respect to a Registered Security, means the Person in whose name such Registered Security is registered in the Security Register. (Section 101)
We will designate a Place of Payment where you can receive payment of the principal of and any premium and interest on the Debt Securities or transfer the Debt Securities. Even though we will designate a Place of Payment, we may elect to pay any interest on the Debt Securities by mailing a check to the Person listed as the owner of the Debt Securities in the Security Register or by wire transfer to an account designated by that Person in writing not less than ten days before the date of the interest payment. (Sections 305, 307, 1002) There will be no service charge for any registration of transfer or exchange of the Debt Securities, but we may require you to pay any tax or other governmental charge payable in connection with a transfer or exchange of the Debt Securities. (Section 305)
Unless the prospectus supplement states otherwise, the Debt Securities will be issued only in registered form, without coupons, in denominations of $1,000 each or multiples of $1,000.
Original Issue Discount
Debt Securities may be issued under the Indenture as Original Issue Discount Securities and sold at a substantial discount below their stated principal amount. If a Debt Security is an "Original Issue Discount Security," that means that an amount less than the principal amount of the Debt Security will be due and payable upon a declaration of acceleration of the maturity of the Debt Security pursuant to the Indenture. (Section 101) The applicable prospectus supplement will describe the federal income tax consequences and other special factors which should be considered prior to purchasing any Original Issue Discount Securities.
Classification of Restricted and Unrestricted Subsidiaries
The Indenture contains certain restrictive covenants that apply to us and all of our Restricted Subsidiaries. Those covenants do not apply to our Unrestricted Subsidiaries. For example, the assets and indebtedness of Unrestricted Subsidiaries and investments by us or our Restricted Subsidiaries in Unrestricted Subsidiaries are not included in the calculations described under the heading
"Restrictions on Secured Funded Debt" below. The Indenture does not require us to maintain any Restricted Subsidiaries and, if we do not, the Indenture will not provide any limitations on the amount of secured debt created or incurred by our Subsidiaries.
A "Subsidiary" is any corporation of which we own more than 50% of the outstanding shares of Voting Stock directly or through one or more of our other Subsidiaries. "Voting Stock" means stock that is entitled in the ordinary course (i.e., not only as a result of the happening of certain events) to vote in an election for directors.
"Restricted Subsidiaries" are all of our Subsidiaries other than Unrestricted Subsidiaries. A "Wholly-owned Restricted Subsidiary" is a Restricted Subsidiary of which we own all of the outstanding capital stock directly or through our other Wholly-owned Restricted Subsidiaries.
Our "Unrestricted Subsidiaries" are:
Our Board of Directors can at any time change a Subsidiary's designation from an Unrestricted Subsidiary to a Restricted Subsidiary if:
Restrictions on Secured Funded Debt
The Indenture limits the amount of Secured Funded Debt that we and our Restricted Subsidiaries may incur or otherwise create (including by guarantee). Neither we nor our Restricted Subsidiaries may incur or otherwise create any new Secured Funded Debt unless immediately after such incurrence or creation:
the aggregate principal amount of all of our outstanding Secured Funded Debt and that of our Restricted Subsidiaries (other than certain categories of Secured Funded Debt discussed below), plus
the aggregate amount of our Attributable Debt and that of our Restricted Subsidiaries relating to sale and lease-back transactions,
This limitation does not apply if the outstanding Debt Securities are secured equally and ratably with or prior to the new Secured Funded Debt. (Sections 1008(a), 1008(c))
"Secured Funded Debt" means Funded Debt which is secured by a mortgage, lien or other similar encumbrance upon any of our assets or those of our Restricted Subsidiaries. (Section 101)
"Funded Debt" means:
Funded Debt does not include any amount relating to obligations under leases, or guarantees of leases, whether or not those obligations would be included as liabilities on our consolidated balance sheet. (Section 101)
"Indebtedness" means, except as set forth in the next sentence:
Indebtedness does not include any obligations or guarantees of obligations relating to lease rentals, even if such obligations or guarantees of obligations would be included as liabilities on the consolidated balance sheet of us and our Restricted Subsidiaries. (Section 101)
"Attributable Debt" means:
The amount of Attributable Debt relating to an operating lease that can be terminated by the lessee with the payment of a penalty will be calculated based on the lesser of:
"Consolidated Net Tangible Assets" means the total consolidated amount of our assets and those of our Restricted Subsidiaries (minus applicable reserves and other properly deductible items and after excluding any investments made in Unrestricted Subsidiaries or in corporations while they were Unrestricted Subsidiaries but which are not Subsidiaries at the time of the calculation), minus
Funded Debt, capital stock and surplus, surplus reserves and provisions for deferred income taxes, and
The following categories of Secured Funded Debt will not be considered in determining whether we are in compliance with the covenant described in the first paragraph under the heading "Restrictions on Secured Funded Debt":
Restrictions on Sale and Lease-Back Transactions
The Indenture provides that neither we nor any of our Restricted Subsidiaries may enter into any sale and lease-back transaction involving any Operating Property (as defined below) more than 120 days after its acquisition or the completion of its construction and commencement of its full operation, unless either:
This restriction will not apply to any sale and lease-back transaction:
"Operating Property" means any retail store, distribution center or other property related to our general retail business or that of one of our Subsidiaries, parking facilities and any equipment located at, or a part of, any such property if it has a net book value greater than .35% of our Consolidated Net Tangible Assets and has been owned and operated by us or one of our Subsidiaries for more than 90 days. If we acquire a new Subsidiary that already owns and operates such property, then such property will not be considered Operating Property until 90 days after such acquisition. (Section 101)
Consolidation, Merger or Sale
The Indenture generally permits a consolidation or merger between us and another corporation. It also permits the sale or transfer by us of all or substantially all of our property and assets and the purchase by us of all or substantially all of the property and assets of another corporation. These transactions are permitted if:
Even though the Indenture contains the provisions described above, we are not required by the Indenture to comply with those provisions if we sell all of our property and assets to another corporation if, immediately after the sale:
If we consolidate or merge with or into any other corporation or sell all or substantially all of our assets according to the terms and conditions of the Indenture, the resulting or acquiring corporation will be substituted for us in the Indenture with the same effect as if it had been an original party to the Indenture. As a result, such successor corporation may exercise our rights and powers under the Indenture, in our name or in its own name and we will be released from all our liabilities and obligations under the Indenture and under the Debt Securities. (Section 802)
Modification and Waiver
Under the Indenture, we and the Trustee can modify or amend the Indenture with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of each series of Debt Securities affected by the modification or amendment. However, we may not, without the consent of the Holder of each Debt Security affected:
Under the Indenture, the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of any series of Debt Securities may, on behalf of all Holders of that series:
a default in the payment of the principal of or any premium or interest on any Debt Securities of that series; or
a default under any provision of the Indenture which itself cannot be modified or amended without the consent of the Holders of each Outstanding Debt Security of that series. (Sections 1012, 513)
Events of Default
"Event of Default," when used in the Indenture with respect to any series of Debt Securities, means any of the following:
days after we have received written notice of the default in the manner specified in the Indenture;
If an Event of Default for any series of Debt Securities occurs and continues, the Trustee or the Holders of at least 25% in aggregate principal amount of the Outstanding Debt Securities of the series may declare the entire principal of all the Debt Securities of that series to be due and payable immediately. If such a declaration occurs, the Holders of a majority of the aggregate principal amount of the Outstanding Debt Securities of that series can, subject to certain conditions, rescind the declaration. (Sections 502, 513)
The prospectus supplement relating to each series of Debt Securities which are Original Issue Discount Securities will describe the particular provisions that relate to the acceleration of maturity of a portion of the principal amount of such series when an Event of Default occurs and continues.
An Event of Default for a particular series of Debt Securities does not necessarily constitute an Event of Default for any other series of Debt Securities issued under the Indenture. The Indenture requires us to file an Officers' Certificate with the Trustee each year that states that certain defaults do not exist under the terms of the Indenture. (Section 1011) The Trustee may withhold notice to the Holders of Debt Securities of any default (except defaults in the payment of principal, premium, interest or any sinking fund installment) if it considers such withholding of notice to be in the best interests of the Holders. (Section 602)
Other than its duties in the case of a default, a Trustee is not obligated to exercise any of its rights or powers under the Indenture at the request, order or direction of any Holders, unless the Holders offer the Trustee reasonable indemnification. (Sections 601, 603) If reasonable indemnification is provided, then, subject to certain other rights of the Trustee, the Holders of a majority in principal amount of the Outstanding Debt Securities of any series may, with respect to the Debt Securities of that series, direct the time, method and place of:
The Holder of a Debt Security of any series will have the right to begin any proceeding with respect to the Indenture or for any remedy only if:
However, the Holder of any Debt Security will have an absolute right to receive payment of principal of and any premium and interest on the Debt Security when due and to institute suit to enforce such payment. (Section 508)
Defeasance and Discharge. At the time that we establish a series of Debt Securities under the Indenture, we can provide that the Debt Securities of that series are subject to the defeasance and discharge provisions of the Indenture. If we so provide, we will be discharged from our obligations on the Debt Securities of that series if we deposit with the Trustee, in trust, sufficient money or Government Obligations (as defined below) to pay the principal, interest, any premium and any other sums due on the Debt Securities of that series, such as sinking fund payments, on the dates such payments are due under the Indenture and the terms of the Debt Securities. (Section 403) As used above, "Government Obligations" mean:
In the event that we deposit funds in trust and discharge our obligations under a series of Debt Securities as described above, then:
Under federal income tax law, such deposit and discharge may be treated as an exchange of the related Debt Securities for an interest in the trust mentioned above. Each holder might be required to recognize gain or loss equal to the difference between:
Holders might be required to include in income a share of the income, gain or loss of the trust, including gain or loss recognized in connection with any substitution of collateral, as described in this section under the heading "Substitution of Collateral" below. You are urged to consult your own tax advisers as to the specific consequences of such a deposit and discharge, including the applicability and effect of tax laws other than federal income tax law.
Defeasance of Certain Covenants and Certain Events of Default. At the time that we establish a series of Debt Securities under the Indenture, we can provide that the Debt Securities of that series are subject to the covenant defeasance provisions of the Indenture. If we so provide and we make the deposit described in this section under the heading "Defeasance and Discharge" above:
Consolidation, Merger or Sale (Sections 801, 803);
Restrictions on Secured Funded Debt (Section 1008);
Restrictions on Sale and Lease-Back Transactions (Section 1009);
Classification of Restricted and Unrestricted Subsidiaries (Section 1010); and
any other covenant we designate when we establish the series of Debt Securities; and
bullet points under the heading "Events of Default" as Events of Default under the Indenture in connection with that series.
In the event of a defeasance, our obligations under the Indenture and the Debt Securities, other than with respect to the covenants and the Events of Default specifically referred to above, will remain in effect. (Section 1501)
If we exercise our option not to comply with the certain covenants listed above and the Debt Securities of such series become immediately due and payable because an Event of Default has occurred (other than as a result of an Event of Default specifically referred to above), the amount of money and/or Government Obligations on deposit with the Trustee will be sufficient to pay the principal, interest, any premium and any other sums, due on the Debt Securities of such series (such as sinking fund payments) on the date such payments are due under the Indenture and the terms of the Debt Securities, but may not be sufficient to pay amounts due at the time of acceleration. However, we would remain liable for the balance of the payments. (Section 1501)
Substitution of Collateral. At the time that we establish a series of Debt Securities under the Indenture, we can provide for our ability to, at any time, withdraw any money or Government Obligations deposited pursuant to the defeasance provisions described above if we simultaneously substitute other money and/or Government Obligations which would satisfy our payment obligations on the Debt Securities of that series pursuant to the defeasance provisions applicable to those Debt Securities. (Section 402)
This section describes the general terms and provisions of our preferred stock ("Preferred Stock") that may be offered by this prospectus ("Preferred Shares"). The prospectus supplement will describe the specific terms of the series of the Preferred Shares offered through that prospectus supplement and any general terms outlined in this section that will not apply to those Preferred Shares.
We have summarized certain terms and provisions of the Preferred Shares in this section. The summary is not complete. We have also filed our Restated Articles of Incorporation and the form of Certificate of Designation, Preferences and Rights of Preferred Shares as exhibits to the registration statement. You should read our Restated Articles of Incorporation and the Certificate of Designation, Preferences and Rights ("Certificate of Designation") relating to the applicable series of the Preferred Shares for additional information before you buy any Preferred Shares.
Pursuant to our Restated Articles of Incorporation, our Board of Directors has the authority, without further shareholder action, to issue a maximum of 5,000,000 shares of Preferred Stock, including shares issued or reserved for issuance. As of April 29, 2000, we had no shares of Preferred Stock outstanding. The Board of Directors has the authority to determine or fix the following terms with respect to shares of any series of Preferred Stock:
If we purchase, redeem or convert shares of Preferred Stock, we will retire and cancel them and restore them to the status of authorized but unissued shares of Preferred Stock. Such shares will not be part of any particular series of Preferred Stock and may be reissued by us.
As described under "Description of Depositary Shares" below, we may elect to offer Depositary Shares represented by Depositary Receipts. If we so elect, each Depositary Share will represent a fractional interest (to be specified in the applicable prospectus supplement) in a Preferred Share. If we issue Depositary Shares representing interests in Preferred Shares, those Preferred Shares will be deposited with a Depositary.
The Preferred Shares will have the dividend, liquidation, redemption, voting and conversion rights described in this section unless the applicable prospectus supplement provides otherwise. You should read the prospectus supplement relating to the particular series of the Preferred Shares it offers for specific terms, including:
When we issue the Preferred Shares, they will be fully paid and nonassessable, which means that the full purchase price for the outstanding Preferred Shares will have been paid and the holders of such Preferred Shares will not be assessed any additional monies for such Preferred Shares. Unless the applicable prospectus supplement specifies otherwise:
The holders of the Preferred Shares of each series will be entitled to receive cash dividends, if declared by our Board of Directors or its duly authorized committee, out of our assets that we can legally use to pay dividends. The prospectus supplement relating to a particular series of Preferred Shares will set forth the dividend rates and dates on which dividends will be payable. The rates may be fixed or variable or both. If the dividend rate is variable, the applicable prospectus supplement will describe the formula used for determining the dividend rate for each dividend period. We will pay dividends to the holders of record as they appear on our stock books on the record dates fixed by our Board of Directors or its duly authorized committee.
The applicable prospectus supplement will also state whether the dividends on any series of the Preferred Shares are cumulative or noncumulative. If our Board of Directors does not declare a dividend payable on a dividend payment date on any noncumulative series of Preferred Shares, then the holders of that series will not be entitled to receive a dividend for that dividend period and we will not be obligated to pay the dividend for that dividend period even if the Board declares a dividend on that series payable in the future.
Our Board will not declare and pay a dividend on any of our stock ranking, as to dividends, equal with or junior to the Preferred Shares unless full dividends on the Preferred Shares have been declared and paid (or declared and sufficient money is set aside for payment). Until full dividends are paid (or declared and payment is set aside) on Preferred Shares ranking equal as to dividends, then:
We will not owe any interest, or any money in lieu of interest, on any dividend payment(s) on any series of the Preferred Shares which may be past due.
A series of the Preferred Shares may be redeemable, in whole or in part, at our option, and may be subject to mandatory redemption pursuant to a sinking fund or otherwise, as described in the applicable prospectus supplement. Redeemed Preferred Shares will become authorized but unissued shares of Preferred Stock that we may issue in the future.
If a series of the Preferred Shares is subject to mandatory redemption, the applicable prospectus supplement will specify the number of shares that we will redeem each year and the redemption price. If Preferred Shares are redeemed, we will pay all accrued and unpaid dividends on those Preferred
Shares to, but excluding, the redemption date. The prospectus supplement will also specify whether the redemption price will be paid in cash or other property. If
then the terms of that series may provide that the Preferred Shares will automatically and mandatorily be converted into such capital stock.
If fewer than all of the outstanding shares of any series of the Preferred Shares are to be redeemed, our Board of Directors will determine the number of shares to be redeemed. We will redeem the shares pro rata from the holders of record in proportion to the number of shares held by them (with adjustments to avoid redemption of fractional shares).
Even though the terms of a series of Preferred Shares may permit redemption of the Preferred Shares in whole or in part, if any dividends, including accumulated dividends, on that series are past due:
The prohibition discussed in the prior sentence will not prohibit us from purchasing or acquiring Preferred Shares of that series pursuant to a purchase or exchange offer if we make the offer on the same terms to all holders of that series.
Unless the applicable prospectus supplement specifies otherwise, we will give notice of a redemption by mailing a notice to each record holder of the shares to be redeemed, between 30 to 60 days prior to the date fixed for redemption (unless we issue Depositary Shares representing interests in Preferred Shares, in which case we will send a notice to the Depositary between 40 to 70 days prior to the date fixed for redemption). We will mail the notices to the holders' addresses as they appear on our stock records. Each notice will state:
If we redeem fewer than all shares of any series of the Preferred Shares held by any holder, we will also specify the number of shares to be redeemed from the holder in the notice.
If we have given notice of the redemption and have provided the funds for the payment of the redemption price, then beginning on the redemption date:
When the holder properly surrenders the redeemed shares, the redemption price will be paid out of the funds provided by us. If we redeem fewer than all of the shares represented by any certificate, we will issue a new certificate representing the unredeemed shares without cost to the holder.
In the event that a redemption described above is deemed to be a "tender offer" within the meaning of Rule 14e-1 under the Exchange Act, we will comply with all applicable provisions of the Exchange Act.
The applicable prospectus supplement relating to a series of convertible Preferred Shares will describe the terms on which shares of that series are convertible into shares of Common Stock or a different series of Preferred Stock.
Rights Upon Liquidation
Unless the applicable prospectus states otherwise, if we voluntarily or involuntarily liquidate, dissolve or wind up our business, the holders of shares of each series of the Preferred Shares will be entitled to receive:
We will pay these amounts to the holders of shares of each series of the Preferred Shares, and all amounts owing on any Preferred Stock ranking equally with such series of Preferred Shares as to distributions upon liquidation, out of our assets available for distribution to shareholders before any distribution is made to holders of any securities ranking junior to the series of Preferred Shares upon liquidation.
The sale of all or substantially all of our property and assets, our merger into or consolidation with any other corporation or the merger of any other corporation into us will not be considered a dissolution, liquidation or winding up of our business.
then we will only make pro rata distributions to the holders of all shares ranking equal as to distributions upon dissolution, liquidation or winding up of our business, which means that the distributions we pay to the holders of all shares ranking equal as to distributions upon dissolution, liquidation or winding up of our business will bear the same relationship to each other that the full distributable amounts for which such holders are respectively entitled upon such dissolution, liquidation or winding up of our business bear to each other.
After we pay the full amount of the liquidation distribution to which the holders of a series of the Preferred Shares are entitled, such holders will have no right or claim to any of our remaining assets.
Except as described in this section or in the applicable prospectus supplement, or except as expressly required by applicable law, the holders of the Preferred Shares will not be entitled to vote. If
the holders of a series of Preferred Shares are entitled to vote and the applicable prospectus supplement does not state otherwise, then each Preferred Share will be entitled to one vote.
As more fully described under "Description of Depositary Shares" below, if we elect to provide for the issuance of Depositary Shares representing fractional interests in a Preferred Share, the holders of each Depositary Share will be entitled to a fraction of a vote.
For any series of Preferred Shares having one vote per share, the voting power of the series, on matters on which holders of such series and holders of any other series of Preferred Stock are entitled to vote as a single class, will solely depend on the total number of shares in such series, not the aggregate liquidation preference or initial offering price.
Unless we receive the consent of the holders of an outstanding series of Preferred Shares and the outstanding shares of all other series of Preferred Stock which (1) rank equal with such series either as to dividends or the distribution of assets upon liquidation, dissolution or winding up of our business and (2) have voting rights that are exercisable and that are similar to those of such series, we will not:
This consent must be given by the holders of at least two-thirds of all such outstanding Preferred Stock described in the preceding sentence, voting together as a single class. We will not be required to obtain this consent with respect to the actions listed in the second bullet point above, however, if we only (1) increase the amount of the authorized Preferred Stock, (2) create and issue another series of Preferred Stock, or (3) increase the amount of authorized shares of any series of Preferred Stock, if such Preferred Stock in each case ranks equal with or junior to the Preferred Shares with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of our business.
Outstanding Preferred Stock
As of April 29, 2000, we had established only one series of Preferred Stock, our Series A Junior Participating Preferred Stock (the "Series A Preferred Stock"), which we have described more fully under the heading "Description of Common StockRights Agreement" below. As of April 29, 2000, we had 2,000,000 shares of preferred stock designated as Series A Preferred Stock, none of which were outstanding.
This section describes the general terms and provisions of the Depositary Shares (as defined below). The prospectus supplement will describe the specific terms of the Depositary Shares offered through that prospectus supplement and any general terms outlined in this section that will not apply to those Depositary Shares.
We have summarized certain terms and provisions of the Deposit Agreement, the Depositary Shares and the Depositary Receipts in this section. The summary is not complete. We have also filed the form of Deposit Agreement, including the form of Depositary Receipt, as an exhibit to the registration statement. You should read the forms of Deposit Agreement and Depositary Receipt relating to a series of Preferred Shares for additional information before you buy any Depositary Shares that represent Preferred Shares of such series.
We may offer fractional interests in Preferred Shares, rather than full Preferred Shares. If we do, we will provide for the issuance by a Depositary (as defined below) to the public of receipts for depositary shares ("Depositary Shares"), each of which will represent a fractional interest in a share of a particular series of Preferred Shares.
The shares of any series of Preferred Shares underlying the Depositary Shares will be deposited under a separate deposit agreement (the "Deposit Agreement") between us and a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50 million (the "Depositary"). We will name the Depositary in the applicable prospectus supplement. Subject to the terms of the Deposit Agreement, each owner of a Depositary Share will have a fractional interest in all the rights and preferences of the Preferred Share underlying such Depositary Share. Those rights include any dividend, voting, redemption, conversion and liquidation rights.
The Depositary Shares will be evidenced by depositary receipts issued under the Deposit Agreement (the "Depositary Receipts"). If you purchase fractional interests in shares of the related series of Preferred Shares, you will receive Depositary Receipts as described in the applicable prospectus supplement. While the final Depositary Receipts are being prepared, we may order the Depositary to issue temporary Depositary Receipts substantially identical to the final Depositary Receipts although not in final form. The holders of the temporary Depositary Receipts will be entitled to the same rights as if they held the Depositary Receipts in final form. Holders of the temporary Depositary Receipts can exchange them for the final Depositary Receipts at our expense.
If you surrender Depositary Receipts at the principal office of the Depositary (unless the related Depositary Shares have previously been called for redemption), you are entitled to receive at such office the number of Preferred Shares and any money or other property represented by such Depositary Shares. We will not issue partial Preferred Shares. If you deliver Depositary Receipts evidencing a number of Depositary Shares that represent more than a whole number of Preferred Shares, the Depositary will issue you a new Depositary Receipt evidencing such excess number of Depositary Shares at the same time that the Preferred Shares are withdrawn. Holders of Preferred Shares received in exchange for Depositary Shares will no longer be entitled to deposit such shares under the Deposit Agreement or to receive Depositary Shares in exchange for such Preferred Shares.
Dividends and Other Distributions
The Depositary will distribute all cash dividends or other cash distributions received with respect to the Preferred Shares to the record holders of Depositary Shares representing the Preferred Shares in proportion to the numbers of Depositary Shares owned by the holders on the relevant record date. The Depositary will distribute only the amount that can be distributed without attributing to any holder of Depositary Shares a fraction of one cent. The balance not distributed will be added to and treated as part of the next sum received by the Depositary for distribution to record holders of Depositary Shares.
If there is a distribution other than in cash, the Depositary will distribute property to the holders of Depositary Shares, unless the Depositary determines that it is not feasible to make such distribution. If this occurs, the Depositary may, with our approval, sell the property and distribute the net proceeds from the sale to the holders of Depositary Shares.
The Deposit Agreement will also contain provisions relating to how any subscription or similar rights offered by us to holders of the Preferred Shares will be made available to the holders of Depositary Shares.
Conversion and Exchange
If any series of Preferred Shares underlying the Depositary Shares is subject to conversion or exchange, the applicable prospectus supplement will describe the rights or obligations of each record holder of Depositary Receipts to convert or exchange the Depositary Shares.
Redemption of Depositary Shares
If the series of the Preferred Shares underlying the Depositary Shares is subject to redemption, the Depositary Shares will be redeemed from the redemption proceeds, in whole or in part, of such series of the Preferred Shares held by the Depositary. The Depositary will mail notice of redemption between 30 to 60 days prior to the date fixed for redemption to the record holders of the Depositary Shares to be redeemed at their addresses appearing in the Depositary's records. The redemption price per Depositary Share will bear the same relationship to the redemption price per Preferred Share that the Depositary Share bears to the underlying Preferred Share. Whenever we redeem Preferred Shares held by the Depositary, the Depositary will redeem, as of the same redemption date, the number of Depositary Shares representing the Preferred Shares redeemed. If less than all the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will be selected by lot or pro rata as determined by the Depositary.
After the date fixed for redemption, the Depositary Shares called for redemption will no longer be outstanding. When the Depositary Shares are no longer outstanding, all rights of the holders will cease, except the right to receive money or other property that the holders of the Depositary Shares were entitled to receive upon such redemption. Such payments will be made when holders surrender their Depositary Receipts to the Depositary.
Voting the Preferred Shares
Upon receipt of notice of any meeting at which the holders of the Preferred Shares are entitled to vote, the Depositary will mail information about the meeting contained in the notice to the record holders of the Depositary Shares relating to such Preferred Shares. Each record holder of such Depositary Shares on the record date (which will be the same date as the record date for the Preferred Shares) will be entitled to instruct the Depositary as to how the Preferred Shares underlying the holder's Depositary Shares should be voted.
The Depositary will try, if practical, to vote the number of Preferred Shares underlying the Depositary Shares according to the instructions received. We will agree to take all action requested by and deemed necessary by the Depositary in order to enable the Depositary to vote the Preferred Shares in that manner. The Depositary will not vote any Preferred Shares for which it does not receive specific instructions from the holders of the Depositary Shares relating to such Preferred Shares.
Owners of Depositary Shares will be treated for federal income tax purposes as if they were owners of the Preferred Shares represented by the Depositary Shares. Accordingly, for federal income tax purposes they will have the income and deductions to which they would be entitled if they were holders of the Preferred Shares. In addition:
Amendment and Termination of the Deposit Agreement
The form of Depositary Receipt evidencing the Depositary Shares and any provision of the Deposit Agreement may be amended by agreement between us and the Depositary at any time. However, any amendment that materially and adversely alters the rights of the existing holders of Depositary Shares will not be effective unless approved by the record holders of at least a majority of the Depositary Shares then outstanding. A Deposit Agreement may be terminated by us or the Depositary only if:
Charges of Depositary
We will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. We will pay associated charges of the Depositary for the initial deposit of the Preferred Shares and any redemption of the Preferred Shares. Holders of Depositary Shares will pay transfer and other taxes and governmental charges and any other charges that are stated to be their responsibility in the Deposit Agreement.
We will forward to the holders of Depositary Shares all reports and communications that we must furnish to the holders of the Preferred Shares.
Neither the Depositary nor we will be liable if the Depositary is prevented or delayed by law or any circumstance beyond its control in performing its obligations under the Deposit Agreement. Our obligations and the Depositary's obligations under the Deposit Agreement will be limited to performance in good faith of duties set forth in the Deposit Agreement. Neither the Depositary nor we will be obligated to prosecute or defend any legal proceeding connected with any Depositary Shares or Preferred Shares unless satisfactory indemnity is furnished to us and/or the Depositary. We and the Depositary may rely upon written advice of counsel or accountants, or information provided by persons presenting Preferred Shares for deposit, holders of Depositary Shares or other persons believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering notice to us. We may also remove the Depositary at any time. Resignations or removals will take effect upon the appointment of a successor depositary and its acceptance of the appointment. The successor depositary must be appointed within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least $50 million.
This section describes the general terms and provisions of the shares of our common stock (the "Common Stock"). The prospectus supplement will describe the specific terms of the Common Stock offered through that prospectus supplement and any general terms outlined in this section that will not apply to that Common Stock.
We have summarized certain terms and provisions of the Common Stock in this section. The summary is not complete. We have also filed our Restated Articles of Incorporation, our bylaws and the Certificate of Designation relating to the Series A Preferred Stock as exhibits to the registration statement. You should read our Restated Articles of Incorporation and our bylaws and the Certificate of Designation relating to the Series A Preferred Stock for additional information before you buy any Common Stock.
Shares Outstanding. As of April 29, 2000, our authorized Common Stock was 3,000,000,000 shares, of which 454,997,822 shares were issued and outstanding. On July 19, 2000, we effected a two-for-one stock split of our Common Stock. In connection with the two-for-one stock split, our authorized Common Stock was increased to 6,000,000,000 shares.
Dividends. Holders of Common Stock may receive dividends when declared by our Board of Directors out of our funds that we can legally use to pay dividends. We may pay dividends in cash, stock or other property. In certain cases, holders of Common Stock may not receive dividends until we have satisfied our obligations to any holders of outstanding Preferred Stock.
Voting Rights. Holders of Common Stock have the exclusive power to vote on all matters presented to our shareholders unless Minnesota law or the certificate of designation for an outstanding series of Preferred Stock gives the holders of that Preferred Stock the right to vote on certain matters. Each holder of Common Stock is entitled to one vote per share. Holders of Common Stock may not cumulate their votes when voting for directors, which means that a holder cannot cast more than one vote per share for each director.
Other Rights. If we voluntarily or involuntarily liquidate, dissolve or wind up our business, holders of Common Stock will receive pro rata, according to shares held by them, any remaining assets distributable to our shareholders after we have provided for any liquidation preference for outstanding shares of Preferred Stock. When we issue securities in the future, holders of Common Stock have no preemptive rights to buy any portion of those issued securities. Each share of Common Stock does include a right to purchase Series A Preferred Stock if certain conditions occur. The conditions under which a holder may exercise that purchase right are discussed under the heading "Rights Agreement" below.
Listing. Our outstanding shares of Common Stock are listed on the New York Stock Exchange and Pacific Stock Exchange under the symbol "TGT." First Chicago Trust Company of New York serves as the transfer agent and registrar for the Common Stock.
Fully Paid. The outstanding shares of Common Stock are fully paid and nonassessable. Any additional Common Stock that we may issue in the future pursuant to an offering under this prospectus or upon the conversion or exercise of other securities offered under this prospectus will also be fully paid and nonassessable.
Anti-takeover Provisions Contained in the Articles of Incorporation and Bylaws
Certain provisions of our Restated Articles of Incorporation may make it less likely that our management would be changed or someone would acquire voting control of our company without our
Board's consent. These provisions may delay, deter or prevent tender offers or takeover attempts that shareholders may believe are in their best interests, including tender offers or attempts that might allow shareholders to receive premiums over the market price of their Common Stock.
Fair Price Provision. Article IV of our Restated Articles of Incorporation prohibits certain business combinations between our company and direct and indirect owners of 10% or more of our voting stock ("interested shareholders") unless those transactions are approved by holders of at least 75% of our outstanding voting stock, voting together as a single class. This 75% approval is in addition to any approval required by law. Business combinations requiring the 75% approval include the following transactions, among others:
Shareholders do not need to approve a business combination under Article IV of our Restated Articles of Incorporation if a majority of the continuing directors approve the business combination. Continuing directors are those directors, other than the interested shareholder or any representative or affiliate of the interested shareholder:
Shareholders also do not need to approve a business combination under Article IV of our Restated Articles of Incorporation that meets certain conditions specified in Article IV of our Restated Articles of Incorporation. These conditions include, among other things, the following:
Holders of at least 75% of our outstanding voting stock, voting together as one class, must approve a proposal to amend or repeal, or adopt provisions inconsistent with, Article IV of our Restated Articles of Incorporation.
Preferred Stock. Our Board of Directors can at any time, under our Restated Articles of Incorporation and without shareholder approval, issue one or more new series of Preferred Stock. In some cases, the issuance of Preferred Stock without shareholder approval could discourage or make more difficult attempts to take control of our company through a merger, tender offer, proxy contest or otherwise. Preferred Stock with special voting rights or other features issued to persons favoring our management could stop a takeover by preventing the person trying to take control of our company from acquiring enough voting shares necessary to take control.
Classified Board. Members of our Board of Directors are divided into three classes and serve staggered three-year terms under Article VI of our Restated Articles of Incorporation. This means that only approximately one-third of our directors are elected at each annual meeting of shareholders and that it would take two years to replace a majority of the directors unless they are removed. Under Article VI of our Restated Articles of Incorporation, directors can be removed from office during their terms only if holders of at least 75% of our outstanding voting stock, voting together as one class, approve the removal. At least 75% of our outstanding voting stock, voting together as one class, must approve any proposal to amend or repeal, or adopt any provisions inconsistent with, this provision of our Restated Articles of Incorporation.
Nomination Procedures. In addition to our Board of Directors, shareholders can nominate candidates for our Board of Directors. However, a shareholder must follow the advance notice procedures described in Article VI of our Restated Articles of Incorporation. In general, a shareholder must submit a written notice of the nomination to our corporate secretary at least 60 days before a scheduled meeting of our shareholders. At least 75% of our outstanding voting stock, voting together as one class, must approve any proposal to amend or repeal, or adopt any provisions inconsistent with, this provision of our Restated Articles of Incorporation.
Proposal Procedures. Shareholders can propose that business other than nominations to our Board of Directors be considered at an annual meeting of shareholders only if a shareholder follows the advance notice procedures described in our bylaws. In general, a shareholder must submit a written notice of the proposal and the shareholder's interest in the proposal at least 90 days before the anniversary date of the previous year's annual meeting of our shareholders.
Amendment of Bylaws. Under our bylaws, our Board of Directors can adopt, amend or repeal the bylaws, subject to limitations under the Minnesota Business Corporation Act. Our shareholders also have the power to change or repeal our bylaws.
Each share of our Common Stock, including those that may be issued in an offering under this prospectus or upon the conversion or exercise of other securities offered under this prospectus, carries with it one preferred share purchase right (a "Right"). If the Rights become exercisable, each Right entitles the registered holder to purchase 1/1200th of a share of the Series A Preferred Stock (subject to a proportionate decrease in the fractional number of shares of Series A Preferred Stock that may be purchased if a stock split, stock dividend or similar transaction occurs with respect to the Common Stock and a proportionate increase in the event of a reverse stock split). Until a Right is exercised, the holder of the Right has no right to vote or receive dividends or any other rights as a shareholder as a result of holding the Right. The description and terms of the Rights are described in the Rights
Agreement, dated as of September 11, 1996, between us and First Chicago Trust Company of New York, as Rights Agent, as amended by the First Amendment to Rights Agreement dated as of May 17, 1999, that have been filed with the SEC.
The Rights trade automatically with shares of Common Stock. A holder of Common Stock may exercise the Rights only under the circumstances described below. The Rights are designed to protect the interests of our company and shareholders against coercive takeover tactics. The Rights are also designed to encourage potential acquirors to negotiate with our Board of Directors before attempting a takeover and to increase the ability of our Board to negotiate terms of any proposed takeover that benefit our shareholders. The Rights may, but are not intended to, deter takeover proposals that may be in the interests of our shareholders.
Shares of Series A Preferred Stock will rank junior to all other series of our Preferred Stock, including the Preferred Shares offered under this prospectus, if our Board, in creating such Preferred Stock, provides that they will rank senior to the Series A Preferred Stock. If our shareholders purchase Series A Preferred Stock, we cannot repurchase such stock from shareholders who do not want to resell it. Subject to the rights of our senior securities, a holder of the Series A Preferred Stock will be entitled, for each such share owned, to:
These rights of the Series A Preferred Stock are protected by customary antidilution provisions which automatically increase dividend, liquidation, merger and voting rights in proportion to increases in Common Stock resulting from stock dividends, stock splits and similar transactions. These rights are proportionately decreased in the event of decreases in Common Stock resulting from reverse stock splits and similar transactions.
The purchase price for each 1/1200th of a share of Series A Preferred Stock is $25. We must adjust the purchase price if certain events occur, such as:
Holders may exercise their Rights only following a "distribution date." A distribution date will occur 15 days after:
However, our Board may delay the distribution date following an offer referred to in the second bullet above until the person or group actually acquires at least 20% of the outstanding shares of Common Stock.
The Rights have certain additional features that will be triggered upon the occurrence of specified events, including:
Any time before a person or group acquires 20% or more of the outstanding shares of Common Stock, our Board of Directors may redeem the Rights in whole, but not in part, at a price of $.0025 per Right, subject to adjustment for stock dividends, stock splits and similar transactions (the "Rights Redemption Price"). Our Board of Directors in its sole discretion may establish the effective time, basis and conditions of the redemption. Immediately upon redemption of the Rights, the holder can no longer exercise such Rights and can only receive the Rights Redemption Price.
In addition, our shareholders can, under certain circumstances, compel our Board of Directors to redeem the Rights even if our Board of Directors believes that a tender offer of the nature described in the following sentence is not in our shareholders' best interests. A person making a cash tender offer for all of our outstanding capital stock and satisfying certain other conditions can demand a shareholders meeting to vote upon a resolution requesting our Board of Directors to redeem the Rights and allow the completion of that tender offer, or another cash tender offer for all of our capital stock at a price that is at least as high as that contained in the original tender offer, without being affected by the Rights. If two-thirds of the outstanding shares of our voting stock approve such a resolution and certain other conditions are satisfied, our Board must redeem the Rights and the Rights would not affect the completion of the tender offer.
The Rights will expire on September 26, 2001, unless we redeem them before then. Our Board of Directors may amend the terms of the Rights without the consent of the holders of the Rights at any time before the distribution date in any manner our Board deems desirable, except that amendments described below that expressly require a shareholder vote must receive that vote. Our Board of Directors may amend the terms of the Rights without the consent of the holders of the Rights after the distribution date only if the amendment cures ambiguities, corrects or supplements defective or inconsistent provisions, or does not adversely affect the interests of the holders of the Rights. The affirmative vote of holders of a majority of the shares of Common Stock voting for or against a proposed amendment at a shareholders meeting is required to amend the terms of the Rights to change the purchase price of the Rights, the Rights Redemption Price, the number or type of shares for which the Rights are exercisable, their expiration date, the percentage stock ownership by a person
or group that triggers the exercise of the Rights, or the shareholder voting requirements for compelling redemption of the Rights.
This section describes the general terms and provisions of the Securities Warrants (as defined below). The prospectus supplement will describe the specific terms of the Securities Warrants offered through that prospectus supplement and any general terms outlined in this section that will not apply to those Securities Warrants.
We may issue warrants for the purchase of Debt Securities, Preferred Shares, Depositary Shares or Common Stock (the "Securities Warrants"). Securities Warrants may be issued alone or together with Debt Securities, Preferred Shares, Depositary Shares or Common Stock offered by any prospectus supplement and may be attached to or separate from those securities. Each series of Securities Warrants will be issued under a separate warrant agreement (a "Securities Warrant Agreement") between us and a bank or trust company, as warrant agent (the "Securities Warrant Agent"), which will be described in the applicable prospectus supplement. The Securities Warrant Agent will act solely as our agent in connection with the Securities Warrants and will not act as an agent or trustee for any holders of Securities Warrants.
We have summarized certain terms and provisions of the Securities Warrant Agreements and Securities Warrants in this section. The summary is not complete. We have also filed the forms of Securities Warrant Agreements and the certificates representing the Securities Warrants ("Securities Warrant Certificates") as exhibits to the registration statement. You should read the applicable forms of Securities Warrant Agreement and Securities Warrant Certificate for additional information before you buy any Securities Warrants.
If we offer Securities Warrants, the applicable prospectus supplement will describe their terms. If Securities Warrants for the purchase of Debt Securities are offered, the applicable prospectus supplement will describe the terms of such Securities Warrants, including the following if applicable:
Securities Warrants for the purchase of Debt Securities will be in registered form only.
If Securities Warrants for the purchase of Preferred Shares, Depositary Shares or Common Stock are offered, the applicable prospectus supplement will describe the terms of such Securities Warrants, including the following where applicable:
Securities Warrants for the purchase of Preferred Shares, Depositary Shares or Common Stock will be in registered form only.
A holder of Securities Warrant Certificates may
Until any Securities Warrants to purchase Debt Securities are exercised, the holder of such Securities Warrants will not have any of the rights of Holders of the Debt Securities that can be purchased upon exercise, including any right to receive payments of principal, premium or interest on the underlying Debt Securities or to enforce covenants in the Indenture. Until any Securities Warrants to purchase Preferred Shares, Depositary Shares or Common Stock are exercised, holders of such Securities Warrants will not have any rights of holders of the underlying Preferred Shares, Depositary Shares or Common Stock, including any right to receive dividends or to exercise any voting rights.
Exercise of Securities Warrants
Each holder of a Securities Warrant is entitled to purchase the principal amount of Debt Securities or number of Preferred Shares, Depositary Shares or shares of Common Stock, as the case may be, at the exercise price described in the applicable prospectus supplement. After the close of business on the
day when the right to exercise terminates (or a later date if we extend the time for exercise), unexercised Securities Warrants will become void.
A holder of Securities Warrants may exercise them by following the general procedure outlined below:
If you comply with the procedures described above, your Securities Warrants will be considered to have been exercised when the Securities Warrant Agent receives payment of the exercise price. After you have completed those procedures, we will, as soon as practicable, issue and deliver to you the Debt Securities, Preferred Shares, Depositary Shares or Common Stock that you purchased upon exercise. If you exercise fewer than all of the Securities Warrants represented by a Securities Warrant Certificate, a new Securities Warrant Certificate will be issued to you for the unexercised amount of Securities Warrants. Holders of Securities Warrants will be required to pay any tax or governmental charge that may be imposed in connection with transferring the underlying securities in connection with the exercise of the Securities Warrants.
Amendments and Supplements to Securities Warrant Agreements
We may amend or supplement a Securities Warrant Agreement without the consent of the holders of the applicable Securities Warrants if the changes are not inconsistent with the provisions of the Securities Warrants and do not materially adversely affect the interests of the holders of the Securities Warrants. We, along with the Securities Warrant Agent, may also modify or amend a Securities Warrant Agreement and the terms of the Securities Warrants if a majority of the then outstanding unexercised Securities Warrants affected by the modification or amendment consent. However, no modification or amendment that accelerates the expiration date, increases the exercise price, reduces the majority consent requirement for any such modification or amendment, or otherwise materially adversely affects the rights of the holders of the Securities Warrants may be made without the consent of each holder affected by the modification or amendment.
Common Stock Warrant Adjustments
Unless the applicable prospectus supplement states otherwise, the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant will be adjusted in the manner set forth in the applicable prospectus supplement if certain events occur, including:
Except as stated above, the exercise price and number of shares of Common Stock covered by a Common Stock Warrant will not be adjusted if we issue Common Stock or any securities convertible into or exchangeable for Common Stock, or securities carrying the right to purchase Common Stock or securities convertible into or exchangeable for Common Stock.
Holders of Common Stock Warrants may have additional rights under the following circumstances:
If one of the above transactions occurs and holders of our Common Stock are entitled to receive stock, securities, other property or assets, including cash, with respect to or in exchange for such Common Stock, the holders of the Common Stock Warrants then outstanding will be entitled to receive upon exercise of their Common Stock Warrants the kind and amount of shares of stock and other securities or property that they would have received upon the reclassification, change, consolidation, merger, sale or conveyance if they had exercised their Common Stock Warrants immediately before the transaction.
We may sell the securities offered pursuant to this prospectus through agents, through underwriters or dealers or directly to one or more purchasers.
Underwriters, dealers and agents that participate in the distribution of the securities offered pursuant to this prospectus may be underwriters as defined in the Securities Act of 1933 and any discounts or commissions received by them from us and any profit on the resale of the offered securities by them may be treated as underwriting discounts and commissions under the Securities Act. Any underwriters or agents will be identified and their compensation (including any underwriting discount) will be described in the applicable prospectus supplement. The prospectus supplement will also describe other terms of the offering, including any discounts or concessions allowed or reallowed or paid to dealers and any securities exchanges on which the offered securities may be listed.
The distribution of the securities offered under this prospectus may occur from time to time in one or more transactions at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices.
If the applicable prospectus supplement indicates, we will authorize dealers or our agents to solicit offers by certain institutions to purchase offered securities from us pursuant to contracts that provide for payment and delivery on a future date. We must approve all institutions, but they may include, among others:
The institutional purchaser's obligations under the contract are only subject to the condition that the purchase of the offered securities at the time of delivery is allowed by the laws that govern the purchaser. The dealers and our agents will not be responsible for the validity or performance of the contracts.
We may have agreements with the underwriters, dealers and agents to indemnify them against certain civil liabilities, including liabilities under the Securities Act, or to contribute with respect to payments which the underwriters, dealers or agents may be required to make as a result of those certain civil liabilities.
When we issue the securities offered by this prospectus (except for shares of Common Stock), they may be new securities without an established trading market. If we sell a security offered by this prospectus to an underwriter for public offering and sale, the underwriter may make a market for that security, but the underwriter will not be obligated to do so and could discontinue any market making without notice at any time. Therefore, we cannot give any assurances to you concerning the liquidity of any security offered by this prospectus.
Underwriters and agents and their affiliates may be customers of, engage in transactions with, or perform services for us or our subsidiaries in the ordinary course of their businesses.
James T. Hale, Esq., who is our General Counsel, or another of our lawyers, will issue an opinion about the legality of the securities offered by this prospectus. Mr. Hale owns, or has the right to acquire, a number of shares of our Common Stock which represents less than 1% of the total outstanding Common Stock. Any underwriters will be represented by their own legal counsel.
Ernst & Young LLP, independent auditors, have audited our consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 29, 2000, as set forth in their report, which is incorporated in this prospectus by reference. Our consolidated financial statements are, and consolidated financial statements included in subsequent filings with the SEC will be, incorporated by reference in this prospectus in reliance on Ernst & Young LLP's reports, given on their authority as experts in accounting and auditing (to the extent consolidated financial statements included in such subsequent filings are covered by consents executed by such firm and filed with the SEC).
No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus supplement and the accompanying prospectus. You must not rely on any unauthorized information or representations. This prospectus supplement and the accompanying prospectus is an offer to sell only the Notes offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus supplement and the accompanying prospectus is current only as of its date.
TABLE OF CONTENTS
|About this Prospectus Supplement||S-2|
|Description of Notes||S-2|
About this Prospectus
|Where You Can Find More Information||2|
|Use of Proceeds||6|
|Ratio of Earnings to Fixed Charges and to Fixed Charges and Preferred Stock Dividends||7|
|Description of Debt Securities||8|
|Description of Preferred Shares||17|
|Description of Depositary Shares||22|
|Description of Common Stock||26|
|Description of the Securities Warrants||31|
|Plan of Distribution||34|
6.35% Notes due 2011
January 5, 2001
Joint Book-Running Managers
Goldman, Sachs & Co.
Salomon Smith Barney
Merrill Lynch & Co.