Filed pursuant to Rule 424(b)(3)
Registration No. 333-89097
PROSPECTUS
TEXAS INSTRUMENTS INCORPORATED
Offer to Exchange
$400,000,000 7% senior notes due 2004
for
$400,000,000 7% senior exchange notes due 2004
-----------------------
We are offering to exchange up to $400,000,000 of our new 7% senior
exchange notes due 2004 for up to $400,000,000 of our existing 7% senior notes
due 2004. We are offering to issue the new notes to satisfy our obligations
contained in the registration rights agreement entered into when the old notes
were sold in transactions permitted by Rule 144A and Regulation S under the
Securities Act.
The terms of the new notes are identical in all material respects to the
terms of the old notes, except that the transfer restrictions, registration
rights and additional interest provisions relating to the old notes do not
apply to the new notes.
To exchange your old notes for new notes:
o You must complete and send the letter of transmittal that accompanies
this prospectus to the exchange agent by 5:00 p.m., New York time, on
December 6, 1999.
o If your old notes are held in book-entry form at The Depository Trust
Company, you must instruct DTC, through your signed letter of
transmittal, that you wish to exchange your old notes for new notes.
When the exchange offer closes, your DTC account will be changed to
reflect your exchange of old notes for new notes.
o You should read the section called "The Exchange Offer" for
additional information on how to exchange your old notes for new
notes.
-----------------------
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is November 5, 1999.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and we file reports, proxy statements and
other information with the Securities and Exchange Commission. These reports,
proxy statements and other information can be inspected and copied at public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
Regional Offices of the SEC: Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and New York Regional Office, 7 World
Trade Center, New York, New York 10048. Such material can also be accessed
electronically by means of the SEC's home page on the Internet at
http://www.sec.gov and inspected and copied at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
We may "incorporate by reference" into this prospectus certain of the
information we file with the SEC. This means that we can disclose important
financial and other information to you by referring you to the publicly filed
documents containing this information. All information incorporated by
reference is part of this prospectus, unless that information is superseded by
the information contained in this prospectus. Information we file later with
the SEC that is incorporated by reference will automatically update and
supersede any previous information that is part of this prospectus. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the Notes we offer with this
prospectus:
o Our Annual Report on Form 10-K, as amended by Form 10-K/A, for the
fiscal year ended December 31, 1998;
o Our Quarterly Report on Form 10-Q, as amended by Form 10-Q/A, and our
Quarterly Report on Form 10-Q, for the quarters ending March 31, 1999
and June 30, 1999, respectively;
o Our Proxy Statement for our 1999 annual meeting of stockholders; and
o Our Current Report on Form 8-K dated May 23, 1999.
We will provide without charge to each person to whom this prospectus is
delivered, upon request of such person, a copy of any or all documents that are
incorporated into this prospectus by reference, other than exhibits to such
documents. You should direct such request to:
Texas Instruments Incorporated
8505 Forest Lane
P.O. Box 660199
Dallas, Texas 75266-0199
(972) 995-3773
2
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in this prospectus by
reference contain "forward-looking statements" intended to qualify for the safe
harbor from liability established by the Private Securities Litigation Reform
Act of 1995. These forward-looking statements generally can be identified by
phrases such as TI or its management "believes," "expects," "anticipates,"
"foresees," "forecasts," "estimates" or other words or phrases of similar
import. Similarly, such statements herein that describe the company's business
strategy, outlook, objectives, plans, intentions or goals also are
forward-looking statements. All such forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those in forward-looking statements.
We urge you to carefully consider the following important factors that
could cause actual results to differ materially from the expectations of the
company or its management:
o Market demand for semiconductors, particularly for digital signal
processors and analog chips in key markets, such as
telecommunications and computers;
o TI's ability to develop, manufacture and market innovative products
in a rapidly changing technological environment;
o TI's ability to compete in products and prices in an intensely
competitive industry;
o TI's ability to maintain and enforce a strong intellectual property
portfolio and obtain needed licenses from third parties;
o Timely completion by customers and suppliers of their Year 2000
programs, accurate assessment of TI's Year 2000 readiness and of
risks associated with its current and past products, and effective
implementation of contingency plans and corrective actions;
o Timely completion of announced acquisitions;
o Global economic, social and political conditions in the countries in
which TI and its customers and suppliers operate, including
fluctuations in foreign currency exchange rates;
o Losses or curtailments of purchases from key customers;
o TI's ability to recruit and retain skilled personnel;
o Availability of raw materials and critical manufacturing equipment;
and
o Realization of savings from announced worldwide corporate
restructuring efforts and consolidation of manufacturing operations.
For a more detailed discussion of these factors, see the text under the
heading "Cautionary Statements Regarding Future Operations" in Item 1 of our
annual report on Form 10-K for 1998. The forward-looking statements included in
this prospectus are made only as of the date of this prospectus and we
undertake no obligation to publicly update the forward-looking statements to
reflect subsequent events or circumstances.
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PROSPECTUS SUMMARY
The following summary contains basic information about this offering. It
may not contain all the information that is important to you in making your
investment decision. Therefore, you should read the entire document carefully
before deciding to invest in the notes. The "Description of Notes" section of
this prospectus contains more detailed information regarding the terms and
conditions of the notes. Unless the context indicates otherwise, the words
"company," "we," "our," "ours," "us" and "TI" refer to Texas Instruments
Incorporated and its consolidated subsidiaries.
The Company
TI is a global semiconductor company and the world's leading designer and
supplier of digital signal processors and analog integrated circuits, the
engines driving the digitization of electronics. These two types of
semiconductor products work together in digital electronic devices such as
digital cellular phones. Analog technology converts analog signals like sound,
light, temperature and pressure into the digital language of zeros and ones,
which can then be processed in real-time by a digital signal processor. Analog
integrated circuits also translate digital signals back to analog. Digital
signal processors and analog integrated circuits enable a wide range of new
products and features for TI's more than 30,000 customers in commercial,
industrial and consumer markets.
TI also is a world leader in the design and manufacturing of other
semiconductor products. Those products include standard logic,
application-specific integrated circuits, reduced instruction-set computing
microprocessors, and microcontrollers.
The semiconductor business comprised 80% of TI's 1998 revenues when the
divested memory business is excluded. TI's semiconductor products are used in a
diverse range of electronic systems, including digital cell phones, computers,
printers, hard disk drives, modems, networking equipment, digital cameras and
video recorders, motor controls, autos, and home appliances. Products are sold
primarily to original-equipment manufacturers and through distributors. TI's
semiconductor patent portfolio has been established as an ongoing contributor
to semiconductor revenues. Revenues generated from sales to TI's top three
semiconductor customers accounted for approximately 24% of total semiconductor
revenues in 1998.
In addition to semiconductors, TI has two other principal segments. The
largest, representing 12% of TI's 1998 revenues when the memory business is
excluded, is Materials & Controls (M&C). This business sells electrical and
electronic controls, electronic connectors, sensors, radio-frequency
identification systems and clad metals into commercial and industrial markets.
Revenues generated from sales to TI's top three M&C customers accounted for
approximately 15% of total M&C revenues in 1998.
Educational & Productivity Solutions (E&PS) represents 6% of TI's 1998
revenues when the memory business is excluded, and is a leading supplier of
educational and graphing calculators. Revenues generated from sales to TI's top
three E&PS customers accounted for approximately 26% of total E&PS revenues in
1998.
In addition, TI continues to invest in digital imaging, an emerging
business that produces micro-mirror-based devices that enable brightness and
clarity in large-screen video displays.
4
Summary Consolidated Financial Data
The following summary consolidated financial data is derived from our
audited consolidated financial statements, except for the financial data for the
six months ended June 30 that is derived from our unaudited consolidated
financial statements. You should read the financial data presented below in
conjunction with the consolidated financial statements, accompanying notes and
management's discussion and analysis of results of operations and financial
condition of TI, which are incorporated by reference into this prospectus.
(In Millions of Dollars, Except Ratios) As of or For the
As of or For the Six Months
Year Ended December 31 Ended June 30
----------------------------------------------------- ---------------------
1994 1995 1996 1997 1998 1998 1999(1)
-------- --------- -------- --------- --------- --------- ----------
Operating Data:
Net revenues..........................$ 8,608 $ 11,409 $ 9,940 $ 9,750 $ 8,460 $ 4,353 $ 4,385
Operating costs and expenses.......... 7,682 9,970 9,966 9,135 8,061 4,413 3,632
Profit (loss) from operations......... 926 1,439 (26) 615 399 (60) 753
Other income (expense) net............ 6 79 76 192 293 193 143
Interest on loans..................... 45 48 73 94 75 37 37
Income (loss) from continuing
operations before extraordinary
item...............................$ 592 $ 996 $ (46) $ 302 $ 407 $ 96 $ 859
Net income............................$ 691 $ 1,088 $ 63 $ 1,805 $ 407 $ 63 $ 567
Balance Sheet Data:
Working capital.......................$ 1,965 $ 2,566 $ 1,968 $ 3,607 $ 2,650 $ 3,345 $ 2,743
Property, plant and equipment (net)... 2,277 2,894 4,162 4,180 3,373 4,281 3,407
Total assets.......................... 6,468 8,748 9,360 10,849 11,250 10,264 11,047
Long-term debt........................ 808 804 1,697 1,286 1,027 1,230 960
Stockholders' equity.................. 3,039 4,095 4,097 5,914 6,527 5,968 6,721
Other Data:
Depreciation..........................$ 580 $ 681 $ 904 $ 1,109 $ 1,169 $ 583 $ 461
Capital expenditures.................. 1,020 1,351 2,063 1,238 1,031 698 505
Ratio of earnings to fixed charges(2). 10.0 14.3 --(3) 5.5 6.0 2.5 15.6
- ---------
(1) In the first quarter of 1999, the company announced a consolidation of
semiconductor manufacturing operations in Japan to improve manufacturing
efficiencies and reduce costs. The consolidation is expected to be
completed by the end of the year 2000. The action resulted in a pretax
charge of $14 million in the first quarter, of which $13 million was for
severance for the elimination of 153 jobs in Hatogaya, Japan and $1
million for other related costs. At June 30, 1999, the pay-out of the
severance cost obligation had not yet begun. Of the $14 million charge,
$11 million was included in cost of revenues and $3 million in marketing,
general and administrative expense.
(2) For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of income (loss) before provision for income taxes,
interest expense, amortization of capitalized interest and that portion of
rental and lease expense which is representative of interest; and "fixed
charges" consist of interest incurred (expensed and capitalized) and that
portion of rental and lease expense which is representative of interest.
(3) The ratio for 1996 is not meaningful because the coverage deficiency was
$43 million.
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The Exchange Offer
Exchange Notes......................... $400,000,000 in principal amount of 7% senior exchange
notes due 2004.
The Exchange Offer..................... We are offering to issue the exchange notes in exchange for
a like principal amount of outstanding 7% senior notes due
2004, issued by TI on August 17, 1999. We are offering to
issue the exchange notes to satisfy our obligations contained
in the registration rights agreement entered into when the
old notes were sold in transactions pursuant to Rule 144A
and Regulation S under the Securities Act and therefore
subject to transfer restrictions that will not apply to the
exchange notes.
Maturity Date.......................... August 15, 2004.
Interest Payment Dates................. February 15 and August 15, beginning on February 15,
2000.
Ranking................................ The exchange notes are unsecured senior obligations of TI
and will rank pari passu with all other unsecured senior
indebtedness of TI.
Optional Redemption.................... We may redeem some or all of the exchange notes at any
time at the redemption price described in the "Description
of Exchange Notes" section under the heading "--Optional
Redemption," plus accrued interest to the date of
redemption.
Certain Covenants...................... The indenture governing the exchange notes will contain
covenants that limit our ability and our subsidiaries' ability
to:
o enter into certain sale and lease-back transactions;
o incur liens on our assets to secure debt;
o merge or consolidate with another company; and
o transfer or sell substantially all of our assets.
For more details, see the section under the heading "Description
of Exchange Notes" in this prospectus.
Use of Proceeds........................ We will not receive any proceeds from the issuance of the
exchange notes.
Denomination of Exchange Notes......... The exchange notes will be issued as book-entry certificates
in global form in the name of Cede & Co., the nominee of the
Depository Trust Company, as described in the attached prospectus
under the caption "Description of Exchange Notes."
6
Tenders, Expiration Date, Withdrawal... The exchange offer will expire at 5:00 p.m. New York City
time December 6, 1999, unless it is extended. If you decide to
exchange your old notes for exchange notes, you must
acknowledge that you are not engaging in, and do not
intend to engage in, a distribution of the exchange notes. If
you decide to tender your old notes pursuant to the
exchange offer, you may withdraw them at any time prior
to December 6, 1999. If we decide for any reason not to accept any
old notes for exchange, your old notes will be returned to
you without expense promptly after the exchange offer
expires.
Federal Income Tax Consequences........ Your exchange of old notes for exchange notes pursuant to
the exchange offer will not result in any income, gain or
loss to you for federal income tax purposes. See "Material
United States Tax Consequences of the Exchange Offer."
Exchange Agent......................... Citibank, N.A. is the exchange agent for the exchange offer.
Failure to Tender Your Old Notes....... If you fail to tender your old notes in the exchange offer,
you will not have any further rights under the registration
rights agreement, including any right to require us to
register your old notes or to pay your liquidated damages.
7
DESCRIPTION OF EXCHANGE NOTES
The old notes were, and the exchange notes will be, issued under an
indenture dated as of July 15, 1996 between us and Citibank, N.A., as trustee.
The following summary of certain provisions of the indenture does not purport
to be complete and is qualified in its entirety by reference to the indenture.
The numerical references below are to provisions of the indenture. Whenever a
defined term is indicated but not defined in this section, the relevant
definition is contained in the indenture.
In this section, "we", "our," "us" and "TI" mean Texas Instruments
Incorporated excluding, unless the context otherwise requires or as otherwise
expressly stated, our subsidiaries.
The terms of the exchange notes are identical in all material respects to
the terms of the old notes, except that the transfer restrictions, registration
rights and additional interest provisions relating to the old notes do not
apply to the exchange notes.
General
The exchange notes
o will be limited to $400,000,000 aggregate principal amount;
o will mature on August 15, 2004; and
o will bear interest at a rate of 7% per annum.
The exchange notes will bear interest from August 20, 1999, payable on
February 15, and August 15, of each year, commencing February 15, 2000, to the
persons in whose names the exchange notes are registered at the close of
business on the preceding February 1, and August 1. Unless other arrangements
are made, interest payments will be paid by checks mailed to record holders at
their registered addresses. All payments of principal and interest will be
payable in U.S. dollars.
The exchange notes will be unsecured and will rank on a parity with any of
our other unsecured and unsubordinated obligations. Thus, we will not issue any
unsecured indebtedness that is senior to the exchange notes. As of June 30,
1999, we had no long-term indebtedness outstanding that was secured by any of
our assets. If, however, we issue indebtedness secured by any of our assets,
such secured indebtedness generally will be senior, with respect to such
assets, to the exchange notes offered hereby. The indenture does not contain
any covenants or provisions that may afford holders of the exchange notes
protection in the event of a highly leveraged transaction.
The exchange notes are redeemable prior to maturity as set forth below
under "--Optional Redemption." The exchange notes are not subject to any
sinking funds provisions.
The indenture does not limit the amount of debentures, notes or other
evidence of indebtedness that may be issued under the indenture. In this
section, we refer to securities issued under the indenture as "debt
securities".
Beneficial interest in a book-entry note will be shown on the records
maintained by DTC. Transfers of the beneficial interest can only be effected
through those records. Holders of beneficial interest in the global notes may
not exchange book-entry notes for certificated notes, except under certain
restricted circumstances.
8
Optional Redemption
At our option, we may redeem the exchange notes, in whole or in part, at
any time, at a redemption price equal to the greater of:
o 100% of the principal amount of the exchange notes then outstanding;
or
o the sum of the present values of the remaining scheduled payments of
principal and interest thereon (not including any portion of such
payments of interest accrued to the date of redemption) discounted to
the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the adjusted treasury rate,
plus 15 basis points;
plus, in either of the above cases, accrued and unpaid interest thereon to
the date of redemption.
"Adjusted treasury rate" means, with respect to any redemption date:
o the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor
publication that is published weekly by the Board of Governors of the
Federal Reserve System and that establishes yields on actively traded
United States treasury securities adjusted to constant maturity under
the caption "Treasury Constant Maturities," for the maturity
corresponding to the comparable treasury issue (if no maturity is
within three months before or after the remaining term of the
exchange notes, yields for the two published maturities most closely
corresponding to the comparable treasury issue shall be determined
and the adjusted treasury rate shall be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest
month); or
o if such release (or any successor release) is not published during
the week preceding the calculation date or does not contain such
yields, the rate per annum equal to the semi-annual equivalent yield
to maturity of the comparable treasury issue, calculated using a
price for the comparable treasury issue, expressed as a percentage of
its principal amount, equal to the comparable treasury price for the
relevant redemption date.
The adjusted treasury rate shall be calculated on the third business day
preceding the redemption date.
"Comparable treasury issue" means the United States treasury security
selected by an independent investment banker as having a maturity comparable to
the remaining term of the exchange notes to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable maturity to
the remaining term of the exchange notes.
"Comparable treasury price" means (1) the average of four reference
treasury dealer quotations for such redemption date, after excluding the
highest and lowest reference treasury dealer quotations, or (2) if the
independent investment banker obtains fewer than four reference treasury dealer
quotations, the average of all such quotations.
"Independent investment banker" means one of the reference treasury
dealers appointed by the trustee after consultation with us.
"Reference treasury dealer" means:
o each of Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc.,
ABN AMRO Incorporated, Banc of America Securities LLC and their
respective successors; provided, however, that if any of them cease
to be a primary U.S. Government securities dealer in New York City,
we will substitute another primary treasury dealer, and
9
o any other primary treasury dealer selected by us.
"Reference treasury dealer quotations" means, with respect to each
reference treasury dealer and any redemption date, the average, as determined
by the independent investment banker, of the bid and asked prices for the
comparable treasury issue, expressed in each case as a percentage of its
principal amount, quoted in writing to the independent investment banker at
5:00 p.m., New York City time, on the third business day preceding such
redemption date.
We will mail a notice of redemption at least 30 days but not more than 60
days before the redemption date to each holder of exchange notes to be
redeemed. If we elect to partially redeem the exchange notes, the trustee will
select in a fair and appropriate manner the exchange notes to be redeemed.
(Section 12.2).
Once we have given notice of redemption for any exchange notes, those
exchange notes will become due and payable on the date and at the place stated
in such notice at the applicable redemption price, together with interest
accrued to the date fixed for redemption. On and after the date fixed for
redemption, those exchange notes will, with limited exceptions, cease to accrue
interest. (Section 12.4).
Certain Covenants of TI
The following covenants apply to the exchange notes:
Certain Definitions. The term "attributable debt" in respect of a sale and
leaseback transaction means, at the time of determination, the present value
(discounted at the interest rate implicit in the lease or, if it is not
practicable to determine such rate, then at the incremental borrowing rate of
TI determined in accordance with generally accepted accounting principles) of
the obligation of the lessee for net rental payments during the remaining term
of any lease.
(Section 3.7).
The term "consolidated net tangible assets" means, at any date, the total
assets appearing on the audited annual consolidated balance sheet of TI and its
subsidiaries for TI's most recently completed fiscal year, prepared in
accordance with generally accepted accounting principles, less (a) all current
liabilities as shown on such balance sheet, and (b) intangible assets. (Section
1.1).
The term "funded debt" means all debt whether incurred, assumed or
guaranteed, including purchase money indebtedness, maturing by its terms more
than one year from the date of creation thereof or which is renewable or
extendable at the sole option of the obligor in such manner that it may become
payable more than one year from the date of creation thereof. (Section 1.1).
The term "principal manufacturing property" means each manufacturing or
processing plant or facility of TI or a subsidiary located in the United States
of America (other than its territories and possessions) or Puerto Rico, except
any such manufacturing or processing plant or facility which the board of
directors by resolution reasonably determines not to be of material importance
to the total business conducted by TI and its consolidated subsidiaries.
(Section 1.1).
The term "restricted subsidiary" means:
(a) any subsidiary of TI which owns or is the lessee of any principal
manufacturing property; provided, however, that the term "restricted
subsidiary" shall not include (1) any subsidiary primarily engaged in
financing the operations of TI or its subsidiaries or both or (2) any
subsidiary acquired or organized for the purpose of business
acquisitions, or
(b) any other subsidiary which is hereafter designated by the board of
directors as a restricted subsidiary. (Section 1.1).
10
Restrictions on Liens. TI will not nor will it permit any restricted
subsidiary to issue or assume any debt for money borrowed (which, including
guarantees of debt for borrowed money, we refer to as "debt"), if the debt is
secured by a mortgage, pledge, lien or other encumbrance (which we refer to as
a "mortgage") upon any principal manufacturing property or on any shares of
stock or debt of any restricted subsidiary (whether such principal
manufacturing property, shares of stock or debt is now owned or subsequently
acquired) without in any such case effectively providing that the exchange
notes shall be secured equally and ratably with the debt. The foregoing
restrictions shall not apply to:
(a) mortgages on property existing at the time of or within 120 days
after acquisition of the property and certain purchase money
mortgages;
(b) mortgages on property of a corporation existing at the time that
corporation is merged into or consolidated with TI or a restricted
subsidiary;
(c) mortgages in favor of the United States or any political subdivision
or any instrumentality thereof, to secure certain payments pursuant
to any contract or statute or to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or the
cost of construction of the property subject to the mortgages;
(d) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage
referred to in clauses (a) through (c) above; and
(e) mortgages securing the indebtedness of a restricted subsidiary to TI
or to another restricted subsidiary. (Section 3.6).
Restrictions on Sale and Leaseback Transactions. TI will not, and will not
permit any restricted subsidiary to, enter into any lease longer than three
years covering any principal manufacturing property that is sold to any other
person in connection with such lease unless the proceeds from such sale or
transfer shall be at least equal to the fair value of such property as
determined by resolution by TI's board of directors and either:
(a) TI or such restricted subsidiary would be entitled, pursuant to the
"Restrictions on Liens" described above, to incur debt secured by a
mortgage on the principal manufacturing property involved in an
amount at least equal to the attributable debt in respect of the
principal manufacturing property without equally and ratably securing
the exchange notes, provided, that such attributable debt shall
thereupon be deemed to be Debt subject to the provisions of such
restrictions on liens, or
(b) within a period commencing twelve months prior to the consummation of
the sale and leaseback transaction and ending twelve months after
consummation of such transaction, TI or such restricted subsidiary
has expended or will expend for principal manufacturing property an
amount equal to
(1) the proceeds of such sale and leaseback transaction and TI
elects to designate such amount as a credit against such
transaction, or
(2) a part of the proceeds of such sale and leaseback transaction
and TI elects to designate such amount as a credit against such
transaction and treats an amount equal to the remainder of the
proceeds as provided in clause (3) below, or
(3) such attributable debt (less any amount elected under clause (2)
above) (A) is applied within 120 days after the transaction to
the retirement of funded debt or (B) is considered attributable
debt for purposes of the calculation of exempted debt and, after
giving effect to the exempted debt, the exempted debt does not
exceed 5% of consolidated net tangible assets. (Section 3.7).
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Exempted Debt. Notwithstanding the restrictions on mortgages and sale and
leaseback transactions described above, TI and its restricted subsidiaries may,
in addition to amounts permitted under such restrictions, create debt secured
by mortgages, or enter into sale and leaseback transactions, which would
otherwise be subject to the foregoing restrictions, without equally and ratably
securing the exchange notes and without any obligation to make expenditures for
principal manufacturing property or to retire any debt, provided, that after
giving effect thereto, the aggregate additional outstanding amount of such debt
secured by mortgages plus attributable debt resulting from such sale and
leaseback transactions does not exceed 5% of consolidated net tangible assets.
(Sections 3.6 and 3.7).
Events of Default
An event of default will occur under the indenture with respect to the
exchange notes if:
(a) TI shall fail to pay when due any installment of interest on the
exchange notes and such default shall continue for 30 days;
(b) TI shall fail to pay when due all or any part of the principal of
(and premium, if any, on) the exchange notes (whether at maturity,
upon redemption, upon acceleration or otherwise);
(c) TI shall fail to perform or observe any other term, covenant or
agreement contained in the indenture (other than a covenant included
in the indenture solely for the benefit of a series of debt
securities other than the exchange notes) for a period of 90 days
after written notice thereof, as provided in the indenture;
(d) certain events of bankruptcy, insolvency or reorganization shall have
occurred;
(e) TI shall fail to convert any of the debt securities in accordance
with the indenture and such default shall continue for 45 days; or
(f) TI has not complied with any other covenant the noncompliance with
which would specifically constitute an event of default with respect
to the exchange notes. (Section 5.1).
The indenture provides that,
(a) if an event of default due to the default in payment of principal of,
or interest on, any series of debt securities, or due to the default
in performance or breach of any other covenant or warranty of TI
applicable to the debt securities of such series but not applicable
to all outstanding debt securities, or due to the default in the
conversion of any series of debt securities, shall have occurred and
be continuing, either the trustee or the holders of 25% in principal
amount of the debt securities of such series then outstanding may
declare the principal of all the exchange notes and interest accrued
thereon to be due and payable immediately, and
(b) if an event of default due to a default in the performance of any
other of the covenants or agreements in the indenture applicable to
all outstanding debt securities, or due to certain events of
bankruptcy, insolvency and reorganization of TI, shall have occurred
and be continuing, either the trustee or the holders of 25% in
principal amount of all debt securities then outstanding (treated as
one class) may declare the principal of all debt securities and
interest accrued thereon to be due and payable immediately, but upon
certain conditions such declarations may be annulled and past
defaults may be waived (except a continuing default in payment of
principal of (or premium, if any) or interest on the debt securities
or in the conversion of any debt security in accordance with the
indenture) by the holders of a majority in principal amount of the
debt securities of any series (or of all series, as the case may be)
then outstanding. (Sections 5.1 and 5.10).
The holders of a majority in principal amount of the outstanding exchange
notes may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee or exercising any trust or power conferred
on the trustee; provided that such direction shall not be in conflict with any
rule of law or the indenture. (Section 5.9).
12
Before proceeding to exercise any right or power under the indenture at the
direction of such holders, the trustee shall be entitled to receive from such
holders reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with any such
direction. (Section 5.6).
TI will be required to furnish to the trustee annually a certificate of
certain officers of TI to the effect that, to the best of their knowledge, TI
is not in default in the performance or fulfillment of, or compliance with, the
terms of the indenture or, if they have knowledge that TI is in default,
specifying such default. (Section 3.5).
The indenture requires the trustee to give to all holders of outstanding
exchange notes notice of any default by TI with respect to the exchange notes,
unless such default shall have been cured or waived; however, except in the
case of a default in the payment of principal of (and premium, if any) or
interest on any outstanding exchange notes, the trustee is entitled to withhold
such notice in the event that the board of directors, the executive committee
or a trust committee of directors or certain officers of the trustee in good
faith determine that withholding such notice is in the interest of the holders
of the outstanding exchange notes. (Section 5.11).
Defeasance and Discharge
The indenture provides that TI will be discharged from its obligations in
respect of the indenture and the outstanding exchange notes (including its
obligation to comply with the provisions referred to under "-- Certain
Covenants of TI," if applicable, but excluding certain other obligations, such
as the obligation to pay principal of, premium, if any, and interest, if any,
on the exchange notes then outstanding, obligations of TI in the event of
acceleration following default referred to in clause (a) above under "-- Events
of Default" and obligations to register the transfer of, convert or exchange
such outstanding exchange notes and to replace stolen, lost or mutilated
certificates), upon the irrevocable deposit, in trust, of cash or U.S.
Government Obligations (as defined) that through the payment of interest and
principal thereof in accordance with their terms will provide cash in an amount
sufficient to pay any installment of principal of (and premium, if any) and
interest on such exchange notes on the stated maturity of such payments in
accordance with the terms of the indenture and such outstanding exchange notes,
provided that TI has received an opinion of counsel to the effect that such a
discharge will not be deemed, or result in, a taxable event with respect to
holders of the outstanding exchange notes and that certain other conditions are
met. (Section 10.1).
Modification of the Indenture
The indenture provides that TI and the trustee may enter into supplemental
indentures without the consent of the holders of the exchange notes to:
(a) secure any debt securities;
(b) evidence the assumption by a successor corporation of the obligations
of TI;
(c) add covenants for the protection of the holders of any debt
securities;
(d) cure any ambiguity or correct any inconsistency in the indenture;
(e) establish the form or terms of the debt securities of any series; and
(f) evidence the acceptance of appointment by a successor trustee.
(Section 8.1).
The indenture also contains provisions permitting TI and the trustee, with
the consent of the holders of not less than a majority in principal amount of
debt securities of each series then outstanding and affected, to add any
provisions to, or change in any manner or eliminate any of the provisions of,
the indenture or modify in any manner the rights of the holders of the debt
securities so affected, provided that TI and the trustee may not, without the
consent of the holder of each outstanding debt security affected thereby,
13
o extend the stated maturity of the principal of any debt security;
o reduce the principal amount thereof;
o reduce the rate or extend the time of payment of interest thereon;
o reduce any amount payable on redemption thereof;
o impair the right to institute suit for the enforcement of any such
payment when due or of any conversion right thereof, or affect any
right to convert any debt security;
o change the currency in which the principal thereof or interest
thereon is payable; or
o reduce the aforesaid percentage in principal amount of the debt
security the consent of the holders of which is required for any such
modification. (Section 8.2).
Consolidation, Merger, Conveyance or Transfer
TI may, without the consent of the trustee or the holders of the exchange
notes, consolidate or merge with, or convey, transfer or lease its properties
and assets substantially as an entirety to, any other corporation, provided
that any successor corporation is a corporation organized under the laws of the
United States of America or any state thereof or it agrees to indemnify and
hold harmless the holders of the exchange notes against certain taxes and
expenses and that such successor corporation expressly assumes all obligations
of TI under the exchange notes and that certain other conditions are met, and,
thereafter, except in the case of a lease, TI shall be relieved of all
obligations thereunder. (Article Nine).
Applicable Law
The exchange notes and the indenture will be governed by and construed in
accordance with the laws of the State of New York. (Section 11.8).
Book-Entry, Delivery and Form
The global notes will be registered in the name of the nominee of DTC and
deposited on behalf of the beneficiaries of the notes represented thereby with
the trustee, as custodian for DTC, for credit by DTC to the specific accounts of
the respective participants.
We expect that pursuant to procedures established by DTC:
o upon deposit of the global note, DTC or its custodian will credit on
its internal system interests in the global notes to the accounts of
persons who have accounts with DTC ("participants"); and
o ownership of the global note will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained
by DTC or its nominee (with respect to interests of participants) and
the records of participants (with respect to interests of persons
other than participants). Ownership of beneficial interests in the
global note will be limited to participants or persons who hold
interests through participants.
The descriptions of the operations and procedures of DTC, Euroclear and
Cedelbank set forth below are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. We do
not take any responsibility for these operations or procedures, and investors
are urged to contact the relevant system or its participants directly to
discuss these matters.
14
DTC has advised us that it is:
o a limited-purpose trust company organized under the laws of the State
of New York;
o a "banking organization" within the meaning of the New York Banking
Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, as amended; and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants,
thereby eliminating the need for physical transfer and delivery of
certificates. DTC's participants include securities brokers and dealers, banks
and trust companies, clearing corporations and certain other organizations.
Indirect access to DTC's system is also available to other entities such as
banks, brokers, dealers and trust companies (collectively, the "indirect
participants") that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Investors who are not participants
may beneficially own securities held by or on behalf of DTC only through
participants or indirect participants.
We expect that pursuant to procedures established by DTC (i) upon deposit
of each global note, DTC will credit, on its book-entry registration and
transfer system, the designated accounts of participants with an interest in
the global note and (ii) ownership of beneficial interests in the exchange
notes will be shown on, and the transfer of ownership interests thereof will be
shown on, and effected only through, records maintained by DTC (with respect to
the interests of participants) and the participants and indirect participants
(with respect to the interests of persons other than participants).
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in definitive form.
Accordingly, the ability to transfer beneficial interests in the exchange notes
represented by a global note to such persons may be limited. In addition,
because DTC can act only on behalf of its participants, who in turn act on
behalf of persons who hold interests through participants, the ability of a
person having a beneficial interest in the exchange notes represented by a
global note to pledge or transfer such interest to persons or entities that do
not participate in DTC's system, or to otherwise take actions in respect of
such interest, may be affected by the lack of physical definitive security in
respect of such interest.
So long as DTC or its nominee is the registered owner of a global note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the exchange notes represented by the global note for all purposes of
such exchange notes and under the indenture. Except as provided below, owners
of beneficial interests in a global note will not be entitled to have the
exchange notes represented by such global note registered in their names, will
not receive or be entitled to receive physical delivery of certificated notes,
and will not be considered the owners or holders thereof under the indenture
for any purpose, including with respect to the giving of any direction,
instruction or approval to the trustee thereunder. Accordingly, each holder
owning a beneficial interest in a global note must rely on procedures of DTC
and, if such holder is not a participant or an indirect participant, on the
procedures of the participant through which such holder owns its interest, to
exercise any rights of a holder of exchange notes under the indenture or such
global note. We understand that under existing industry practice, in the event
that we request any action of holders of exchange notes, or a holder that is an
owner of a beneficial interest in a global note desires to take any action that
DTC, as the holder of such global note, is entitled to take, DTC would
authorize the participants to take such action and the participants would
authorize holders owning through such participants to take such action or would
otherwise act upon the instruction of such holders. Neither we nor the trustee
will have any responsibility or liability for any
15
aspect of the records relating to or payments made on account of exchange notes
by DTC, or for maintaining, supervising or reviewing any records of DTC
relating to such exchange notes.
Payments with respect to principal of and premium, if any, and interest
on, any exchange notes represented by a global note registered in the name of
DTC or its nominee on the applicable record date will be payable by the trustee
to or at the direction of DTC or its nominee in its capacity as the registered
holder of the global note representing such exchange notes under the indenture.
Under the terms of the indenture, we and the trustee may treat the persons in
whose names the exchange notes, including the global notes, are registered as
the owners thereof for the purpose of receiving payment thereon and for any and
all other purposes whatsoever. Accordingly, neither we nor the trustee has or
will have any responsibility or liability for the payment of such amounts to
owners of beneficial interests in a global note (including principal, premium,
if any, and interest). Payments by the participants and the indirect
participants to the owners of beneficial interest in a global note will be
governed by standing instructions and customary industry practice and will be
the responsibility of the participants or the indirect participants and DTC.
DTC management is aware that some computer applications, systems, and the
like for processing data that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "year 2000
problems." DTC has informed its participants and other members of the financial
community that it has developed and is implementing a program so that its
systems, as the same relate to the timely payment of distributions (including
principal and income payments) to securityholders, book-entry deliveries, and
settlement of trades within DTC continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of which
is complete. Additionally, DTC's plan includes a testing phase, which is
expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed the industry that it is contacting (and will
continue to contact) third party vendors from whom DTC acquires services to:
(i) impress upon them the importance of such services being year 2000
compliant; and (ii) determine the extent of their efforts for year 2000
remediation (and as appropriate, testing) of their services. In addition, DTC
is in the process of developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear and Cedelbank will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
exchange notes, cross-market transfers between the participants in DTC, on the
one hand, and Euroclear and Cedelbank participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear and
Cedelbank, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Cedelbank, as the case may be, by the counterparty in such system in accordance
with the rules and procedures and within the established deadlines (Brussels
time) of such system. Euroclear or Cedelbank, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf
by delivering or receiving interests in the relevant global notes in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Cedelbank
participants may not deliver instructions directly to the depositaries for
Euroclear or Cedelbank.
16
Because of time zone differences, the securities account of a Euroclear or
Cedelbank participant purchasing an interest in a global note from a
participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Cedelbank participant, during the securities
settlement processing day (which must be a business day for Euroclear or
Cedelbank) immediately following the settlement date of DTC. Cash received in
Euroclear or Cedelbank as a result of sales of interests in a global note by or
through a Euroclear or Cedelbank participant to a participant in DTC will be
received with value on the settlement date of DTC but will be available in the
relevant Euroclear or Cedelbank cash account only as of the business day for
Euroclear or Cedelbank following DTC's settlement date.
Although DTC, Euroclear and Cedelbank have agreed to the foregoing
procedures to facilitate transfers of interests in the global notes among
participants in DTC, Euroclear and Cedelbank, they are under no obligation to
perform or to continue to perform such procedures, and such procedures may be
discontinued at any time. Neither we nor the trustee will have any
responsibility for the performance by DTC, Euroclear or Cedelbank or their
respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
Certificated Notes
If DTC is at any time unwilling or unable to continue as depositary and we
do not appoint a successor depositary within 90 days, we will issue exchange
notes in definitive form in exchange for such global note. In addition, we may
at any time and in our sole discretion determine not to have any of the
exchange notes represented by one or more global notes and, in such event, will
issue certificated notes in exchange for all of the global note or global notes
representing such exchange notes. Upon any such issuance, the trustee is
required to register such certificated notes in the name of such person or
persons (or the nominee of any thereof) and cause the same to be delivered
thereto.
Neither we nor the trustee shall be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related exchange notes and each such person may conclusively rely on, and shall
be protected in relying on, instructions from DTC for all purposes (including
with respect to the registration and delivery, and the respective principal
amounts, of the exchange notes to be issued).
17
THE EXCHANGE OFFER
Pursuant to a registration rights agreement between TI and the initial
purchasers, we agreed to use our reasonable best efforts to cause to become
effective a registration statement with respect to an issue of notes identical
in all material respects to the old notes and, upon becoming effective, to
offer the holders of the old notes the opportunity to exchange their old notes
for the exchange notes. Under existing SEC interpretations set forth in several
no-action letters to third parties, the exchange notes are, in general, freely
transferable (other than by holders who are broker-dealers or by an affiliate
of TI) after the exchange offer without further registration under the
Securities Act. In the event that due to a change in current interpretations by
the SEC, we are not permitted to effect such exchange offer, it is contemplated
that we will instead file a shelf registration statement covering resales by
the holders of the old notes and will use our reasonable best efforts to cause
such shelf registration statement to become effective and to keep such shelf
registration statement effective for a maximum of two years from the closing
date, which is the date we delivered the old notes to the initial purchasers.
Terms of the Exchange Offer; Period for Tendering Old Notes
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will:
o accept for exchange old notes, which are properly tendered on or
prior to the expiration date and not withdrawn as permitted below;
and
o keep the exchange offer open for not less than 20 business days (or
longer if required by applicable law) after the date notice of the
exchange offer is mailed to the holders of the old notes.
The term "expiration date" means 5:00 p.m., New York City time, on December
6, 1999; provided, however, that if we, in our sole discretion, have extended
the period of time for which the exchange offer is open, the term "expiration
date" means the latest time and date to which the exchange offer is extended.
As of the date of this prospectus, $400,000,000 in aggregate principal
amount of the old notes were outstanding. The exchange offer is not conditioned
upon any minimum principal amount of old notes being tendered. This prospectus,
together with the letter of transmittal, is first being sent on or about the
date set forth on the cover page to all holders of old notes at the addresses
set forth in the security register with respect to old notes maintained by the
trustee.
We expressly reserve the right:
o at any time or from time to time, to extend the period of time during
which the exchange offer is open, and thereby delay acceptance of any
old notes; and
o to amend or terminate the exchange offer, and not to accept for
exchange any old notes not previously accepted for exchange, upon the
occurrence of any of the conditions of the exchange offer specified
below under "Certain Conditions to the Exchange Offer."
We will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the old notes as promptly as
practicable, such notice in the case of any extension to be issued by means of
a press release or other public announcement no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date. Without limiting the manner in which we may choose to make any public
announcement and subject to applicable law, we shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
18
Holders of old notes do not have appraisal or dissenters' rights in
connection with the exchange offer. Old notes that are not tendered for
exchange or are tendered but not accepted in connection with the exchange offer
will remain outstanding and be entitled to the benefits of the indenture, but
will not be entitled to any further registration rights under the registration
rights agreement. We intend to conduct the exchange offer in accordance with
the applicable requirements of the Exchange Act and the relevant rules and
regulations of the SEC.
Procedures for Tendering Old Notes
The tender to us of old notes by a holder as set forth below and the
acceptance of the old notes by us will constitute a binding agreement between
the tendering holder and us upon the terms and subject to the conditions set
forth in this prospectus and in the accompanying letter of transmittal. Except
as set forth below, a holder who wishes to tender old notes for exchange
pursuant to the exchange offer must transmit a properly completed and duly
executed letter of transmittal, including all other documents required by such
letter of transmittal, to Citibank, N.A., who is acting as our exchange agent,
at the address set forth below under "exchange agent" on or prior to the
expiration date. In addition:
o certificates for such old notes must be received by the exchange
agent along with the letter of transmittal;
o a timely confirmation of a book-entry transfer of such old notes, if
such procedure is available, into the exchange agent's account at DTC
pursuant to the procedure for book-entry transfer described below,
must be received by the exchange agent prior to the expiration date;
or
o the holder must comply with the guaranteed delivery procedures
described below.
The method of delivery of old notes, letters of transmittal and all other
required documents is at the election and risk of the holders. If such delivery
is by mail, it is recommended that registered mail, properly insured, with
return receipt requested, be used. In all cases, sufficient time should be
allowed to assure timely delivery. No letters of transmittal or old notes
should be sent to TI.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the old notes surrendered for exchange
pursuant thereto are tendered:
o by a registered holder of the old notes who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or
o for the account of an eligible institution.
If signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantees must be by an eligible
institution, which is a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States. If old notes are registered in the name of
a person other than the person signing the letter of transmittal, the old notes
surrendered for exchange must be endorsed by, or be accompanied by a written
instrument or instruments of transfer or exchange, in satisfactory form as
determined by us in our sole discretion, duly executed by the registered holder
with the signature thereon guaranteed by an eligible institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of old notes tendered for exchange will be determined
by us in our sole discretion, which determination will be final and binding. We
reserve the absolute right:
o to reject any and all tenders of any particular old notes not
properly tendered or to not accept any particular old notes which
acceptance might, in our judgment or the judgment of our counsel, be
unlawful; and
19
o to waive any defects or irregularities or conditions of the exchange
offer as to any particular old notes either before or after the
expiration date (including the right to waive the ineligibility of
any holder who seeks to tender old notes in the exchange offer).
Unless waived, any defects or irregularities in connection with the tender
of old notes for exchange must be cured within such reasonable period of time
as we determine. Neither we, the exchange agent nor any other person will be
under any duty to give notification of any defect or irregularity with respect
to any tender of old notes for exchange, nor will any of them incur any
liability for failure to give such notification.
If the letter of transmittal is signed by a person or persons other than
the registered holder or holders of old notes, such old notes must be endorsed
or accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered holder or holders that appear on the old
notes.
If the letter of transmittal or any old notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by us,
proper evidence satisfactory to us of its authority to so act must be
submitted.
By executing, or otherwise becoming bound by a letter of transmittal, each
holder of the old notes (other than certain specified holders) will represent
that:
o it is not our affiliate;
o any exchange notes to be received by it were acquired in the ordinary
course of business; and
o it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the
exchange notes.
If the tendering holder is a broker-dealer that will receive exchange notes for
its own account in exchange for old notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such exchange notes. See "--Resale of the Exchange Notes."
Acceptance of Old Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the exchange
offer, we will accept, promptly after the expiration date, all old notes
properly tendered and will issue the exchange notes promptly after acceptance
of the old notes. See "Certain Conditions to the Exchange Offer" below. For
purposes of the exchange offer, we will be deemed to have accepted properly
tendered old notes for exchange if and when we have given oral or written
notice thereof to the exchange agent.
In all cases, issuance of exchange notes for old notes that are accepted
for exchange pursuant to the exchange offer will be made only after timely
receipt by the exchange agent of certificates for such old notes or a timely
book-entry confirmation of such old notes into the exchange agent's account at
DTC pursuant to the book-entry transfer procedures described below, a properly
completed and duly executed letter of transmittal and all other required
documents. If any tendered old notes are not accepted for any reason set forth
in the terms and conditions of the exchange offer or if certificates
representing old notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged old notes will be
returned without expense to the tendering holder thereof (or, in the case of
old notes tendered by book-entry transfer into the exchange agent's account at
DTC pursuant to the book-entry transfer procedures described below, such
non-exchanged old notes will be credited to an account maintained with DTC) as
promptly as practicable after the expiration or termination of the exchange
offer.
20
Book-Entry Transfer
The exchange agent will make a request to establish an account with
respect to the old notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of old notes by
causing DTC to transfer such old notes into the exchange agent's account in
accordance with DTC's Automated Tender Offer Program, ATOP, procedures for
transfer. However, the exchange for the old notes so tendered will only be made
after timely confirmation of such book-entry transfer of old notes into the
exchange agent's account, and timely receipt by the exchange agent of an
agent's message and any other documents required by the letter of transmittal.
The term "agent's message" means a message, transmitted by DTC and received by
the exchange agent and forming a part of a book-entry confirmation, which
states that DTC has received an express acknowledgment from a participant
tendering old notes that are the subject of such book-entry confirmation, that
such participant has received and agrees to be bound by the terms of the letter
of transmittal, and that we may enforce such agreement against such
participant.
Although delivery of old notes may be effected through book-entry transfer
into the exchange agent's account at DTC, the letter of transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other required documents, must in any case be
delivered to and received by the exchange agent at its address set forth under
"--Exchange Agent" on or prior to the expiration date, or the guaranteed
delivery procedure set forth below must be complied with.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the Exchange Agent.
Guaranteed Delivery Procedures
If a registered holder of the old notes desires to tender such old notes
and the old notes are not immediately available, or time will not permit such
holder's old notes or other required documents to reach the exchange agent
before the expiration date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if:
o the tender is made through an eligible institution;
o prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed letter of
transmittal (or a facsimile letter of transmittal) and notice of
guaranteed delivery, substantially in the form provided by us (by
telegram, telex, facsimile transmission, mail or hand delivery),
setting forth the name and address of the holder of old notes and the
amount of old notes tendered, stating that the tender is being made
thereby and guaranteeing that within five New York Stock Exchange
trading days after the date of execution of the notice of guaranteed
delivery, the certificates of all physically tendered old notes, in
proper form for transfer, or a book-entry confirmation, as the case
may be, and any other documents required by the letter of transmittal
will be deposited by the eligible institution with the exchange
agent; and
o the certificates for all physically tendered old notes, in proper
form for transfer, or a book-entry confirmation, as the case may be,
and all other documents required by the letter of transmittal, are
received by the exchange agent within five NYSE trading days after
the date of execution of the notice of guaranteed delivery.
Withdrawal Rights
Tenders of old notes may be withdrawn at any time prior to the expiration
date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify:
21
o the name of the person having tendered the old notes to be withdrawn;
o the old notes to be withdrawn (including the principal amount of such
old notes); and
o where certificates for old notes have been transmitted, the name in
which such old notes are registered, if different from that of the
withdrawing holder.
If certificates for old notes have been delivered or otherwise identified
to the exchange agent, then, prior to the release of such certificates, the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an eligible institution unless such holder is an eligible
institution. If old notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn old
notes and otherwise comply with the procedures of such facility. All questions
as to the validity, form and eligibility (including time of receipt) of such
notices will be determined by us, and our determination will be final and
binding on all parties.
Any old notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the exchange offer. Any old notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the holder thereof without cost to such holder (or, in the case
of old notes tendered by book-entry transfer into the exchange agent's account
at DTC pursuant to the book-entry transfer procedures described above, such old
notes will be credited to an account maintained with DTC for the old notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn old notes may be re-entered by following one
of the procedures described under "Procedures for Tendering Old Notes" above at
any time on or prior to the expiration date.
Certain Conditions to the Exchange Offer
Notwithstanding any other provisions of the exchange offer, we are not
required to accept for exchange, or to issue exchange notes in exchange for,
any old notes and may terminate or amend the exchange offer, if at any time
before the acceptance of such old notes for exchange or the exchange of the
exchange notes for such old notes, such acceptance or issuance would violate
applicable law or any interpretation of the SEC's staff.
The condition in the paragraph immediately above is for our sole benefit
and may be asserted by us regardless of the circumstances giving rise to such
condition. Our failure at any time to exercise the foregoing rights is not to
be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any old notes tendered, and
no exchange notes will be issued in exchange for any such old notes, if at such
time any stop order is threatened or in effect with respect to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture under the Trust Indenture Act.
22
Exchange Agent
Citibank, N.A. has been appointed as the exchange agent for the exchange
offer. All executed letters of transmittal should be directed to the exchange
agent at one of the addresses set forth below. Questions and requests for
assistance, requests for additional copies of this prospectus or of the letter
of transmittal and requests for notices of guaranteed delivery should be
directed to the exchange agent, addressed as follows:
Deliver To:
Citibank, N.A., Exchange Agent
By Mail or By Hand:
Corporate Trust Window
111 Wall Street, 5th Floor
New York, NY 10043
By Facsimile:
(212) 657-4009
Confirm by Telephone:
(212) 657-8476
Delivery to an address other than as set forth above or transmission of
instructions via facsimile other than as set forth above does not constitute a
valid delivery.
Fees and Expenses
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by our officers,
regular employees and affiliates. We will not pay any additional compensation
to any such officers and employees who engage in soliciting tenders. We will
not make any payment to brokers, dealers, or others soliciting acceptances of
the exchange offer. However, we will pay the exchange agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith.
The estimated cash expenses to be incurred in connection with the exchange
offer will be paid by us and are estimated in the aggregate to be $350,000.
Transfer Taxes
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who
instruct us to register exchange notes in the name of, or request that old
notes not tendered or not accepted in the exchange offer to be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.
Resale of the Exchange Notes
Under existing interpretations of the SEC's staff contained in several
no-action letters to third parties, the exchange notes would be freely
transferable after the exchange offer without further registration under the
Securities Act. However, any purchaser of old notes who is an "affiliate" of
ours or who intends to participate in the exchange offer for the purpose of
distributing the exchange notes:
23
o will not be able to rely on the interpretation of the SEC's staff;
o will not be able to tender its old notes in the exchange offer; and
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or
transfer of the old notes unless such sale or transfer is made
pursuant to an exemption from such requirements.
By executing, or otherwise becoming bound by, the letter of transmittal
each holder of the old notes (other than certain specified holders) will
represent that:
o it is not our "affiliate";
o any exchange notes to be received by it were acquired in the ordinary
course of its business; and
o it has no arrangement with any person to participate in the
distribution (within the meaning of the Securities Act) of the
exchange notes.
In addition, in connection with any resales of exchange notes, any
participating broker-dealer who acquired the old notes for its own account as a
result of market-making or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act. The SEC has taken the position
that participating broker-dealers may fulfill their prospectus delivery
requirements with respect to the exchange notes (other than a resale of an
unsold allotment from the original sale of the old notes) with the prospectus
contained in the exchange offer registration statement. Under the registration
rights agreement, we are required to allow participating broker-dealers and
other persons, if any, subject to similar prospectus delivery requirements to
use this prospectus as it may be amended or supplemented from time to time, in
connection with the resale of such exchange notes.
MATERIAL UNITED STATES TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of old notes for exchange notes pursuant to the exchange
offer will not result in any United States federal income tax consequences to
holders. When a holder exchanges an old note for an exchange note pursuant to
the exchange offer, the holder will have the same adjusted basis and holding
period in the exchange note as in the old note immediately before the exchange.
PLAN OF DISTRIBUTION
Each participating broker-dealer in connection with the exchange offer
must acknowledge that it will deliver a prospectus in connection with any
resale of exchange notes. This prospectus, as it may be amended or supplemented
from time to time, may be used by a participating broker-dealer in connection
with resales of exchange notes received in exchange for old notes where such
old notes were acquired as a result of market-making activities or other
trading activities. We have agreed that we will make this prospectus, as
amended or supplemented, available to any participating broker-dealer for use
in connection with any such resale and participating broker-dealers shall be
authorized to deliver this prospectus for a period not exceeding 90 days after
the expiration date.
We will not receive any proceeds from any sales of the exchange notes by
participating broker-dealers. Exchange notes received by participating
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time, in one or more transactions in the over-the-counter market,
in negotiated transactions, through the writing of options on the exchange
notes or a combination of such methods of resale, at market prices prevailing
at the time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions
24
or concessions from any such participating broker-dealer that resells the
exchange notes that were received by it for its own account pursuant to the
exchange offer. Any broker or dealer that participates in a distribution of such
exchange notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of exchange notes and any
omissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a participating broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
We will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any participating broker-dealer
that requests such documents in the letter of transmittal. See "The Exchange
Offer."
LEGAL MATTERS
The validity of the notes offered hereby will be passed upon for us by
Davis Polk & Wardwell, New York, New York.
INDEPENDENT AUDITORS
The consolidated financial statements included in our Annual Report on
Form 10-K/A for the year ended December 31, 1998 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report therein.
25
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You should rely only on the information
contained in this document or that we have
referred you to. We have not authorized anyone to
provide you with information that is different. We
are not making an offer of these securities in any
state where the offer is not permitted. You should
not assume that the information in this prospectus
or any prospectus supplement is accurate as of any
date other than the date on the front of those
documents.
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TABLE OF CONTENTS
Page
----
Where You Can Find More Information.................2
Forward-Looking Statements..........................3
Prospectus Summary..................................4
Summary Consolidated Financial Data.................5
The Exchange Offer..................................6
Description of Exchange Notes.......................8
Material United States Tax Consequences of the
Exchange Offer..................................24
Plan of Distribution...............................24
Legal Matters......................................25
Independent Auditors...............................25
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$400,000,000
Texas Instruments
Incorporated
[LOGO]
7% senior exchange notes
due 2004
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Prospectus
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November 5, 1999
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