e424b2
Filed pursuant to Rule 424(b)(2)
Registration
No. 333-138376
PROSPECTUS SUPPLEMENT
(To Prospectus dated November 2, 2006)
$1,100,000,000
Federated
Retail Holdings, Inc.
5.90% Senior
Notes Due 2016
Payment of
principal and interest unconditionally guaranteed by
Federated
Department Stores, Inc.
The senior notes mature on December 1, 2016. Federated
Retail Holdings, Inc. (Federated Holdings) will pay
interest on the senior notes semi-annually in arrears on each
June 1 and December 1. The first interest payment will
be made on June 1, 2007. The senior notes will rank equal
in right of payment to any other existing or future senior
unsecured obligations of Federated Holdings.
Federated Holdings may redeem the senior notes at any time at
the redemption prices set forth herein. Upon the occurrence of
both (i) a change of control of Federated Department
Stores, Inc. (Federated) and (ii) a downgrade
of the senior notes below an investment grade rating by each of
Fitch Ratings, Moodys Investors Service, Inc. and
Standard & Poors Ratings Services within a
specified period, Federated Holdings will be required to make an
offer to purchase the senior notes at a price equal to 101% of
their principal amount, plus accrued and unpaid interest to the
date of repurchase.
Investing in the senior notes involves risks. See the
Risk Factors section in our Annual Report on
Form 10-K
for the year ended January 28, 2006.
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Underwriting
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Proceeds to
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Price to
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Discounts and
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Federated
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Public (1)
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Commissions
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Holdings (1)
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Per senior note
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99.932
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%
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0.650
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%
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99.282
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%
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Total
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$
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1,099,252,000
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$
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7,150,000
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$
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1,092,102,000
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(1) |
Plus accrued interest, if any, from November 29, 2006.
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the senior notes in
book-entry form only through the facilities of The Depository
Trust Company for the accounts of its participants, including
Clearstream Banking, societe anonyme, and Euroclear Bank
S.A./N.V., as operator of the Euroclear System, against payment
in New York, New York on November 29, 2006.
Joint
Book-Running Managers
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Banc
of America Securities LLC |
Credit
Suisse |
JPMorgan |
Co-Managers
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Citigroup |
Piper
Jaffray |
Wells
Fargo Securities |
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Fifth
Third Securities, Inc. |
BNY
Capital Markets, Inc. |
The
Williams Capital Group |
The date of this prospectus supplement is November 17, 2006.
TABLE OF
CONTENTS
Prospectus
Supplement
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Page
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S-1
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S-2
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S-4
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S-5
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S-19
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S-23
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S-26
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S-26
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Prospectus
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Page
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About This Prospectus
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1
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Where You Can Find More Information
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1
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Incorporation by Reference
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1
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Forward-Looking Statements
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2
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Description of Debt Securities
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3
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Description of Federated Capital
Stock
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11
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Description of Depositary Shares
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13
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Description of Warrants
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13
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Description of Purchase Contracts
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14
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Description of Units
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15
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Ratio of Earnings to Fixed Charges
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15
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Use of Proceeds
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15
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Certain Legal Matters
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15
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Experts
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16
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You should rely only on the information contained in this
document or to which Federated or Federated Holdings has
referred you. None of Federated, Federated Holdings or any
underwriter has authorized anyone to provide you with
information that is different. This document may only be used
where it is legal to sell the securities. The information in
this document may be accurate only on the date of this
document.
S-i
SUMMARY
The following summary contains basic information about the
senior notes and is not intended to be complete. For a more
complete discussion of the senior notes, please refer to the
section entitled Description of Notes in this
prospectus supplement. You should read the entire prospectus
supplement and the accompanying prospectus, as well as the
documents incorporated by reference into them, before making an
investment decision.
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Issuer |
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Federated Retail Holdings, Inc. |
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Guarantor |
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Federated Department Stores, Inc. |
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Securities Offered |
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$1,100,000,000 aggregate principal amount of 5.90% Senior
Notes due 2016 |
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Maturity Date |
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December 1, 2016 |
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Interest Payment Dates |
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Semi-annually in arrears on each June 1 and
December 1, commencing June 1, 2007. Interest on the
senior notes being offered by this prospectus supplement will
accrue from November 29, 2006. |
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Ranking |
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The senior notes will rank equal in right of payment to any
other existing or future senior unsecured obligations of
Federated Holdings. |
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Guarantee |
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The obligations of Federated Holdings under the senior notes
will be fully and unconditionally guaranteed on a senior
unsecured basis by Federated. The guarantee will rank equal in
right of payment to all other existing and future senior
unsecured obligations of Federated. |
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Optional Redemption |
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Federated Holdings may, at its option, at any time or from time
to time in whole or in part, redeem the senior notes at a
redemption price described in this prospectus supplement, plus
accrued interest to the date of redemption. |
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Change of Control |
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Upon the occurrence of both (i) a change of control of
Federated and (ii) a downgrade of the senior notes below an
investment grade rating by each of Fitch Ratings, Moodys
Investors Service, Inc. and Standard & Poors
Ratings Services within a specified period, Federated Holdings
will be required to make an offer to purchase the senior notes
at a price equal to 101% of their principal amount, plus accrued
and unpaid interest to the date of repurchase. See
Description of Notes Change of Control. |
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Certain Covenants |
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The indenture, pursuant to which the senior notes will be
issued, will contain covenants that will, among other things,
limit the ability of Federated Holdings to: |
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incur certain liens;
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enter into sale and
leaseback transactions; or
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consolidate, merge or
transfer all or substantially all of its assets.
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These covenants will be subject to important exceptions and
qualifications, which are described in Description of
Notes Certain Restrictive Covenants. |
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Denominations |
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Minimum denominations of $2,000 and integral multiples of $1,000
in excess thereof. |
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Use of Proceeds |
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Federated Holdings will use the net proceeds from this offering
to purchase a portion of its outstanding debt securities listed
in Use of Proceeds and to pay related costs and
expenses. |
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Trustee, Registrar and Paying Agent |
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U.S. Bank National Association |
S-1
RECENT
DEVELOPMENTS
The following tables present Federateds unaudited results
of operations data for the 13 and 39 weeks ended
October 28, 2006 and October 29, 2005. This data
should be read in conjunction with the consolidated financial
statements (including the notes thereto) and the other
information contained or incorporated by reference in this
prospectus supplement and the accompanying prospectus. Because
of the seasonal nature of the retail business, the results of
operations for the 13 and 39 weeks ended October 28,
2006 and October 29, 2005 (which do not include the
Christmas season) are not necessarily indicative of the results
for the fiscal year. The May Department Stores Company
(May) was acquired August 30, 2005. The results
of operations of May have been included in results of operations
from the date of acquisition. Certain reclassifications were
made to prior period amounts to conform to the classifications
of such amounts for the most recent period.
Federateds ratio of earnings to fixed charges for the
39 weeks ended October 28, 2006 is 1.4x. For purposes
of determining the ratio of earnings to fixed charges,
earnings consist of income from continuing
operations before income taxes plus fixed charges (excluding
interest capitalized). Fixed charges represent
interest incurred, amortization of debt expenses, and that
portion of rental expenses on operating leases deemed to be the
equivalent of interest.
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13 Weeks Ended
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39 Weeks Ended
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October 28,
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October 29,
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October 28,
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October 29,
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2006
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2005
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2006
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2005
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(Millions)
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Net sales
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$
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5,886
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$
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5,555
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$
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17,811
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$
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12,819
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Cost of sales
recurring (Note 1)
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3,513
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3,312
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10,610
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7,614
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Gross margin recurring
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2,373
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2,243
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7,201
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5,205
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Inventory valuation
adjustments
May integration (Note 2)
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(28
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(168
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Gross margin
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2,345
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2,243
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7,033
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5,205
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Selling, general and
administrative expenses
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(2,094
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(1,973
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(6,365
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(4,392
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May integration costs (Note 3)
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(117
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(63
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(283
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(63
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Gains on sale of accounts
receivable (Note 4)
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480
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191
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480
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Operating income
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134
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687
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576
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1,230
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Interest expense net
(Note 5)
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(104
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(145
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(341
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(253
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Income from continuing operations
before income taxes
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30
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542
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235
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977
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Federal, state and local income
tax expense (Note 6)
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(10
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(118
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(7
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(282
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Income from continuing operations
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20
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424
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228
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695
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Discontinued operations, net of
income taxes (Note 7)
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(23
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12
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34
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12
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Net income (loss)
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$
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(3
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$
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436
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$
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262
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$
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707
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(1)
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Merchandise inventories are primarily valued at the lower of
cost or market using the
last-in,
first-out (LIFO) retail inventory method. Application of this
method did not impact cost of sales for the 13 and 39 weeks
ended October 28, 2006 or October 29,2005.
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(2)
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Represents inventory valuation adjustments associated with the
combination and integration of Federated and May merchandise
assortments.
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(3)
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Represents costs and expenses associated with the integration
and consolidation of Mays operations into Federateds
operations primarily related to the closing of duplicate store
locations. The May integration costs for the 39 weeks ended
October 28, 2006 were partially offset by gains from the
sale of Federated locations.
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S-2
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(4)
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Represents the gains recognized on the sale of proprietary and
non-proprietary credit card accounts and related receivables.
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(5)
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Interest expense for the 39 weeks ended October 28,
2006 includes approximately $17 million of interest income
related to the settlement of various tax examinations (See
Note 6).
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(6)
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Income tax expense for the 39 weeks ended October 28,
2006 reflects approximately $80 million of tax benefits
related to the settlement of various tax examinations, primarily
attributable to losses related to the disposition of a former
subsidiary. Income tax expense for the 13 and 39 weeks
ended October 29, 2005 was reduced by approximately
$85 million to recognize capital loss carryforwards
realized as a result of the sale of certain credit card accounts
receivable.
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(7)
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Represents the results of operations of the acquired businesses
of Lord & Taylor and the Bridal Group, including
Davids Bridal, After Hours Formalwear and Priscilla of
Boston. The sale of the Lord & Taylor division was
completed on October 2, 2006. For the 13 weeks and
39 weeks ended October 28, 2006, discontinued
operations also includes the loss on disposal of the
Lord & Taylor division of $63 million on a pre-tax
basis, or $38 million after income taxes. The loss on
disposal reflects a reduction to the fair value of the assets
sold based on the actual purchase agreement.
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S-3
USE OF
PROCEEDS
Federated Holdings will use the net proceeds from the sale of
the senior notes offered hereby to purchase a portion of its
outstanding debt securities listed below and to pay related
costs and expenses. Federated Holdings has commenced a cash
tender offer to purchase up to $1.0 billion in aggregate
principal amount of the debt securities listed below on the
terms and subject to the conditions set forth in the offer to
purchase, dated November 2, 2006 (as modified by a press
release issued by Federated on November 17, 2006, the
Offer to Purchase), relating to the tender offer.
The amounts of each series of debt securities that are purchased
in the tender offer will be determined in accordance with the
priorities set forth in the Acceptance Priority
Level column below and will be based on the decisions of
the holders of each series of debt securities to tender or not
to tender in the tender offer. As of 5:00 p.m. New York
City time on November 16, 2006, an estimated aggregate
principal amount of $1,011,736,000 of the debt securities listed
below had been validly tendered and not validly withdrawn.
The consideration to be paid for debt securities of each series
listed below will be determined by reference to a fixed spread
specified for such series of debt securities over the yield
based on the bid-side price of a specified U.S. treasury
security having a maturity comparable to the remaining maturity
of debt securities of such series and will include accrued and
unpaid interest up to the date of purchase. It is anticipated
that the consideration to be paid for such debt securities,
excluding accrued and unpaid interest, will approximate the
principal amount of the senior notes. The tender offer is made
solely pursuant to, and governed solely by, the Offer to
Purchase.
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Aggregate
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Principal
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Acceptance
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Amount
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Priority
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CUSIP Number
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Title of Security
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Outstanding
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Level
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577778AR4
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10.25
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% Senior debentures due 2021
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$
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100,000,000
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1
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577778BL6
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8.75
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% Senior debentures due 2029
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$
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250,000,000
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2
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577778BK8
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7.875
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% Senior debentures due 2030
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$
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200,000,000
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3
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577778AZ6
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7.6
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% Senior debentures due 2025
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$
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100,000,000
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4
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577778BM4
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8.5
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% Senior debentures due 2019
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$
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200,000,000
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5
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577778BC6
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8.125
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% Senior debentures due 2035
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$
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150,000,000
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6
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577778BD4
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7.875
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% Senior debentures due 2036
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$
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200,000,000
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7
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577778AS2
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9.75
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% amortizing debentures due 2021
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$
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90,625,000
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8
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577778AT0
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9.5
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% amortizing debentures due 2021
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$
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108,750,000
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9
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The amounts of debt securities of any particular series and of
all applicable series in the aggregate that may be purchased
pursuant to the tender offer, and the consideration payable
therefor, cannot be determined prior to the expiration of the
tender offer. Federated Holdings will use the remainder of the
net proceeds, if any, from the sale of the senior notes offered
hereby for general corporate purposes.
S-4
DESCRIPTION
OF NOTES
The senior notes will be issued under an indenture, dated as of
November 2, 2006 (the Base Indenture), among
Federated Holdings, as issuer, Federated, as guarantor, and
U.S. Bank National Association, as Trustee (the
Trustee), as supplemented by a First Supplemental
Indenture (the Supplemental Indenture and together
with the Base Indenture, the Indenture) relating to
the senior notes. The following discussion includes a summary
description of certain material terms of the Indenture. Because
this is a summary, it does not include all of the information
that is included in the Indenture, including the definitions of
certain terms used below. You should read the Indenture
carefully and in its entirety. You may request a copy of the
Indenture at Federateds address set forth under the
caption Where You Can Find More Information in the
accompanying prospectus.
General
The senior notes are senior unsecured obligations of Federated
Holdings. The senior notes will be limited to $1,100,000,000
aggregate principal amount and will mature on December 1,
2016. Federated Holdings will issue the senior notes in minimum
denominations of $2,000 and integral multiples of $1,000. The
senior notes will bear interest at the rate per year shown on
the cover page of this prospectus supplement from
November 29, 2006. Federated Holdings will pay interest
semi-annually in arrears on June 1 and December 1 of
each year commencing June 1, 2007 to the Person in whose
name such senior notes (or any predecessor note) is registered
at the close of business on May 15 or November 15,
respectively, preceding such interest payment date. Interest on
the senior notes will be calculated on the basis of a
360-day year
consisting of 12 months of 30 days each.
The senior notes will be exchangeable and transfers thereof will
be registrable, at an office or agency of Federated Holdings,
one of which will be maintained for such purpose in New York,
New York (which initially will be the corporate trust office of
the Trustee) or such other office or agency permitted under the
Indenture.
The senior notes will rank equal in right of payment to any
other existing or future senior unsecured obligations of
Federated Holdings. The senior notes will not be subject to any
sinking fund.
Federated Holdings does not intend to list the senior notes on a
national securities exchange.
The Indenture does not contain any provisions that would limit
the ability of Federated Holdings to incur indebtedness or
require the maintenance of financial ratios or specified levels
of net worth or liquidity. However, the Indenture does:
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provide that, subject to certain exceptions, neither Federated
Holdings nor any Restricted Subsidiary will subject its property
or assets to any mortgage or other encumbrance unless the senior
notes are secured equally and ratably with such other
indebtedness thereby secured; and
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contain certain limitations on the ability of Federated Holdings
and its Restricted Subsidiaries to enter into certain sale and
leaseback arrangements.
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Guarantee
The obligations of Federated Holdings under the senior notes
will be fully and unconditionally guaranteed (the
Guarantee) on a senior unsecured basis by Federated.
The Guarantee will rank equal in right of payment to all other
existing and future senior unsecured obligations of Federated.
Further
Issuances
Federated Holdings may, from time to time, without notice to or
the consent of the holders of the notes, increase the principal
amount of this series of notes under the Indenture and issue
such increased principal amount (or any portion thereof), in
which case any additional notes so issued will have the same
form and terms (other than the date of issuance and, under
certain circumstances, the date from which interest thereon will
begin to accrue), and will carry the same right to receive
accrued and unpaid interest, as the notes previously issued, and
such additional notes will form a single series with the notes.
S-5
Redemption
Federated Holdings may, at its option, at any time or from time
to time in whole or in part, redeem the senior notes on not less
than 30 nor more than 60 days prior notice mailed to
the holders of senior notes to be redeemed. The senior notes
will be redeemable at a redemption price, plus accrued interest
to the date of redemption, equal to the greater of (1) 100%
of the principal amount of the senior notes to be redeemed and
(2) the sum of the remaining scheduled payments of
principal and interest on the senior notes to be redeemed that
would be due after the related redemption date but for such
redemption (except that, if such redemption date is not an
interest payment date with respect to the senior notes, the
amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued thereon to the
redemption date), discounted to the redemption date on a
semi-annual basis (assuming a
360-day year
consisting of twelve
30-day
months) at the Treasury Rate plus 20 basis points.
Comparable Treasury Issue means the United
States Treasury security selected by an Independent Investment
Banker 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 applicable senior notes.
Independent Investment Banker means one of the
Reference Treasury Dealers appointed by Federated Holdings.
Comparable Treasury Price means, with respect
to any redemption date, (1) the average of the bid and
asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated
Composite 3:30 p.m. Quotations for
U.S. Government Securities or (2) if such
release (or any successor release) is not published or does not
contain such prices on such business day, (a) the average
of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest of such Reference
Treasury Dealer Quotations, or (b) if the Trustee obtains
fewer than four such Reference Treasury Dealer Quotations, the
average of all such Quotations.
Reference Treasury Dealer means each of Banc
of America Securities LLC, Credit Suisse Securities (USA) LLC,
J.P. Morgan Securities Inc., and their respective
successors and one other nationally recognized investment
banking firm that is a primary U.S. Government securities
dealer in New York City (a Primary Treasury Dealer)
specified from time to time by Federated Holdings, except that
if any of the foregoing ceases to be a Primary Treasury Dealer,
Federated Holdings is required to designate as a substitute
another nationally recognized investment banking firm that is a
Primary Treasury Dealer.
Reference Treasury Dealer Quotations means,
with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury
Dealer as of 3:30 p.m., New York City time, on the third
business day preceding such redemption date.
Treasury Rate means, with respect to any
redemption date, the rate per annum equal to the semi-annual
equivalent yield to maturity (computed as of the second business
day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming 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.
On and after any redemption date, interest will cease to accrue
on the senior notes called for redemption. On or prior to any
redemption date, Federated Holdings is required to deposit with
a paying agent money sufficient to pay the redemption price of
and accrued interest on the senior notes to be redeemed on such
date. If Federated Holdings is going to redeem less than all the
senior notes, the Trustee must select the senior notes to be
redeemed by such method as the Trustee deems fair and
appropriate in accordance with methods generally used at the
time of selection by fiduciaries in similar circumstances.
S-6
Change of
Control
If a Change of Control Triggering Event occurs, unless Federated
Holdings has exercised its right to redeem the senior notes as
described above, holders of notes will have the right to require
Federated Holdings to repurchase all or any part (equal to
$2,000 or an integral multiple of $1,000 in excess thereof) of
their senior notes pursuant to the offer described below (the
Change of Control Offer) on the terms set
forth in the Indenture. In the Change of Control Offer,
Federated Holdings will be required to offer payment in cash
equal to 101% of the aggregate principal amount of senior notes
repurchased plus accrued and unpaid interest, if any, on the
senior notes repurchased, to the date of purchase (the
Change of Control Payment). Within
30 days following any Change of Control Triggering Event,
Federated Holdings will be required to mail a notice to holders
of notes describing the transaction or transactions that
constitute the Change of Control Triggering Event and offering
to repurchase the senior notes on the date specified in the
notice, which date will be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the
Change of Control Payment Date), pursuant to
the procedures required by the Indenture and described in such
notice. Federated Holdings must comply with the requirements of
Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the
Exchange Act) and any other securities laws
and regulations thereunder to the extent those laws and
regulations are applicable in connection with the repurchase of
the senior notes as a result of a Change of Control Triggering
Event. To the extent that the provisions of any securities laws
or regulations conflict with the Change of Control provisions of
the Indenture, Federated Holdings will be required to comply
with the applicable securities laws and regulations and will not
be deemed to have breached its obligations under the Change of
Control provisions of the Indenture by virtue of such conflicts.
On the Change of Control Payment Date, Federated Holdings will
be required, to the extent lawful, to:
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accept for payment all senior notes or portions of senior notes
properly tendered pursuant to the Change of Control Offer;
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deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all senior notes or portions of
senior notes properly tendered; and
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deliver or cause to be delivered to the Trustee the senior notes
properly accepted together with an officers certificate
stating the aggregate principal amount of senior notes or
portions of senior notes being purchased.
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For purposes of the foregoing discussion of a repurchase at the
option of holders, the following definitions are applicable:
Below Investment Grade Rating Event means the
senior notes are rated below an Investment Grade Rating by each
of the Rating Agencies (as defined below) on any date from the
date of the public notice of an arrangement that could result in
a Change of Control until the end of the
60-day
period following public notice of the occurrence of the Change
of Control (which
60-day
period shall be extended so long as the rating of the senior
notes is under publicly announced consideration for possible
downgrade by any of the Rating Agencies).
Change of Control means the occurrence of any
of the following: (1) the direct or indirect sale,
transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related
transactions, of all or substantially all of the properties or
assets of Federated and its subsidiaries taken as a whole to any
Person other than Federated or one of its subsidiaries;
(2) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is
that any Person becomes the beneficial owner, directly or
indirectly, of more than 50% of the then outstanding number of
shares of Federateds voting stock; or (3) the
first day on which a majority of the members of Federateds
Board of Directors are not Continuing Directors.
Change of Control Triggering Event means the
occurrence of both a Change of Control and a Below Investment
Grade Rating Event.
Continuing Directors means, as of any date of
determination, any member of the Board of Directors of Federated
who (1) was a member of such Board of Directors on the date
of the Supplemental Indenture; or
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(2) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing
Directors who were members of such Board of Directors at the
time of such nomination or election (either by a specific
vote or by approval of Federateds proxy statement in which
such member was named as a nominee for election as a director,
without objection to such nomination).
Fitch means Fitch Ratings.
Investment Grade Rating means a rating equal
to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or
the equivalent) by Moodys and BBB- (or the equivalent) by
S&P.
Moodys means Moodys Investors
Service, Inc.
Rating Agencies means (1) each of Fitch,
Moodys and S&P; and (2) if any of Fitch,
Moodys or S&P ceases to rate the senior notes or fails
to make a rating of the senior notes publicly available for
reasons outside of Federated Holdings control, a
nationally recognized statistical rating
organization within the meaning of
Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act, selected by Federated Holdings (as
certified by a resolution of its Board of Directors) as a
replacement agency for Fitch, Moodys or S&P, or all of
them, as the case may be.
S&P means Standard & Poors
Ratings Services, a division of The McGraw-Hill Companies, Inc.
Book-Entry
System
The senior notes will initially be issued in the form of a
global security held in book-entry form. Accordingly, The
Depository Trust Company (DTC) or its nominee will
be the sole registered holder of the senior notes for all
purposes under the Indenture. DTC has advised Federated Holdings
that DTC is a limited-purpose trust company organized under the
Banking Law of the State of New York, a member of the Federal
Reserve System, a clearing corporation within the
meaning of the New York Uniform Commercial Code, and a
clearing agency registered under the Exchange Act.
DTC was created to hold the securities of its participants and
to facilitate the clearance and settlement of securities
transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants,
thereby eliminating the need for physical movement of securities
certificates. DTCs participants include securities brokers
and dealers (including the underwriters), banks, trust
companies, clearing corporations, and certain other
organizations some of whom (and/or their representatives) own
DTC. Access to DTCs book-entry system is also available to
others such as banks, brokers, dealers, and trust companies that
clear through or maintain a custodial relationship with a
participant, either directly or indirectly. See
Description of Debt Securities Global
Securities in the accompanying prospectus.
Clearstream is incorporated under the laws of Luxembourg as a
professional depositary. Clearstream holds securities for its
participating organizations (Clearstream
Participants) and facilitates the clearance and settlement
of securities transactions between Clearstream Participants
through electronic book-entry changes in accounts of Clearstream
Participants, thereby eliminating the need for physical movement
of certificates. Clearstream provides Clearstream Participants
with, among other things, services for safekeeping,
administration, clearance and establishment of internationally
traded securities and securities lending and borrowing.
Clearstream interfaces with domestic markets in several
countries. As a professional depositary, Clearstream is subject
to regulation by the Luxembourg Monetary Institute. Clearstream
Participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations, and may include the underwriters. Indirect access
to Clearstream is also available to others, such as banks,
brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Clearstream Participant
either directly or indirectly.
Distributions with respect to senior notes held beneficially
through Clearstream will be credited to cash accounts of
Clearstream Participants in accordance with its rules and
procedures to the extent received by DTC for Clearstream.
Euroclear was created in 1968 to hold securities for
participants of Euroclear (Euroclear Participants)
and to clear and settle transactions between Euroclear
Participants through simultaneous electronic book-entry
S-8
delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of
simultaneous transfers of securities and cash. Euroclear
includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several
markets in several countries. Euroclear is operated by Euroclear
Bank S.A./N.V. (the Euroclear Operator), under
contract with Euro-clear Clearance Systems S.C., a Belgian
cooperative corporation (the Cooperative). All
operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for Euroclear on
behalf of Euroclear Participants. Euroclear Participants include
banks (including central banks), securities brokers and dealers
and other professional financial intermediaries and may include
the underwriters. Indirect access to Euroclear is also available
to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is regulated and examined by the Belgian
Banking Commission.
Links have been established among DTC, Clearstream and Euroclear
to facilitate the initial issuance of the senior notes sold
outside of the United States and cross-market transfers of the
senior notes associated with secondary market trading.
Although DTC, Clearstream and Euroclear have agreed to the
procedures provided below in order to facilitate transfers, they
are under no obligation to perform these procedures, and these
procedures may be modified or discontinued at any time.
Clearstream and Euroclear will record the ownership interests of
their participants in much the same way as DTC, and DTC will
record the total ownership of each of the U.S. agents of
Clearstream and Euroclear, as participants in DTC. When senior
notes are to be transferred from the account of a DTC
participant to the account of a Clearstream participant or a
Euroclear participant, the purchaser must send instructions to
Clearstream or Euroclear through a participant at least one day
prior to settlement. Clearstream or Euroclear, as the case may
be, will instruct its U.S. agent to receive senior notes
against payment. After settlement, Clearstream or Euroclear will
credit its participants account. Credit for the senior
notes will appear on the next day (European time).
Because settlement is taking place during New York business
hours, DTC participants will be able to employ their usual
procedures for sending senior notes to the relevant
U.S. agent acting for the benefit of Clearstream or
Euroclear participants. The sale proceeds will be available to
the DTC seller on the settlement date. As a result, to the DTC
participant, a cross-market transaction will settle no
differently than a trade between two DTC participants.
When a Clearstream or Euroclear participant wishes to transfer
senior notes to a DTC participant, the seller will be required
to send instructions to Clearstream or Euroclear through a
participant at least one business day prior to settlement. In
these cases, Clearstream or Euroclear will instruct its
U.S. agent to transfer these senior notes against payment
for them. The payment will then be reflected in the account of
the Clearstream or Euroclear participant the following day, with
the proceeds back valued to the value date, which would be the
preceding day, when settlement occurs in New York, if settlement
is not completed on the intended value date, that is, the trade
fails, proceeds credited to the Clearstream or Euroclear
participants account will instead be valued as of the
actual settlement date.
You should be aware that you will only be able to make and
receive deliveries, payments and other communications involving
the senior notes through Clearstream and Euroclear on the days
when those clearing systems are open for business. Those systems
may not be open for business on days when banks, brokers and
other institutions are open for business in the United States.
In addition, because of time zone differences there may be
problems with completing transactions involving Clearstream and
Euroclear on the same business day as in the United States.
Payment
The payment of principal of and interest on senior notes
represented by a global security will be made in accordance with
the applicable requirements of the depositary for the global
security. The payment of principal
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of and interest on any other senior note will be made at the
office or agency of Federated Holdings maintained for that
purpose or, at Federated Holdings option, by mailing a
check to such holders registered address.
Certain
Restrictive Covenants
The Indenture will contain the following restrictive covenants.
Limitation on Liens. Federated Holdings and
the Restricted Subsidiaries will not be permitted to create,
incur, assume or suffer to exist any liens upon any of their
respective assets, other than Permitted Liens, unless the senior
notes are secured by an equal and ratable lien on the same
assets. The terms of other existing and future indebtedness of
Federated Holdings may require that such other indebtedness be
similarly secured by an equal and ratable lien on such assets.
Limitation on Sale and Leaseback. Federated
Holdings and the Restricted Subsidiaries may not enter into any
sale and leaseback transaction unless the net cash proceeds
therefrom are applied as follows: to the extent that the
aggregate amount of net cash proceeds from such sale and
leaseback transaction that have not been reinvested in the
business of Federated Holdings or its Subsidiaries or used to
reduce Senior Indebtedness of Federated Holdings or its
Subsidiaries within 12 months of the receipt of such
proceeds exceeds $100.0 million (Excess Sale
Proceeds) from time to time, such Excess Sale Proceeds
will be used to offer to repurchase the senior notes (on a pro
rata basis with any other Senior Indebtedness of Federated
Holdings or its Subsidiaries required by the terms of such
Indebtedness to be repurchased with such Excess Sale Proceeds,
based on the principal amount of such Senior Indebtedness
required to be repurchased) at 100% of their principal amount,
plus accrued interest, and to pay related costs and expenses.
To the extent that the aggregate purchase price for the senior
notes or other Senior Indebtedness tendered pursuant to such an
offer to purchase is less than the aggregate purchase price
offered in such offer, an amount of Excess Sale Proceeds equal
to such shortfall will cease to be Excess Sale Proceeds and may
thereafter be used for general corporate purposes. If the
aggregate purchase price for the senior notes or other Senior
Indebtedness tendered pursuant to such an offer to purchase
exceeds the amount of such Excess Sale Proceeds, the Trustee
will select the senior notes or other Senior Indebtedness to be
purchased by such method as the Trustee deems fair and
appropriate.
The net cash proceeds from any sale or leaseback transaction
will be determined net of the following:
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all fees and expenses incurred and all taxes and reserves
required to be accrued as a liability as a consequence of such a
sale and leaseback transaction;
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all payments made on any Indebtedness that is secured by assets
subject to a sale and leaseback transaction; and
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all distributions and other payments made to minority interest
holders in Subsidiaries of Federated Holdings or joint ventures
as a result of a sale and leaseback transaction.
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Cash Equivalents will be deemed to be proceeds upon receipt of
such Cash Equivalents and cash payments under promissory notes
secured by letters of credit or similar assurances of payment
issued by commercial banks of recognized standing will be deemed
to be proceeds upon receipt of such payments.
If an offer to purchase the senior notes is made, Federated
Holdings will comply with all tender offer rules, including but
not limited to Section 14(e) of the Exchange Act and
Rule 14e-1
thereunder, to the extent applicable to such offer to purchase.
To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the Indenture
related to limitations on sale and leaseback transactions,
Federated Holdings will comply with the applicable securities
laws and regulations and will not be deemed to have breached its
obligations under the provisions of the Indenture related to
limitations on sale and leaseback transactions by virtue of such
conflicts.
S-10
Limitations
on Merger and Other Transactions
Prior to the satisfaction and discharge of the Indenture,
Federated Holdings may not consolidate with or merge with or
into any other Person, or transfer all or substantially all of
its properties and assets to another Person unless:
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Federated Holdings is the continuing or surviving Person in the
consolidation or merger; or
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the Person (if other than Federated Holdings) formed by the
consolidation or into which Federated Holdings is merged or to
which all or substantially all of the properties and assets of
Federated Holdings are transferred is a corporation,
partnership, limited liability company, business trust, trust or
other legal entity organized and validly existing under the laws
of the United States, any State thereof, or the District of
Columbia, and expressly assumes, by a supplemental indenture,
all of Federated Holdings obligations under the senior
notes and the Indenture;
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immediately after the transaction and the incurrence or
anticipated incurrence of any indebtedness to be incurred in
connection therewith, no Default exists; and
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an officers certificate is delivered to the Trustee to the
effect that both of the conditions set forth above have been
satisfied and an opinion of outside counsel has been delivered
to the Trustee to the effect that the first condition set forth
above has been satisfied.
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The continuing, surviving, or successor Person will succeed to
and be substituted for Federated Holdings with the same effect
as if it had been named in the Indenture as a party thereto, and
thereafter the predecessor Person will be relieved of all
obligations and covenants under the Indenture and the senior
notes.
Events of
Default
The following are Events of Default with respect to
the senior notes:
(1) failure to pay principal of or premium, if any, on any
senior note when due;
(2) failure to pay any interest on any senior note when
due, which failure continues for 30 calendar days;
(3) failure to perform, or breach of, any other of
Federated Holdings covenants in the Indenture (other than
a covenant included therein solely for the benefit of a series
of debt securities other than the senior notes), which failure
or breach continues for 60 calendar days after written notice as
provided in the Indenture;
(4) any nonpayment at maturity or other default (beyond any
applicable grace period) under any agreement or instrument
relating to any other Indebtedness of Federated Holdings or any
Restricted Subsidiary (the unpaid principal amount of which is
not less than $100.0 million), which default results in the
acceleration of the maturity of such Indebtedness prior to its
stated maturity or occurs at the final maturity thereof;
(5) the entry of any final judgments or orders against
Federated Holdings, Federated or any of their respective
Restricted Subsidiaries in excess of $100.0 million
individually or in the aggregate (not covered by insurance) that
is not paid, discharged or otherwise stayed (by appeal or
otherwise) within 60 calendar days after the entry of such
judgments or orders;
(6) the Guarantee ceases to be in full force and effect
(except as contemplated by the terms of the Indenture) or is
declared in a judicial proceeding to be null and void, or
Federated denies or disaffirms in writing its obligation under
the Guarantee; and
(7) specified events of bankruptcy, insolvency or
reorganization of Federated Holdings, Federated or any
Significant Subsidiary or any group of Subsidiaries of Federated
Holdings or Federated that, if considered in the aggregate,
would be a Significant Subsidiary.
Federated Holdings will be required to provide the Trustee with
notice of any uncured Event of Default within 10 calendar days
after any responsible officer of Federated Holdings becomes
aware of or receives actual notice of the occurrence thereof.
The Trustee will be required, within 90 calendar days after the
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occurrence of a default in respect of the senior notes, to give
to the holders of the senior notes notice of all such uncured
defaults known to it, except that:
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in the case of a default in the performance of any covenant of
the character contemplated in clause (3) above, no such
notice to holders of the senior notes will be given until at
least 30 calendar days after the occurrence of such
default; and
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other than in the case of a default of the character
contemplated in clause (1) or (2) above, the Trustee
may withhold such notice if and so long as it in good faith
determines that the withholding of such notice is in the
interests of the holders of the senior notes.
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If an Event of Default described in clause (7) above
occurs, the principal of, and any premium and accrued interest
on the senior notes will become immediately due and payable
without any declaration or other act on the part of the Trustee
or any holder of the senior notes. If any other Event of Default
with respect to the senior notes occurs and is continuing,
either the Trustee or the holders of at least 25% in principal
amount of the outstanding senior notes, by notice as provided in
the Indenture, may declare the principal amount of the senior
notes to be due and payable immediately. However, at any time
after a declaration of acceleration with respect to the senior
notes has been made, but before a judgment or decree based on
such acceleration has been obtained, the holders of a majority
in principal amount of the outstanding senior notes may, under
specified circumstances, rescind and annul such acceleration.
Subject to the duty of the Trustee to act with the required
standard of care during an Event of Default, the Trustee will
have no obligation to exercise any of its rights or powers under
the Indenture at the request or direction of any of the holders
of the senior notes unless such holders shall have offered to
the Trustee reasonable security or indemnity. Subject to the
provisions of the Indenture, including those requiring security
or indemnification of the Trustee, the holders of a majority in
principal amount of the senior notes will have the right to
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, with respect to the senior
notes.
No holder of a senior note will have any right to institute any
proceeding with respect to the Indenture or for any remedy
thereunder unless:
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the holder has previously given to the Trustee written notice of
a continuing Event of Default;
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the holders of at least 25% in aggregate principal amount of the
outstanding senior notes have also made such a written request;
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the holder or holders have offered reasonable indemnity to the
Trustee to institute the proceeding as trustee;
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the Trustee has not received from the holders of a majority in
aggregate principal amount of the outstanding senior notes a
direction inconsistent with the written request; and
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the Trustee has failed to institute such proceeding within 60
calendar days after receipt of the written request.
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However, the limitations described above do not apply to a suit
instituted by a holder of senior notes for enforcement of
payment of the principal of, and any principal or interest on,
the senior notes on or after the applicable due dates expressed
in the senior notes.
Federated Holdings is required to furnish to the Trustee
annually a statement as to the performance of its obligations
under the Indenture and as to any default in such performance.
Defeasance
Except as described below, upon compliance with the applicable
requirements described below, Federated Holdings:
(1) will be deemed to have been discharged from their
obligations with respect to the senior notes; or
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(2) will be released from their obligations to comply with
the covenants in the Indenture with respect to the senior notes,
and the occurrence of an event described in any of
clauses (3), (4) and (5) under
Events of Default above will no longer be an Event of
Default with respect to the senior notes, except to the limited
extent described below.
Following any defeasance described in clause (1) or
(2) above, Federated Holdings will continue to have
specified obligations under the Indenture, including obligations
to register the transfer or exchange of the senior notes;
replace destroyed, stolen, lost, or mutilated senior notes;
maintain an office or agency in respect of the senior notes; and
hold funds for payment to holders of senior notes in trust. In
the case of any defeasance described in clause (2) above,
any failure by Federated Holdings to comply with its continuing
obligations may constitute an Event of Default with respect to
the senior notes as described in clause (3) under
Events of Defaults above.
In order to effect any defeasance described in clause (1)
or (2) above, Federated Holdings must irrevocably deposit
with the Trustee, in trust, money or specified government
obligations (or depositary receipts therefor) that through the
scheduled payment of principal and interest in accordance with
their terms will provide, without reinvestment, money in an
amount sufficient to pay all of the principal of, and any
premium and interest on, the senior notes on the dates such
payments are due in accordance with the terms of the senior
notes. In addition, the following conditions must be satisfied:
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no Event of Default or event with which the giving of notice or
lapse of time, or both, would become an Event of Default under
the Indenture shall have occurred and be continuing on the date
of such deposit;
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no Event of Default or any event described in clause (7)
under Events of Default above shall
have occurred and be continuing at any time on or prior to the
124th calendar day following the date of deposit;
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in the event of defeasance described in clause (1) above,
Federated Holdings shall have delivered to the Trustee an
opinion of outside counsel stating that (a) it has received
from, or there has been published by, the United States Internal
Revenue Service a ruling or (b) there has been a change in
applicable federal income tax law, in either case to the effect
that, among other things, the holders of the outstanding senior
notes will not recognize gain or loss for United States federal
income tax purposes as a result of such deposit or defeasance
and will be subject to United States federal income tax in the
same manner as if such deposit or defeasance had not occurred;
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in the event of any defeasance in clause (2) above,
Federated Holdings shall have delivered to the Trustee an
opinion of outside counsel to the effect that, among other
things, the holders of the outstanding senior notes will not
recognize gain or loss for United States federal income tax
purposes as a result of such deposit or defeasance and will be
subject to United States federal income tax in the same manner
as if such deposit or defeasance had not occurred; and
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Federated Holdings shall have delivered to the Trustee a
certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of
principal and interest when due on the deposited government
obligations plus any deposited money will provide the cash at
such times and in such amounts as will be sufficient to pay the
principal of and any premium and interest when due on the senior
notes.
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If Federated Holdings fails to comply with its remaining
obligations under the Indenture after a defeasance with respect
to the senior notes as described under clause (2) above and
the senior notes are declared due and payable because of the
occurrence of any undefeased Event of Default, the amount of
money and government obligations on deposit with the Trustee may
be insufficient to pay amounts due on the senior notes at the
time of the acceleration resulting from such Event of Default.
However, Federated Holdings will remain liable in respect of
such payments.
S-13
Certain
Defined Terms
Capitalized terms used but not defined herein have the meanings
given to such terms in the Indenture. In addition, for purposes
of the Indenture, the following definitions apply:
Bank Facilities means the Amended and
Restated Credit Agreement, dated as of August 30, 2006,
among Federated, Federated Holdings, the lenders from time to
time party thereto, JPMorgan Chase Bank, N.A. and Bank of
America, N.A., as administrative agents, and JPMorgan Chase
Bank, N.A., as Paying Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
Cash Equivalent means:
(1) obligations issued or unconditionally guaranteed as to
principal and interest by the United States of America or by any
agency or authority controlled or supervised by and acting as an
instrumentality of the United States of America;
(2) obligations (including, but not limited to, demand or
time deposits, bankers acceptances and certificates of
deposit) issued by a depository institution or trust company or
a wholly owned Subsidiary or branch office of any depository
institution or trust company, provided that (a) such
depository institution or trust company has, at the time of
Federated Holdings or any Restricted Subsidiarys
Investment therein or contractual commitment providing for such
Investment, capital, surplus, or undivided profits (as of the
date of such institutions most recently published
financial statements) in excess of $100.0 million and
(b) the commercial paper of such depository institution or
trust company, at the time of Federated Holdings or any
Restricted Subsidiarys Investment therein or contractual
commitment providing for such Investment, is rated at least A1
by S&P,
P-1 by
Moodys or F1 by Fitch;
(3) debt obligations (including, but not limited to,
commercial paper and medium term notes) issued or
unconditionally guaranteed as to principal and interest by any
corporation, state or municipal government or agency or
instrumentality thereof, or foreign sovereignty, if the
commercial paper of such corporation, state or municipal
government, or foreign sovereignty, at the time of Federated
Holdings or any Restricted Subsidiarys Investment
therein or contractual commitment providing for such Investment,
is rated at least A1 by S&P,
P-1 by
Moodys or F1 by Fitch;
(4) repurchase obligations with a term of not more than
seven days for underlying securities of the type described above
entered into with a depository institution or trust company
meeting the qualifications described in clause (2)
above; and
(5) Investments in money market or mutual funds that invest
predominantly in Cash Equivalents of the type described in
clauses (1), (2), (3) and (4) above; provided,
however, that, in the case of the clauses (1) through
(3) above, each such Investment has a maturity of one year
or less from the date of acquisition thereof.
Consolidated Net Tangible Assets means total
assets (less depreciation and valuation reserves and other
reserves and items deductible from gross book value of specific
asset accounts under GAAP) after deducting therefrom
(1) all current liabilities and (2) all goodwill,
trade names, trademarks, patents, unamortized debt discount,
organization expenses and other like intangibles, all as set
forth on the most recent balance sheet of Federated Holdings and
its consolidated Subsidiaries and computed in accordance with
GAAP.
Existing Indebtedness means all Indebtedness
under or evidenced by:
the senior notes;
Federated Holdings 4.8% Senior
notes due 2009;
Federated Holdings 6.625% Senior
notes due 2008;
Federated Holdings 6.625% Senior
notes due 2011;
Federated Holdings 5.75% Senior
notes due 2014;
Federated Holdings 3.95% Senior
notes due 2007;
Federated Holdings 6.9% Senior
debentures due 2029;
Federated Holdings 6.7% Senior
debentures due 2034;
S-14
Federated Holdings 6.3% Senior
notes due 2009;
Federated Holdings 7.45% Senior
debentures due 2017;
Federated Holdings 6.65% Senior
debentures due 2024;
Federated Holdings 7.0% Senior
debentures due 2028;
Federated Holdings 8.75% Senior
debentures due 2029;
Federated Holdings 6.9% Senior
debentures due 2032;
Federated Holdings 7.9% Senior
debentures due 2007;
Federated Holdings 8.0% Senior
debentures due 2012;
Federated Holdings 8.5% Senior
debentures due 2019;
Federated Holdings 6.7% Senior
debentures due 2028;
Federated Holdings 7.875% Senior
debentures due 2030;
Federated Holdings 7.875% Senior
debentures due 2036;
Federated Holdings 6.79% Senior
debentures due 2027;
Federated Holdings 5.95% Senior
notes due 2008;
Federated Holdings 10.625% Senior
debentures due 2010;
Federated Holdings 7.45% Senior
debentures due 2011;
Federated Holdings 8.125% Senior
debentures due 2035;
Federated Holdings 7.625% Senior
debentures due 2013;
Federated Holdings 7.45% Senior
debentures due 2016;
Federated Holdings 7.50% Senior
debentures due 2015;
Federated Holdings 10.25% Senior
debentures due 2021;
Federated Holdings 7.6% Senior
debentures due 2025;
Federated Holdings 8.5% Senior
notes due 2010;
Federated Holdings 9.5% amortizing
debentures due 2021;
Federated Holdings 9.75% amortizing
debentures due 2021;
Federated Holdings 9.93% Medium term
notes due 2007;
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capital lease obligations of Federated Holdings and its
Restricted Subsidiaries existing on the date of issuance of the
senior notes; and
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the other secured Indebtedness of Federated Holdings or secured
or unsecured Indebtedness of its Restricted Subsidiaries
existing on the date of issuance of the senior notes.
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Indebtedness means, as applied to any Person,
without duplication:
(1) all obligations of such Person for borrowed money;
(2) all obligations of such Person for the deferred
purchase price of property or services (other than property and
services purchased, and expense accruals and deferred
compensation items arising, in the ordinary course of business);
(3) all obligations of such Person evidenced by notes,
bonds, debentures, mandatorily redeemable preferred stock or
other similar instruments (other than performance, surety and
appeals bonds arising in the ordinary course of business);
(4) all payment obligations created or arising under any
conditional sale, deferred price or other title retention
agreement with respect to property acquired by such Person
(unless the rights and remedies of the seller or lender under
such agreement in the event of default are limited to
repossession or sale of such property);
(5) any capital lease obligation of such Person;
(6) all reimbursement, payment or similar obligations,
contingent or otherwise, of such Person under acceptance, letter
of credit or similar facilities (other than letters of credit in
support of trade obligations or incurred in connection with
public liability insurance, workers compensation,
unemployment insurance, old-age pensions and other social
security benefits other than in respect of employee benefit
plans subject to ERISA);
S-15
(7) all obligations of such Person, contingent or
otherwise, under any guarantee by such Person of the obligations
of another Person of the type referred to in clauses (1)
through (6) above; and
(8) all obligations referred to in clauses (1) through
(6) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to
be secured by) any mortgage or security interest in property
(including without limitation accounts, contract rights and
general intangibles) owned by such Person and as to which such
Person has not assumed or become liable for the payment of such
obligations other than to the extent of the property subject to
such mortgage or security interest; except that Indebtedness of
the type referred to in clauses (7) and (8) above will
be included within the definition of Indebtedness
only to the extent of the least of (a) the amount of the
underlying Indebtedness referred to in the applicable
clause (1) through (6) above; (b) in the case of
clause (7), the limit on recoveries, if any, from such
Person under obligations of the type referred to in
clause (7) above, and (c) in the case of
clause (8), the aggregate value (as determined in good
faith by Federated Holdings Board of Directors) of the
security for such Indebtedness.
Investment means, with respect to any Person,
any direct or indirect loan or other extension of credit or
capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services
for the account or use of others), or any purchase or
acquisition by such Person of any capital stock, bonds, notes,
debentures or other securities or evidences of Indebtedness
issued by any other Person. The amount of any Investment shall
be the original cost thereof, plus the cost of all additions
thereto, without any adjustments for increases or decreases in
value, write-ups, write-downs or write-offs with respect to such
Investment.
Permitted Liens means:
(1) liens (other than liens on inventory) securing;
(a) Existing Indebtedness;
(b) Indebtedness under the Bank Facilities in an aggregate
principal amount at any one time not to exceed
$2,800.0 million, less (1) principal payments actually
made by Federated Holdings on any term loan facility under such
Bank Facilities (other than principal payments made in
connection with or pursuant to a refinancing of the Bank
Facilities in compliance with clause (1)(i) below) and
(2) any amounts by which any revolving credit facility
commitments under the Bank Facilities are permanently reduced
(other than permanent reductions made in connection with or
pursuant to a refinancing of the Bank Facilities in compliance
with clause (1)(i) below), except that under no
circumstances will the total allowable indebtedness under this
clause (1)(b) be less than $1,450.0 million (subject
to increase from and after the date of issuance of the senior
notes at a rate, compounded annually, equal to 3% per
annum) if incurred for the purpose of providing Federated
Holdings and its Subsidiaries with working capital (including
bankers acceptances, letters of credit and similar
assurances of payment) whether as part of the Bank Facilities or
otherwise;
(c) Indebtedness existing as of the date of issuance of the
senior notes of any Subsidiary of Federated Holdings engaged
primarily in the business of owning or leasing real property;
(d) Indebtedness incurred for the purpose of financing
store construction and remodeling or other capital expenditures;
(e) Indebtedness in respect of the deferred purchase price
of property or arising under any conditional sale or other title
retention agreement;
(f) Indebtedness of a Person acquired by Federated Holdings
or a Subsidiary of Federated Holdings at the time of such
acquisition;
(g) to the extent deemed to be Indebtedness,
obligations under swap agreements, cap agreements, collar
agreements, insurance agreements or any other agreement or
arrangement, in each case designed to provide protection against
fluctuations in interest rates, the cost of currency or the cost
of goods (other than inventory);
S-16
(h) other Indebtedness in outstanding amounts not to
exceed, in the aggregate, the greater of $750.0 million and
12.5% of Consolidated Net Tangible Assets of Federated Holdings
and the Restricted Subsidiaries at any particular time; and
(i) Indebtedness incurred in connection with any extension,
renewal, refinancing, replacement or refunding (including
successive extensions, renewals, refinancings, replacements or
refundings), in whole or in part, of any Indebtedness of
Federated Holdings or the Restricted Subsidiaries; provided that
the principal amount of the Indebtedness so incurred does not
exceed the sum of the principal amount of the Indebtedness so
extended, renewed, refinanced, replaced or refunded, plus all
interest accrued thereon and all related fees and expenses
(including any payments made in connection with procuring any
required lender or similar consents);
(2) liens incurred and pledges and deposits made in the
ordinary course of business in connection with liability
insurance, workers compensation, unemployment insurance,
old-age pensions and other social security benefits other than
in respect of employee benefit plans subject to ERISA;
(3) liens securing performance, surety and appeal bonds and
other obligations of like nature incurred in the ordinary course
of business;
(4) liens on goods and documents securing trade letters of
credit;
(5) liens imposed by law, such as carriers,
warehousemens, mechanics, materialmens and
vendors liens, incurred in the ordinary course of business
and securing obligations which are not yet due or which are
being contested in good faith by appropriate proceedings;
(6) liens securing the payment of taxes, assessments and
governmental charges or levies (a) either (1) not
delinquent or (2) being contested in good faith by
appropriate legal or administrative proceedings and (b) as
to which adequate reserves shall have been established on the
books of the relevant corporation in conformity with GAAP;
(7) zoning restrictions, easements, rights of way,
reciprocal easement agreements, operating agreements, covenants,
conditions or restrictions on the use of any parcel of property
that are routinely granted in real estate transactions or do not
interfere in any material respect with the ordinary conduct of
the business of Federated Holdings and its Subsidiaries or the
value of such property for the purpose of such business;
(8) liens on property existing at the time such property is
acquired;
(9) purchase money liens upon or in any property acquired
or held in the ordinary course of business to secure
Indebtedness incurred solely for the purpose of financing the
acquisition of such property;
(10) liens on the assets of any Subsidiary of Federated
Holdings at the time such Subsidiary is acquired;
(11) liens with respect to obligations in outstanding
amounts not to exceed $100.0 million at any particular time
and that (a) are not incurred in connection with the
borrowing of money or obtaining advances or credit (other than
trade credit in the ordinary course of business) and (b) do
not in the aggregate interfere in any material respect with the
ordinary conduct of the business of Federated Holdings and its
Subsidiaries; and
(12) without limiting the ability of Federated Holdings or
any Restricted Subsidiary to create, incur, assume or suffer to
exist any lien otherwise permitted under any of the foregoing
clauses, any extension, renewal or replacement, in whole or in
part, of any lien described in the foregoing clauses; provided,
that any such extension, renewal or replacement lien is limited
to the property or assets covered by the lien extended, renewed
or replaced or substitute property or assets, the value of which
is determined by the Board of Directors of Federated Holdings to
be not materially greater than the value of the property or
assets for which the substitute property or assets are
substituted.
Person means any individual, partnership,
corporation, limited liability company, joint stock company,
business trust, trust, unincorporated association, joint venture
or other entity, or a government or political subdivision or
agency thereof.
Restricted Subsidiary means any Subsidiary of
Federated Holdings other than an Unrestricted Subsidiary.
S-17
Senior Indebtedness means any Indebtedness of
Federated Holdings or its Subsidiaries other than Subordinated
Indebtedness.
Significant Subsidiary means any Subsidiary
that accounts for (1) 10% or more of the total consolidated
assets of any Person and its Subsidiaries as of any date of
determination or (2) 10% or more of the total consolidated
revenues of any Person and its Subsidiaries for the most
recently concluded fiscal quarter.
Subordinated Indebtedness means any
Indebtedness of Federated Holdings which is expressly
subordinated in right of payment to the senior notes or the
Guarantee.
Subsidiary means, as applied, with respect to
any Person, any corporation, partnership or other business
entity of which, in the case of a corporation, more than 50% of
the issued and outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock
of any other class or classes of such corporation has or might
have voting power upon the occurrence of any contingency), or,
in the case of any partnership or other legal entity, more than
50% of the ordinary equity capital interests, is at the time
directly or indirectly owned or controlled by such Person, by
such Person and one or more of its other Subsidiaries or by one
or more of such Persons other Subsidiaries.
Unrestricted Subsidiary means any entity
designated as such (1) in the Supplemental Indenture
(including Federated Holdings existing receivables finance
Subsidiaries and FACS Group, Inc. or (2) by Federated
Holdings Board of Directors, provided that such entity is
a special purpose entity formed for financing purposes.
S-18
CERTAIN
U.S. FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a summary of certain U.S. federal income
tax considerations relating to the purchase, ownership and
disposition of the senior notes by initial investors. It is not
a complete analysis of all the potential tax considerations
relating to the senior notes. This summary is based upon the
provisions of the Internal Revenue Code of 1986, as amended, or
the Code, Treasury Regulations promulgated under the Code, and
currently effective administrative rulings and judicial
decisions. These authorities may be changed, perhaps with
retroactive effect, so as to result in U.S. federal income
tax consequences different from those set forth below. Federated
Holdings has not sought any ruling from the Internal Revenue
Service, or I.R.S., and Federated Holdings cannot assure you
that the I.R.S. will agree with such statements.
Except as otherwise provided, this summary is limited to initial
investors who purchase senior notes for cash at the initial
issue price (i.e. the initial offering price to the
public, excluding bond houses and brokers, at which price a
substantial amount of such senior notes is sold) pursuant to
this offering and who hold the senior notes as capital assets
(generally for investment purposes). This summary does not
address the tax considerations arising under the laws of any
foreign, state or local jurisdiction. In addition, this
discussion does not address all tax considerations that may be
applicable to holders particular circumstances or to
holders that may be subject to special tax rules, such as, for
example:
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holders subject to the alternative minimum tax;
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banks, insurance companies, or other financial institutions;
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tax-exempt organizations;
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dealers in securities or commodities;
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expatriates;
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traders in securities that elect to use a
mark-to-market
method of accounting for their securities holdings;
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holders whose functional currency is not the U.S. dollar;
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persons that will hold the senior notes as a position in a
hedging transaction, straddle, conversion transaction or other
risk reduction transaction;
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persons deemed to sell the senior notes under the constructive
sale provisions of the Code; or
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partnerships or other pass-through entities.
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If a partnership holds senior notes, the tax treatment of a
partner in the partnership will generally depend upon the status
of the partner and the activities of the partnership. If you are
a partner of a partnership holding Federated Holdings
senior notes, you should consult your tax advisor regarding the
tax consequences of the purchase, ownership and disposition of
the senior notes.
Purchasers of senior notes who also sell debt securities
pursuant to the Offer to Purchase as described under
Use of Proceeds should consult their tax
advisors as to the possible application of U.S. federal
income tax rules that would defer the recognition of any loss
with respect to debt securities sold pursuant to the Offer to
Purchase.
This summary of certain U.S. federal income tax
considerations is for general information only and is not tax
advice. You are urged to consult your tax advisor with respect
to the application of U.S. federal income tax laws to your
particular situation, as well as any tax consequences arising
under the U.S. federal estate or gift tax rules or under
the laws of any state, local, foreign or other taxing
jurisdiction or under any applicable tax treaty.
S-19
Consequences
to U.S. Holders
The following is a summary of the general U.S. federal
income tax consequences that will apply to you if you are a
U.S. Holder of the senior notes. Certain
consequences to
Non-U.S. Holders
of the senior notes are described under
Consequences to
Non-U.S. Holders,
below. You are a U.S. Holder if you are a
beneficial owner of a senior note that is, for U.S. federal
income tax purposes:
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an individual citizen or resident of the United States;
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a corporation (or other entity treated as a corporation for
U.S. federal income tax purposes) created or organized in
or under the laws of the United States or any political
subdivision of the United States;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or
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a trust that (1) is subject to the supervision of a court
within the United States and the control of one or more
United States person (as defined in the Code) or
(2) has a valid election in effect under applicable
Treasury Regulations to be treated as a United States person.
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Payments
of Interest
Stated interest on the senior notes will generally be taxable to
a U.S. Holder as ordinary income at the time it is paid or
accrued in accordance with the U.S. holders regular
method of accounting for U.S. federal income tax purposes.
Federated Holdings does not anticipate that the senior notes
will bear original issue discount, or OID, for U.S. federal
income tax purposes. Therefore, Federated Holdings does not
expect that holders of the senior notes will be required to
recognize OID as interest income over the term of the senior
notes under the OID tax regulations.
In certain circumstances, Federated Holdings may be obligated to
pay amounts in excess of stated interest or principal on the
senior notes. According to Treasury Regulations, the possibility
that any such payments in excess of stated interest or principal
will be made will not affect the amount of interest income a
U.S. Holder recognizes if there is only a remote chance as
of the date the senior notes were issued that such payments will
be made. Federated Holdings believes that the likelihood that it
will be obligated to make any such payments is remote.
Therefore, Federated Holdings does not intend to treat the
potential payment of a premium pursuant to the change of control
provisions as part of the yield to maturity of the note. If
Federated Holdings pays a premium pursuant to the change of
control provisions, or upon redemption, U.S. Holders will
be required to recognize such amounts as income.
Disposition
of Senior Notes
Upon the sale, exchange, redemption or other taxable disposition
of a senior note, a U.S. Holder generally will recognize
taxable gain or loss equal to the difference between the amount
realized on such disposition (except to the extent any amount
realized is attributable to accrued but unpaid interest, which
is treated as interest as described above) and the holders
adjusted tax basis in the senior note. A U.S. Holders
adjusted tax basis in a senior note generally will equal the
cost of the senior note to such holder.
Gain or loss recognized on the disposition of a senior note
generally will be capital gain or loss, and will be long-term
capital gain or loss if, at the time of such disposition, the
U.S. Holders holding period for the senior note is
more than 12 months. The deductibility of capital losses by
U.S. Holders is subject to certain limitations.
Information
Reporting and Backup Withholding
In general, information reporting requirements will apply to
certain payments of principal, premium (if any) and interest on
and the proceeds of certain sales of senior notes unless the
U.S. Holder is an exempt recipient. A backup withholding
tax may apply to such payments if the U.S. Holder fails to
provide its taxpayer identification number or certification of
exempt status or has been notified by the I.R.S. that payments
to the U.S. Holder are subject to backup withholding.
S-20
Any amounts withheld under the backup withholding rules will
generally be allowed as a refund or a credit against a
U.S. Holders U.S. federal income tax liability
provided that the U.S. Holder furnishes the required
information to the I.R.S. on a timely basis.
Consequences
to
Non-U.S. Holders
The following is a summary of the U.S. federal income tax
consequences that will generally apply to you if you are a
Non-U.S. Holder
of senior notes. The term
Non-U.S. Holder
means a beneficial owner of a senior note that is, for
U.S. federal income tax purposes, a nonresident alien
individual or a corporation, estate or trust that is not a
U.S. Holder. If you are a
Non-U.S. Holder,
Federated Holdings encourages you to consult your tax advisors
to determine the U.S. federal, state, local and other tax
consequences that may be relevant to you.
Payments
of Interest
The 30% U.S. federal withholding tax (or lower applicable
treaty rate) generally will not apply to any payment to a
Non-U.S. Holder
of interest on a senior note that is not effectively connected
with a U.S. trade or business provided that:
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the
Non-U.S. Holder
does not actually or constructively (under applicable
attribution rules) own 10% or more of the total combined voting
power of Federated Holdings voting stock, within the meaning of
Section 871(h)(3) of the Code;
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the
Non-U.S. Holder
is not a controlled foreign corporation that is related to
Federated Holdings directly or indirectly through stock
ownership; and
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(a) the
Non-U.S. Holder
provides its name and address, and certifies, under penalties of
perjury, that it is not a United States person (which
certification may be made on an I.R.S. Form
W-8BEN) or
(b) a securities clearing organization, bank, or other
financial institution that holds customers securities in
the ordinary course of its business holds the senior note on a
Non-U.S. Holders
behalf and certifies, under penalties of perjury, either that it
has received I.R.S.
Form W-8BEN
from the holder or from another qualifying financial institution
intermediary or that it is permitted to establish and has
established the holders foreign status through other
documentary evidence, and otherwise complies with applicable
requirements. If the senior notes are held by or through certain
foreign intermediaries or certain foreign partnerships, such
foreign intermediaries or partnerships must also satisfy the
certification requirements of applicable Treasury Regulations.
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If a
Non-U.S. Holder
cannot satisfy the requirements described above, payments of
interest will be subject to the 30% U.S. federal
withholding tax, unless the holder provides Federated Holdings
with a properly executed (1) I.R.S.
Form W-8BEN
claiming an exemption from or reduction in withholding under an
applicable tax treaty or (2) I.R.S.
Form W-8ECI
stating that interest paid on the senior note is not subject to
withholding tax because it is effectively connected with the
holders conduct of a trade or business in the United
States.
If a
Non-U.S. Holder
is engaged in a trade or business in the United States and
interest on a senior note is effectively connected with the
conduct of that trade or business, the
Non-U.S. Holder
will instead be required to pay U.S. federal income tax on
that interest on a net income basis in the same manner as if the
Non-U.S. Holder
were a U.S. Holder, except as otherwise provided by an
applicable tax treaty. In addition, if a
Non-U.S. Holder
is a foreign corporation, it may be subject to a branch profits
tax equal to 30% (or lower applicable treaty rate) of its
earnings and profits for the taxable year, subject to
adjustments, that are effectively connected with its conduct of
a trade or business in the United States. For this purpose,
interest on the senior notes which is effectively connected with
your conduct of a trade or business in the United States would
be included in your earnings and profits.
S-21
Disposition
of Senior Notes
Any gain recognized upon the sale, exchange, redemption or other
taxable disposition of a senior note (except with respect to
accrued and unpaid interest, which would be taxable as such)
will not be subject to the 30% U.S. federal withholding
tax. Such gain also generally will not be subject to
U.S. federal income tax unless:
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that gain is effectively connected with a
Non-U.S. Holders
conduct of a trade or business in the United States; or
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the
Non-U.S. Holder
is an individual who is present in the United States for
183 days or more in the taxable year of the disposition,
and certain other conditions are met.
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A
Non-U.S. Holder
described in the first bullet point above will generally be
required to pay U.S. federal income tax on the net gain
derived from the sale, except as otherwise required by an
applicable tax treaty, and if such holder is a foreign
corporation, it may also be required to pay a branch profits tax
at a 30% rate or a lower rate if so specified by an applicable
tax treaty.
Information
Reporting and Backup Withholding
In general, Federated Holdings must report to the I.R.S. and to
each
Non-U.S. Holder
the amount of interest on the senior notes paid to such
Non-U.S. Holder
and the amount of tax, if any, withheld with respect to those
payments. Copies of the information returns reporting such
interest payments and any withholding may also be made available
to the tax authorities in the country in which the
Non-U.S. Holder
resides under the provisions of an applicable tax treaty. Backup
withholding may apply to certain payments of principal, premium
(if any) and interest on the senior notes to
Non-U.S. Holders,
as well as to the proceeds of certain sales of senior notes made
through brokers, unless the holder has made appropriate
certifications as to its foreign status, or has otherwise
established an exemption. The certification of foreign status
described above under Payments of
Interest is generally effective to establish an exemption
from backup withholding.
Any amounts withheld under the backup withholding rules will
generally be allowed as a refund or a credit against a
Non-U.S. Holders
U.S. federal income tax liability provided that the
Non-U.S. Holder
furnishes the required information to the I.R.S. on a timely
basis.
S-22
UNDERWRITING
Under the terms and subject to the conditions contained in an
underwriting agreement dated November 17, 2006, Federated
Holdings has agreed to sell to the underwriters named below, for
whom Banc of America Securities LLC, Credit Suisse Securities
(USA) LLC and J.P. Morgan Securities Inc. are acting as
representatives, and the underwriters have agreed to buy, the
principal amount of the senior notes set forth opposite the
underwriters name:
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Principal Amount
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Underwriter
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of Senior Notes
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Banc of America Securities LLC
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$
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293,315,000
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Credit Suisse Securities (USA) LLC
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315,370,000
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J.P. Morgan Securities
Inc.
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293,315,000
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Citigroup Global Markets Inc.
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44,000,000
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Piper Jaffray & Co.
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44,000,000
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Wells Fargo Securities, LLC
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44,000,000
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Fifth Third Securities, Inc.
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22,000,000
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BNY Capital Markets, Inc.
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22,000,000
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The Williams Capital Group,
L.P.
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22,000,000
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Total
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$
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1,100,000,000
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The underwriting agreement provides that the underwriters are
obligated to purchase all of the senior notes if any are
purchased. The underwriting agreement also provides that if an
underwriter defaults the purchase commitments of non-defaulting
underwriters may be increased or the offering of senior notes
may be terminated.
The underwriters propose to offer the senior notes initially at
the public offering price on the cover page of this prospectus
supplement and to selling group members at that price less a
selling concession of 0.40% of the principal amount per senior
note. The underwriters may allow, and selling group members may
reallow, a discount of 0.12% of the principal amount per senior
note on sales to other broker/dealers. After the initial public
offering the representatives may change the public offering
price and other selling terms.
The following table summarizes the compensation and estimated
expenses we will pay.
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Per Senior Note
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Total
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Underwriting Discounts and
Commissions paid by us
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0.650
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%
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$
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7,150,000
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We estimate that our out of pocket expenses for this offering
will be approximately $750,000.
Federated Holdings has agreed to indemnify the underwriters
against liabilities under the Securities Act or to contribute to
payments which the underwriters may be required to make in that
respect.
The senior notes are a new issue of securities with no
established trading market. The senior notes will not be listed
on any securities exchange or on any automated dealer quotation
system. The representatives may make a secondary market for the
senior notes. However, they are not obligated to do so and may
discontinue making a secondary market for the senior notes at
any time without notice. No assurance can be given as to how
liquid the trading market for the senior notes will be or that
an active public market for the senior notes will develop. If an
active public trading market for the senior notes does not
develop, the market price and liquidity of the senior notes may
be adversely affected.
In connection with the offering, the representatives may engage
in stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the
Exchange Act.
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Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
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Syndicate covering transactions involve purchases of the senior
notes in the open market after the distribution has been
completed in order to cover syndicate short positions. A short
position is more likely to be created if the representatives are
concerned that there may be downward pressure on the price of
the senior notes in the open market after pricing that could
adversely affect investors who purchase in the offering.
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Penalty bids permit the representatives to reclaim a selling
concession from a syndicate member when the senior notes
originally sold by the syndicate member are purchased in a
stabilizing transaction or a syndicate covering transaction to
cover syndicate short positions.
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These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of raising or maintaining
the market price of the senior notes or preventing or retarding
a decline in the market price of the senior notes. As a result
the price of the senior notes may be higher than the price that
might otherwise exist in the open market. These transactions, if
commenced, may be discontinued at any time.
The senior notes are being offered for sale in the United States
and in jurisdictions outside the United States, subject to
applicable law.
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), each underwriter has
represented and agreed that with effect from and including the
date on which the Prospectus Directive is implemented in that
Relevant Member State (the Relevant Implementation
Date) it has not made and will not make an offer of senior
notes to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the senior notes
which has been approved by the competent authority in that
Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in
that Relevant Member State, all in accordance with the
Prospectus Directive, except that it may, with effect from and
including the Relevant Implementation Date, make an offer of
senior notes to the public in that Relevant Member State at any
time:
(1) to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in
securities;
(2) to any legal entity which has two or more of
(a) an average of at least 250 employees during the last
financial year, (b) a total balance sheet of more than
443,000,000 Euros, and (c) an annual net turnover of more
than 450,000,000 Euros, as shown in its last annual or
consolidated accounts; or
(3) in any other circumstances which do not require the
publication by Federated Holdings of a prospectus pursuant to
Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an
offer of senior notes to the public in relation to
any senior notes in any Relevant Member State means the
communication in any form and by any means of sufficient
information on the terms of the offer and the senior notes to be
offered so as to enable an investor to decide to purchase or
subscribe the senior notes, as the same may be varied in that
Member State by any measure implementing the Prospectus
Directive in that Member State and the expression Prospectus
Directive means Directive 2003/71/EC and includes any relevant
implementing measure in each Relevant Member State.
Each underwriter has represented and agreed that:
(1) it is a person whose ordinary activities involve it in
acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of its business and it has
not offered or sold and will not offer or sell the senior notes
other than to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as
principal or as agent) for the purposes of their businesses or
who it is reasonable to expect will acquire, hold, manage or
dispose of investments (as principal or agent) for the purposes
of their businesses where the issue of the senior notes would
otherwise constitute a contravention of Section 19 of the
Financial Services and Markets Act 2000 (FSMA) by
Federated Holdings;
(2) it has communicated or caused to be communicated and
will communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning
of Section 21 of the FSMA)
S-24
received by it in connection with the issue or sale of the
senior notes only in circumstances in which Section 21(1)
of the FSMA does not apply to Federated Holdings; and
(3) it has complied and will comply with all applicable
provisions of the FSMA with respect to anything done by it in
relation to the senior notes in, from or otherwise involving the
United Kingdom.
The senior notes may not be offered or sold by means of any
document other than (1) in circumstances which do not
constitute an offer to the public within the meaning of the
Companies Ordinance (Cap.32, Laws of Hong Kong), or (2) to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap.571, Laws of Hong Kong)
and any rules made thereunder, or (3) in other
circumstances which do not result in the document being a
prospectus within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), and no advertisement,
invitation or document relating to the senior notes may be
issued or may be in the possession of any person for the purpose
of issue (in each case whether in Hong Kong or elsewhere), which
is directed at, or the contents of which are likely to be
accessed or read by, the public in Hong Kong (except if
permitted to do so under the laws of Hong Kong) other than with
respect to senior notes which are or are intended to be disposed
of only to persons outside Hong Kong or only to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong)
and any rules made thereunder.
This prospectus supplement has not been and will not be
circulated or distributed in the Peoples Republic of China
(the PRC), and senior notes may not be offered or
sold, and will not be offered or sold to any person for
re-offering or resale, directly or indirectly, to any resident
of the PRC except pursuant to applicable laws and regulations of
the PRC. For the purpose of this paragraph only, the PRC does
not include Taiwan and the special administrative regions of
Hong Kong and Macau.
The securities have not been and will not be registered under
the Securities and Exchange Law of Japan (the Securities
and Exchange Law) and each underwriter has agreed that it
will not offer or sell any securities, directly or indirectly,
in Japan or to, or for the benefit of, any resident of Japan
(which term as used herein means any person resident in Japan,
including any corporation or other entity organized under the
laws of Japan), or to others for re-offering or resale, directly
or indirectly, in Japan or to a resident of Japan, except
pursuant to an exemption from the registration requirements of,
and otherwise in compliance with, the Securities and Exchange
Law and any other applicable laws, regulations and ministerial
guidelines of Japan.
This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this prospectus
and any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of the
senior notes may not be circulated or distributed, nor may the
senior notes be offered or sold, or be made the subject of an
invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (1) to an
institutional investor under Section 274 of the Securities
and Futures Act, Chapter 289 of Singapore (the
SFA), (2) to a relevant person, or any person
pursuant to Section 275(1A), and in accordance with the
conditions, specified in Section 275 of the SFA, or
(3) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA.
Where the senior notes are subscribed or purchased under
Section 275 by a relevant person which is: (1) a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (2) a trust (where the
trustee is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary is an accredited investor,
shares, debentures and units of shares and debentures of that
corporation or the beneficiaries rights and interest in
that trust shall not be transferable for six months after that
corporation or that trust has acquired the senior notes under
Section 275 except: (a) to an institutional investor
under Section 274 of the SFA or to a relevant person, or
any person pursuant to Section 275(1A), and in accordance
with the conditions, specified in Section 275 of the SFA;
(b) where no consideration is given for the transfer; or
(c) by operation of law.
We expect that delivery of the senior notes will be made against
payment therefor on or about the closing date specified on the
cover page of this prospectus supplement, which will be the
seventh business day following the date of pricing of the senior
notes (this settlement cycle being referred to as T+
7). Under
Rule 15c6-1
of the Exchange Act, trades in the secondary market generally
are required to settle in three
S-25
business days, unless the parties to that trade expressly agree
otherwise. Accordingly, purchasers who wish to trade senior
notes on the date of pricing or the next six succeeding business
days will be required, by virtue of the fact that the senior
notes initially will settle in T+ 7, to specify an alternate
settlement cycle at the time of any such trade to prevent a
failed settlement and should consult their own advisor.
The underwriters and their respective affiliates have provided,
and may in the future provide, investment banking and/or
commercial banking services to Federated, Federated Holdings and
their subsidiaries from time to time. The underwriters and their
respective affiliates have received, and will in the future
receive, customary fees in connection with providing these
services. The representatives are acting as broker/dealers in
connection with Federated Holdings tender offer to
purchase certain of its debt securities.
Certain of the underwriters or their affiliates hold positions
in Federated Holdings debt securities. If the underwriters
or their affiliates tender their debt securities in the tender
offer, which is described in Use of Proceeds, more
than 10% of the proceeds of this offering, not including
underwriting compensation, may be received by the underwriters,
which are members of the National Association of Securities
Dealers, Inc. (NASD), or their affiliates.
Consequently, this offering is being conducted in compliance
with NASD Conduct Rule 2710(h). Pursuant to that rule, the
appointment of a qualified independent underwriter is not
necessary in connection with this offering, as the offering is
of a class of securities to be rated Baa or better by
Moodys rating service or BBB or better by
Standard & Poors rating service.
EXPERTS
The consolidated financial statements and managements
report on the effectiveness of internal control over financial
reporting incorporated into this prospectus supplement and the
accompanying prospectus by reference from Federateds
Annual Report on
Form 10-K
for the year ended January 28, 2006, as amended, have been
audited by KPMG LLP, an independent registered public accounting
firm, as stated in their reports, which are incorporated by
reference herein, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements and managements
report on the effectiveness of internal control over financial
reporting incorporated into this prospectus supplement and the
accompanying prospectus by reference from the Annual Report on
Form 10-K
for the year ended January 29, 2005, as amended, of The May
Department Stores Company have been audited by
Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their reports, which are
incorporated by reference herein, and have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
CERTAIN
LEGAL MATTERS
The validity of the senior notes and guarantees offered hereby
will be passed upon for Federated Holdings and Federated by
Jones Day. Certain legal matters will be passed upon for the
underwriters by Shearman & Sterling LLP.
S-26
PROSPECTUS
FEDERATED
DEPARTMENT STORES, INC.
Common
Stock
Preferred Stock
Depositary Shares
Warrants
Purchase Contracts
Units
Guarantees of Debt Securities
FEDERATED
RETAIL HOLDINGS, INC.
Debt
Securities
Warrants
Purchase Contracts
Units
$2,000,000,000
Federated Department Stores, Inc., referred to as
Federated,
and/or
Federated Retail Holdings, Inc., a wholly owned subsidiary of
Federated referred to as Federated Holdings, may
offer from time to time to sell, in one or more series, any
combination of the securities described in this prospectus. Such
securities may be offered and sold by us in one or more
offerings with a total aggregate principal amount or initial
purchase price not to exceed $2,000,000,000.
We may offer and sell these securities to or through one or more
underwriters, dealers and agents, or directly to purchasers, on
a continuous or delayed basis.
The principal executive offices of Federated and Federated
Holdings are located at 7 West Seventh Street, Cincinnati,
Ohio 45202, and the telephone number for each is
(513) 579-7000.
This prospectus describes some of the general terms that may
apply to these securities. The specific terms of any securities
to be offered will be described in a supplement to this
prospectus.
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of this prospectus is November 2, 2006
TABLE OF
CONTENTS
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The registration statement containing this prospectus,
including the exhibits to the registration statement, provides
additional information about us and the securities offered under
this prospectus. The registration statement, including the
exhibits and the documents incorporated herein by reference, can
be read on the Securities and Exchange Commission website or at
the Securities and Exchange Commission offices mentioned under
the heading Where You Can Find More Information.
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission, or the SEC,
using a shelf registration process. Under this shelf
process, we may sell from time to time the securities described
in this prospectus in one or more offerings up to a total
aggregate principal amount or initial purchase price of
$2,000,000,000.
This prospectus provides you with a general description of the
securities. Each time we offer the securities, we will provide a
prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may
also supplement, modify or supersede other information contained
in this prospectus. You should read both this prospectus and any
prospectus supplement together with the information incorporated
by reference as described below under the heading
Incorporation by Reference.
You should rely only on the information provided in this
prospectus and in any prospectus supplement, including the
information incorporated by reference. We have not authorized
anyone to provide you with different information. We are not
offering the securities in any state where the offer is not
permitted. You should not assume that the information in this
prospectus, or any supplement to this prospectus, is accurate at
any date other than the date indicated on the cover page of
these documents.
Unless the context implies otherwise, references in this
prospectus to we, us or our
are references to either Federated or Federated Holdings or both.
WHERE YOU
CAN FIND MORE INFORMATION
Federated files annual, quarterly and current reports, proxy
statements and other information with the SEC. Federateds
SEC filings are available to the public from the SECs
website at www.sec.gov or from Federateds website
at www.fds.com. You may also read and copy any document
Federated files at the SECs public reference room in
Washington, D.C., located at 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. Please call the SEC
at
1-800-SEC-0330
for further information on the public reference room.
Information about Federated is also available at
Federateds website at www.fds.com. However, the
information on that website is not part of this prospectus.
INCORPORATION
BY REFERENCE
The SEC allows us to incorporate by reference in
this prospectus the information in the documents that Federated
files with it, which means that we can disclose important
information to you by referring you to those documents. The
information incorporated by reference is considered to be a part
of this prospectus. Any information that is part of this
prospectus or any prospectus supplement that speaks as of a
later date than any other information that is part of this
prospectus or any prospectus supplement updates or supersedes
such other information. We incorporate by reference in this
prospectus the documents listed below and any future documents
or portions thereof that Federated files with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 on or after the date of this prospectus
until we sell all of the securities that may be offered by this
prospectus.
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Federateds Annual Report on
Form 10-K
for the fiscal year ended January 28, 2006, as amended;
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Federateds Quarterly Reports on
Form 10-Q
for the fiscal quarters ended April 29, 2006 and
July 29, 2006;
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Federateds Current Reports on
Form 8-K
filed on March 28, 2006, March 30, 2006,
March 31, 2006, April 10, 2006, May 3, 2006,
May 24, 2006, June 1, 2006, June 6, 2006,
June 9, 2006, June 21, 2006, June 22, 2006,
July 13, 2006, August 29, 2006, September 1,
2006, October 3, 2006 and November 2, 2006;
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Description of Federateds common stock, par value
$0.01 per share, contained in Federateds Registration
Statement on
Form 8-A
filed on December 12, 1994;
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Item 8 of the Annual Report on
Form 10-K
for the fiscal year ended January 29, 2005, as amended, of
The May Department Stores Company, a Delaware corporation
(May); and
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Item 1 of Mays Quarterly Report on
Form 10-Q
for each of the fiscal quarters ended April 30, 2005 and
July 30, 2005.
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You may obtain, free of charge, a copy of any of these documents
(other than exhibits to these documents unless the exhibits are
specifically incorporated by reference into these documents or
referred to in this prospectus) by writing or calling us at the
following address and telephone number:
Federated Department Stores, Inc.
7 West Seventh Street
Cincinnati, Ohio 45202
Attention: Investor Relations
(513) 579-7780
FORWARD-LOOKING
STATEMENTS
Some of the statements made and information contained in this
prospectus and the documents we incorporate by reference,
excluding historical information, are forward-looking
statements as defined in the Private Securities Litigation
Reform Act of 1995, the Securities Act of 1933 and the
Securities Exchange Act of 1934. Forward-looking statements give
our current expectations or forecasts of future events. Words
such as may, assume,
forecast, position, predict,
strategy, expect, intend,
plan, estimate, anticipate,
believe, project, budget,
potential, or continue, and similar
expressions are used to identify forward-looking statements.
They can be affected by assumptions used or by known or unknown
risks or uncertainties. Consequently, no forward-looking
statements can be guaranteed. Actual results may vary
materially. You are cautioned not to place undue reliance on any
forward-looking statements. You should also understand that it
is not possible to predict or identify all such factors and
should not consider the following list to be a complete
statement of all potential risks and uncertainties. Any of the
following factors may impact the achievement of results:
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risks and uncertainties relating to the possible invalidity of
the underlying beliefs and assumptions;
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possible changes or developments in social, economic, business,
industry, market, legal and regulatory circumstances and
conditions;
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actions taken or omitted to be taken by third parties, including
customers, suppliers, business partners, competitors and
legislative, regulatory, judicial and other governmental
authorities and officials; and
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attacks or threats of attacks by terrorists or war.
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Without limiting the generality of the foregoing,
forward-looking statements regarding the effects of the
acquisition of May by Federated are subject to risks and
uncertainties relating to, among other things, the successful
and timely integration of the acquired businesses with our
historical businesses, timely realization of expected cost
savings and other synergies, and potential disruption from the
transaction which could make it more difficult to maintain
relationships with the companies respective employees,
customers and vendors.
No forward-looking statements should be relied upon as
continuing to reflect the expectations of management or the
current status of any matter referred to therein as of any date
subsequent to the date on which such statements are made.
Furthermore, future results of the operations of Federated
and/or
Federated Holdings could differ materially from historical
results or current expectations because of a variety of factors
that affect Federated and its consolidated subsidiaries,
including:
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the acquisition of May;
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transaction costs associated with the renovation, conversion and
transitioning of retail stores in regional markets;
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the outcome and timing of sales and leasing in conjunction with
the disposition of retail store properties;
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the retention, reintegration and transitioning of displaced
employees;
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the sale of Federateds credit card operations and related
strategic alliance;
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competitive pressures from department and specialty stores,
general merchandise stores, manufacturers outlets,
off-price and discount stores, and all other retail channels,
including the Internet, mail-order catalogs and television; and
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general consumer-spending levels, including the impact of the
availability and level of consumer debt, levels of consumer
confidence and the effects of the weather.
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This list of factors is not exhaustive, and new factors may
emerge or changes to these factors may occur that would impact
our business. Additional information regarding these and other
factors may be contained in Federateds filings with the
SEC, especially on
Forms 10-K,
10-Q and
8-K. All
such risk factors are difficult to predict, contain material
uncertainties that may affect actual results and may be beyond
our control.
DESCRIPTION
OF DEBT SECURITIES
General
The debt securities that we may offer by this prospectus consist
of unsecured notes, debentures, or other evidences of
indebtedness of Federated Holdings, a wholly-owned subsidiary of
Federated, which securities we refer to as debt
securities. Federated Holdings may issue debt securities
in one or more series under an indenture, dated as of
November 2, 2006, among Federated Holdings, as issuer,
Federated, as guarantor, and U.S. Bank National
Association, as trustee. A copy of the indenture is filed as
Exhibit 4.6 to the registration statement of which this
prospectus is a part and is incorporated herein by reference.
Except as otherwise defined in this prospectus, capitalized
terms used in this prospectus have the meanings given to them in
the indenture.
The provisions of the indenture will generally be applicable to
all of the debt securities. Selected provisions of the indenture
are described in this prospectus. Additional or different
provisions that are applicable to a particular series of debt
securities will, if material, be described in a prospectus
supplement relating to the offering of debt securities of that
series. These provisions may include, among other things and to
the extent applicable, the following:
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the title of the debt securities;
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the extent, if any, to which the debt securities are
subordinated in right of payment to other indebtedness of
Federated Holdings;
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any limit on the aggregate principal amount of the debt
securities;
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any subordination provisions or other limitations applicable to
guarantees of the debt securities;
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the persons to whom any interest on the debt securities will be
payable, if other than the registered holders thereof on the
regular record date therefor;
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the date or dates on which the principal of the debt securities
will be payable;
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the rate or rates at which the debt securities will bear
interest, if any, and the date or dates from which interest will
accrue;
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the dates on which interest, if any, will be payable and the
regular record dates for interest payment dates;
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the place or places where the principal of and any premium and
interest on the debt securities will be payable;
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the period or periods, if any, within which, and the price or
prices at which, the debt securities may be redeemed, in whole
or in part, at the option of Federated Holdings;
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the obligation, if any, of Federated Holdings to redeem or
purchase the debt securities pursuant to sinking fund or similar
provisions and the terms and conditions of any such redemption
or purchase;
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the denominations in which the debt securities will be issuable,
if other than denominations of $1,000 and any integral multiple
thereof;
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the currency, currencies or currency units, if other than
currency of the United States of America, in which payment of
the principal of and any premium or interest on the debt
securities will be payable, and the terms and conditions of any
elections that may be made available with respect thereto;
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any index or formula used to determine the amount of payments of
principal of and any premium or interest on the debt securities;
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whether the debt securities are to be issued in whole or in part
in the form of one or more global securities and, if so, the
identity of the depositary, if any, for the global securities;
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the manner, if any, in which the debt securities will be
exchangeable for the common stock or other securities of
Federated or any other person;
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the principal amount (or any portion of the principal amount) of
the debt securities which will be payable upon any declaration
of acceleration of the maturity of the debt securities pursuant
to an event of default; and
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the applicability to the debt securities of the provisions
described under Defeasance below.
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We may issue debt securities at a discount from their stated
principal amount. Federal income tax considerations and other
special considerations applicable to any debt security issued
with original issue discount (an original issue discount
security) may be described in an applicable prospectus
supplement.
If the purchase price of any series of the debt securities is
payable in a foreign currency or currency unit or if the
principal of or any premium or interest on any series of the
debt securities is payable in a foreign currency or currency
unit, the restrictions, elections, general tax considerations,
specific terms, and other information with respect to the debt
securities and the applicable foreign currency or currency unit
will be set forth in an applicable prospectus supplement.
Unless otherwise indicated in an applicable prospectus
supplement:
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the debt securities will be issued only in fully registered form
(without coupons) in denominations of $1,000 or integral
multiples thereof; and
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payment of principal and any premium or interest on the debt
securities will be payable, and the exchange and transfer of
debt securities will be registrable, at Federated Holdings
office or agency maintained for those purposes and at any other
office or agency maintained for those purposes. No service
charge will be made for any registration of transfer or exchange
of the debt securities, but we may require payment of a sum
sufficient to cover any tax or other governmental charge imposed
in connection therewith.
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Guarantees
Subject to the limitations described below and except as
otherwise disclosed in the applicable prospectus supplement,
Federated will fully, unconditionally and irrevocably guarantee
the full and punctual payment when due, whether at maturity, by
acceleration, by redemption, by repurchase, or otherwise, of all
payment obligations on the debt securities of a series, whether
for principal of, or any premium or interest on, the debt
securities or otherwise.
In the case of subordinated debt securities of any series,
Federateds guarantee will be subordinated in right of
payment to its senior debt on the same basis as the subordinated
debt securities of each series are subordinated to Federated
Holdings senior debt securities. No payment will be made
by Federated under its guarantee during any period in which
payments by Federated Holdings on any subordinated debt
securities are suspended by the subordination provisions
applicable to such series.
Each guarantee will be limited in amount to an amount not to
exceed the maximum amount that can be guaranteed by Federated
without rendering such guarantee voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
4
Each guarantee will be a continuing guarantee and will:
(1) remain in full force and effect until either
(a) payment in full of all the applicable debt securities
(or such debt securities are otherwise satisfied and discharged
in accordance with the provisions of the applicable indenture)
or (b) released in connection with a redemption, if any;
(2) be binding upon Federated; and
(3) inure to the benefit of and be enforceable by the
applicable trustee, the holders and their successors,
transferees and assigns.
Global
Securities
The debt securities of a series may be issued in whole or in
part in the form of one or more global securities that will be
deposited with, or on behalf of, a depositary or its nominee
identified in an applicable prospectus supplement. Unless and
until it is exchanged in whole or in part for debt securities in
registered form, a global security may not be registered for
transfer or exchange except:
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by the depositary to a nominee of the depositary;
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by a nominee of the depositary to the depositary or another
nominee of the depositary;
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by the depositary or any nominee of the depositary to a
successor depositary or a nominee of the successor
depositary; or
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in any other circumstances described in an applicable prospectus
supplement.
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The specific terms of the depositary arrangement with respect to
any debt securities to be represented by a global security will
be described in an applicable prospectus supplement. We expect
that the following provisions will apply to depositary
arrangements.
Unless otherwise specified in an applicable prospectus
supplement, any global security that represents debt securities
will be registered in the name of the depositary or its nominee.
Upon the deposit of a global security with or on behalf of the
depositary for the global security, the depositary will credit,
on its book-entry registration and transfer system, the
respective principal amounts of the debt securities represented
by the global security to the accounts of institutions that are
participants in such system. The accounts to be credited will be
designated by the underwriters or agents of the debt securities
or by Federated Holdings, if the debt securities are offered and
sold directly by Federated Holdings.
Ownership of beneficial interests in debt securities represented
by a global security will be limited to participants in the
book-entry registration and transfer system of the applicable
depositary or persons that may hold interests through those
participants. Ownership of those beneficial interests by
participants will be shown on, and the transfer of ownership
will be effected only through, records maintained by the
depositary or its nominee for such global security. Ownership of
such beneficial interests by persons that hold through such
participants will be shown on, and the transfer of such
ownership will be effected only through, records maintained by
the participants. The laws of some jurisdictions require that
specified purchasers of securities take physical delivery of
their securities in definitive form. These laws may impair your
ability to transfer beneficial interests in a global security.
So long as the depositary for a global security, or its nominee,
is the registered owner of the global security, the depositary
or the nominee, as the case may be, will be considered the sole
owner or holder of the debt securities represented by the global
security for all purposes under the indenture. Unless otherwise
specified in an applicable prospectus supplement, owners of
beneficial interests in the global security will not be entitled
to have any of the debt securities represented by the global
security registered in their names, will not receive or be
entitled to receive physical delivery of any such debt
securities in certificated form, and will not be considered the
owners or holders of the debt securities for any purpose under
the indenture. Accordingly, each person owning a beneficial
interest in debt securities represented by a global security
must rely on the procedures of the applicable depositary and, if
the person is not a participant in the book-entry registration
and transfer system of the applicable depositary, on the
procedures of the participant through which the person owns its
interest, to exercise any rights of an owner or holder of debt
securities under the indenture.
5
We understand that, under existing industry practices, if an
owner of a beneficial interest in debt securities represented by
a global security desires to give any notice or take any action
that an owner or holder of debt securities is entitled to give
or take under the indenture:
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the applicable depositary would authorize its participants to
give the notice or take the action; and
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the participants would authorize persons owning the beneficial
interests through the participants to give the notice or take
the action or would otherwise act upon the instructions of the
persons owning the beneficial interests.
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Principal of and any premium and interest on debt securities
represented by a global security will be payable in the manner
described in an applicable prospectus supplement. Payment of
principal of, and any premium or interest on, debt securities
represented by a global security will be made to the applicable
depositary or its nominee, as the case may be, as the registered
owner or the holder of the global security. None of us, the
trustee, any paying agent, or the registrar for debt securities
represented by a global security will have any responsibility or
liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in those debt
securities or for maintaining, supervising, or reviewing any
records relating to those beneficial ownership interests.
Certain
Covenants of Federated Holdings
Maintenance of Office or Agency. Federated
Holdings will be required to maintain an office or agency in
each place of payment for each series of debt securities for
notice and demand purposes and for the purposes of presenting or
surrendering debt securities for payment, registration of
transfer, or exchange.
Paying Agents, Etc. If Federated Holdings acts
as its own paying agent with respect to any series of debt
securities, on or before each due date of the principal of or
any premium or interest on any of the debt securities of that
series, Federated Holdings will be required to segregate and
hold in trust for the benefit of the persons entitled to payment
a sum sufficient to pay the amount due and to notify the trustee
promptly of Federated Holdings action or failure to act. If
Federated Holdings has one or more paying agents for any series
of debt securities, prior to each due date of the principal of
or any premium or interest on any debt securities of that
series, Federated Holdings will be required to deposit with a
paying agent a sum sufficient to pay the amount due and, unless
the paying agent is the trustee, to promptly notify the trustee
of its action or failure to act. All moneys paid by Federated
Holdings to a paying agent for the payment of principal of or
any premium or interest on any debt securities that remain
unclaimed for two years after the principal or any premium or
interest has become due and payable may be repaid to Federated
Holdings, and thereafter the holder of those debt securities may
look only to Federated Holdings for payment thereof.
Existence. Federated Holdings will be required
to, and will be required to cause its subsidiaries to, preserve
and keep in full force and effect its and their existence,
charter rights, statutory rights, and franchises, except to the
extent that the failure to do so would not have a Material
Adverse Effect.
Restrictive Covenants. Any restrictive
covenants applicable to any series of debt securities will be
described in an applicable prospectus supplement.
Events of
Default
The following are Events of Default under the indenture with
respect to debt securities of any series:
(1) failure to pay principal of or premium, if any, on any
debt security of that series when due;
(2) failure to pay any interest on any debt security of
that series when due, which failure continues for
30 calendar days;
(3) failure to make any sinking fund payment in respect of
any debt security of that series when it becomes due and payable;
(4) failure to perform, or breach of, any other of
Federated Holdings covenants in the indenture (other than
a covenant included in the indenture solely for the benefit of a
series of debt securities other than that
6
series), which failure or breach continues for 60 calendar days
after written notice thereof has been given to Federated
Holdings as provided in the indenture;
(5) any nonpayment at maturity or other default (beyond any
applicable grace period) under any agreement or instrument
relating to any other indebtedness of Federated Holdings, the
unpaid principal amount of which is not less than
$100 million, which default results in the acceleration of
the maturity of the indebtedness prior to its stated maturity or
occurs at the final maturity thereof;
(6) any guarantee of the debt securities of that series
ceases to be in full force and effect (except as contemplated by
the terms of the indenture) or is declared in a judicial
proceeding to be null and void, or Federated denies or
disaffirms in writing its obligations under its guarantee;
(7) specified events of bankruptcy, insolvency, or
reorganization involving Federated Holdings or
Federated; and
(8) any other Event of Default provided with respect to
debt securities of that series.
Pursuant to the Trust Indenture Act of 1939, the trustee is
required, within 90 calendar days after the occurrence of a
default in respect of any series of debt securities, to give to
the holders of the debt securities of that series notice of all
uncured defaults known to it, except that:
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in the case of a default in the performance of any covenant of
the character contemplated in clause (4) above, no notice
will be given until at least 30 calendar days after the
occurrence of the default; and
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other than in the case of a default of the character
contemplated in clause (1), (2) or (3) above, the
trustee may withhold notice if and so long as it in good faith
determines that the withholding of notice is in the interests of
the holders of the debt securities of that series.
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If an Event of Default described in clause (7) above
occurs, the principal of, and any premium and accrued interest
on the debt securities of that series will become immediately
due and payable without any declaration or other act on the part
of the trustee or any holder of the debt securities of that
series. If any other Event of Default with respect to debt
securities of any series occurs and is continuing, either the
trustee or the holders of at least 25% in principal amount of
the outstanding debt securities of that series may declare the
principal amount of all debt securities of that series to be due
and payable immediately. However, at any time after a
declaration of acceleration with respect to debt securities of
any series has been made, but before a judgment or decree based
on such acceleration has been obtained, the holders of a
majority in principal amount of the outstanding debt securities
of that series may, under specified circumstances, rescind and
annul such acceleration. See Modification and
Waiver below.
Subject to the duty of the trustee to act with the required
standard of care during an Event of Default, the trustee will
have no obligation to exercise any of its rights or powers under
the indenture at the request or direction of the holders of debt
securities, unless holders of debt securities shall have offered
to the trustee reasonable security or indemnity. Subject to the
provisions of the indenture, including those requiring security
or indemnification of the trustee, the holders of a majority in
principal amount of the debt securities of any series will have
the right to 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, with
respect to the debt securities of that series.
No holder of a debt security of any series will have any right
to institute any proceeding with respect to the indenture or for
any remedy thereunder unless:
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the holder has previously given to the trustee written notice of
a continuing Event of Default with respect to the debt
securities of that series;
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the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have requested in
writing that the trustee institute a proceeding as trustee in
respect of the Event of Default;
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the holder or holders have offered reasonable indemnity to the
trustee to institute the proceeding as trustee;
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the trustee has not received from the holders of a majority in
principal amount of the outstanding debt securities of that
series a direction inconsistent with the written
request; and
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the trustee has failed to institute the proceeding within 60
calendar days after receipt of the written request.
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However, the limitations described above do not apply to a suit
instituted by a holder of a debt security for enforcement of
payment of the principal of and any premium or interest on such
debt security on or after the applicable due dates for the
payment of such obligations.
Federated Holdings is required to furnish to the trustee
annually a statement as to the performance of its obligations
under the indenture and as to any default in its performance.
Any additional Events of Default with respect to any series of
debt securities, and any variations from the foregoing Events of
Default applicable to any series of debt securities, will be
described in an applicable prospectus supplement.
Modification
and Waiver
In general, modifications and amendments of the indenture may be
made by Federated Holdings, Federated and the trustee with the
consent of the holders of not less than a majority in principal
amount of the outstanding debt securities of each series
affected thereby. However, no modification or amendment of the
indenture may, without the consent of the holder of each
outstanding debt security affected thereby:
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change the stated maturity of, or any installment of principal
of, or interest on, any debt security;
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reduce the principal amount of, the rate of interest on, or the
premium, if any, payable upon the redemption of, any debt
security;
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reduce the amount of principal of an original issue discount
security payable upon acceleration of the maturity thereof;
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change the place or currency of payment of principal of, and any
premium or interest on, any debt security;
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impair the right to institute suit for the enforcement of any
payment on or with respect to any debt security on or after the
stated maturity or prepayment date thereof; or
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reduce the percentage in principal amount of outstanding debt
securities of any series required for modification or amendment
of the indenture or for waiver of compliance with certain
provisions of the indenture or for waiver of certain defaults.
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The holders of at least a majority in principal amount of the
outstanding debt securities of any series may, on behalf of the
holders of all debt securities of that series, waive Federated
Holdings compliance with specified covenants of the
indenture. The holders of at least a majority in principal
amount of the outstanding debt securities of any series may, on
behalf of the holders of all debt securities of that series,
waive any past default under the indenture with respect to that
series, except:
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a default in the payment of the principal of, any premium or
interest on, any debt security of that series; or
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a default of a provision of the indenture that cannot be
modified or amended without the consent of the holder of each
outstanding debt security of that series.
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Defeasance
Unless otherwise specified in a prospectus supplement applicable
to a particular series of debt securities and except as
described below, upon compliance with the applicable
requirements described below, Federated Holdings:
(1) will be deemed to have been discharged from its
obligations with respect to the outstanding debt securities of
that series; or
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(2) will be released from its obligations to comply with
certain covenants described under Certain
Covenants of Federated Holdings above and from certain
prohibitions against consolidations, mergers, and the transfer
of its assets described under Limitations on
Merger and Other Transactions below with respect to the
outstanding debt securities of that series, and the occurrence
of an event described in any of clauses (3), (4),
(5) and (8) under Events of
Default above will no longer be an Event of Default with
respect to the debt securities of that series except to the
limited extent described below.
Following any defeasance described in clause (1) or
(2) above, Federated Holdings will continue to have
specified obligations under the indenture, including obligations
to register the transfer or exchange of debt securities of the
applicable series; replace destroyed, stolen, lost, or mutilated
debt securities of the applicable series; maintain an office or
agency in respect of the debt securities of the applicable
series; and hold funds for payment to holders of debt securities
of the applicable series in trust. In the case of any defeasance
described in clause (2) above, any failure by Federated
Holdings to comply with its continuing obligations may
constitute an Event of Default with respect to the debt
securities of the applicable series as described in
clause (4) under Events of Defaults
above.
In order to effect any defeasance described in clause (1)
or (2) above, Federated Holdings must irrevocably deposit
with the trustee, in trust, money or specified government
obligations (or depositary receipts therefor) that through the
scheduled payment of principal and interest in accordance with
their terms will provide, without reinvestment, money in an
amount sufficient to pay all of the principal and any premium
and interest on the debt securities of such series on the dates
such payments are due in accordance with the terms of such debt
securities. In addition, among other things:
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no Event of Default or event which with the giving of notice or
lapse of time, or both, would become an Event of Default under
the indenture shall have occurred and be continuing on the date
of such deposit;
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no Event of Default or any event described in clause (7)
under Events of Default above shall have
occurred and be continuing at any time on or prior to the
124th calendar
day following the date of deposit;
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in the event of any defeasance described in clause (1)
above, Federated Holdings shall have delivered to the trustee an
opinion of outside counsel, stating that (a) it has
received from, or there has been published by, the United States
Internal Revenue Service a ruling or (b) there has been a
change in applicable federal income tax law, in either case to
the effect that, among other things, the holders of the
outstanding debt securities of such series will not recognize
gain or loss for United States federal income tax purposes as a
result of such deposit or defeasance and will be subject to
United States federal income tax in the same manner as if such
deposit or defeasance had not occurred;
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in the event of any defeasance described in clause (2)
above, Federated Holdings shall have delivered to the trustee an
opinion of outside counsel to the effect that, among other
things, the holders of the outstanding debt securities of such
series will not recognize gain or loss for United States federal
income tax purposes as a result of such deposit or defeasance
and will be subject to United States federal income tax in the
same manner as if such deposit or defeasance had not occurred;
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Federated Holdings shall have delivered to the trustee an
officers certificate to the effect that (a) the debt
securities of such series, if then listed on any securities
exchange, will not be delisted solely as a result of such
deposit and (b) any defeasance described in clause (1)
or (2) above shall not result in a breach or violation of,
or constitute a default under, any agreement to which Federated
Holdings is a party or violate any law to which Federated
Holdings is subject; and
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Federated Holdings shall have delivered to the trustee a
certificate from a nationally recognized firm of independent
accountants or other person acceptable to the trustee expressing
their opinion that the payments of principal and interest when
due on the deposited government obligations plus any deposited
money will provide the cash at such times and in such amounts as
will be sufficient to pay the principal of and any premium and
interest when due on the debt securities of such series on the
respective maturities or on any earlier date or dates on which
the debt securities of such series shall be subject to
redemption at the option of the holder thereof.
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If Federated Holdings fails to comply with its remaining
obligations under the indenture with respect to the debt
securities of the applicable series following a defeasance
described in clause (2) above and the debt securities of
that series are declared due and payable because of the
occurrence of any undefeased Event of Default, the amount of
money and government obligations on deposit with the trustee may
be insufficient to pay amounts due on the debt securities of
that series at the time of the acceleration resulting from such
Event of Default. However, Federated Holdings will remain liable
in respect of such payments.
Satisfaction
and Discharge
Federated Holdings, at its option, may satisfy and discharge the
indenture (except for specified obligations of Federated
Holdings and the trustee, including, among others, the
obligations to apply money held in trust) when:
(1) all of the debt securities previously authenticated and
delivered under the indenture (subject to specified exceptions
relating to debt securities that have otherwise been satisfied
or provided for) have been delivered to the trustee for
cancellation; or
(2) all of the debt securities not previously delivered to
the trustee for cancellation have become due and payable, will
become due and payable at their stated maturity within one year,
or are to be called for redemption within one year under
arrangements satisfactory to the trustee for the giving of
notice of redemption by the trustee, and Federated Holdings has
deposited or caused to be deposited with the trustee as trust
funds for such purpose an amount sufficient to pay and discharge
the entire indebtedness on such debt securities, for principal
and any premium and interest to the date of such deposit (in the
case of debt securities which have become due and payable) or to
the stated maturity or redemption date, as the case may be;
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Federated Holdings has paid or caused to be paid all other sums
payable by it under the indenture; and
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Federated Holdings has delivered to the trustee an
officers certificate and an opinion of counsel, each to
the effect that all conditions precedent relating to the
satisfaction and discharge of the indenture have been satisfied.
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Limitations
on Merger and Other Transactions
Prior to the satisfaction and discharge of the indenture,
Federated Holdings may not consolidate with or merge with or
into any other person, or transfer all or substantially all of
its properties and assets to another person unless:
(1) Federated Holdings is the continuing or surviving
person in the consolidation or merger; or
(2) the person (if other than Federated Holdings) formed by
the consolidation or into which Federated Holdings is merged or
to which all or substantially all of the properties and assets
of Federated Holdings are transferred is a corporation,
partnership, limited liability company, business trust, trust or
other legal entity organized and validly existing under the laws
of the United States, any State thereof, or the District of
Columbia, and expressly assumes, by a supplemental indenture,
all of Federated Holdings obligations under the debt
securities and the indenture;
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immediately after the transaction and the incurrence or
anticipated incurrence of any indebtedness to be incurred in
connection therewith, no Default exists; and
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an officers certificate is delivered to the trustee to the
effect that both of the conditions set forth above have been
satisfied and an opinion of outside counsel has been delivered
to the trustee to the effect that the first condition set forth
above has been satisfied.
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The continuing, surviving, or successor person will succeed to
and be substituted for Federated Holdings with the same effect
as if it had been named in the indenture as a party thereto, and
thereafter the predecessor person will be relieved of all
obligations and covenants under the indenture and the debt
securities.
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Governing
Law
The indenture is, and the debt securities will be, governed by,
and construed in accordance with, the laws of the State of New
York.
Regarding
the Trustee
The indenture and the Trust Indenture Act contain specified
limitations on the right of the trustee, should it become a
creditor of Federated Holdings within three months of, or
subsequent to, a default by Federated Holdings to make payment
in full of principal of or interest on any series of debt
securities issued pursuant to the indenture when and as the same
becomes due and payable, to obtain payment of claims, or to
realize for its own account on property received in respect of
any such claim as security or otherwise, unless and until such
default is cured. However, the trustees rights as a
creditor of Federated Holdings will not be limited if the
creditor relationship arises from, among other things:
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the ownership or acquisition of securities issued under any
indenture or having a maturity of one year or more at the time
of acquisition by the trustee;
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specified advances authorized by a receivership or bankruptcy
court of competent jurisdiction or by the indenture;
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disbursements made in the ordinary course of business in its
capacity as indenture trustee, transfer agent, registrar,
custodian, or paying agent or in any other similar capacity;
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indebtedness created as a result of goods or securities sold in
a cash transaction or services rendered or premises
rented; or
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the acquisition, ownership, acceptance, or negotiation of
specified drafts, bills of exchange, acceptances, or other
obligations.
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The indenture does not prohibit the trustee from serving as
trustee under any other indenture to which Federated Holdings
may be a party from time to time or from engaging in other
transactions with Federated Holdings. If the trustee acquires
any conflicting interest within the meaning of the
Trust Indenture Act and there is an Event of Default with
respect to any series of debt securities, the trustee must
eliminate the conflict or resign.
DESCRIPTION
OF FEDERATED CAPITAL STOCK
Authorized
Capital Stock
Federated is authorized to issue 1,125 million shares of
capital stock, consisting of 1,000 million shares of common
stock, par value $0.01 per share, and 125 million
shares of preferred stock, par value $0.01 per share.
Common
Stock
Holders of Federated common stock are entitled to one vote for
each share held of record on all matters submitted to a vote of
stockholders. Upon satisfaction of Federateds obligations
to preferred stockholders, holders of Federated common stock may
receive dividends when declared by the Federated board of
directors. If Federated liquidates, dissolves or
winds-up its
business, holders of Federated common stock will share equally
in the assets remaining after Federated pays all of its
creditors and satisfies all of its obligations to preferred
stockholders. Holders of Federated common stock have no
conversion, preemptive, subscription or redemption rights.
Federated common stock is traded on the New York Stock Exchange
under the symbol FD. The registrar and transfer
agent for the common stock is The Bank of New York.
Preferred
Stock
The Federated board of directors can, without approval of
stockholders, issue one or more series of preferred stock. The
board can determine the number of shares of each series and the
rights, preferences and limitations of each series, including
dividend rights, voting rights, conversion rights, redemption
rights and any liquidation
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preferences and the terms and conditions of the issue. In some
cases, the issuance of preferred stock could delay, defer or
prevent a change in control of Federated and make it harder to
remove present management, without further action by Federated
stockholders. Under some circumstances, preferred stock could
also decrease the amount of earnings and assets available for
distribution to holders of Federated common stock if Federated
liquidates or dissolves and could also restrict or limit
dividend payments to holders of Federated common stock.
Federated has not issued any shares of preferred stock to date,
and Federated does not plan to issue any shares of preferred
stock.
Purposes
and Effects of Certain Provisions of Federateds
Certificate of Incorporation and By-laws
General
Federateds certificate of incorporation and by-laws
contain provisions that could make more difficult the
acquisition of control of Federated by means of a tender offer,
open market purchases, a proxy contest or otherwise. A
description of these provisions is set forth below.
Removal
of Directors
Federateds certificate of incorporation provides that,
except as may be otherwise provided by the terms of any series
of preferred stock, a director may only be removed at any annual
or special meeting of Federateds stockholders, the notice
of which states that the removal of a director or directors is
among the purposes of the meeting, by the affirmative vote of
the holders of at least 80% of the then-outstanding shares of
its voting stock entitled to vote in the election of directors,
voting together as a single class. Federateds certificate
of incorporation also requires the approval of the holders of at
least 80% of the then-outstanding shares of its voting stock
entitled to vote in the election of directors, voting together
as a single class, to amend, alter or repeal any provision of
Federateds certificate of incorporation governing the
removal of directors.
Limitation
of Director Liability
Federateds certificate of incorporation provides that, to
the full extent permitted by the Delaware General Corporation
Law or any other applicable law currently or hereafter in
effect, no director will be personally liable to Federated or
its stockholders for or with respect to any acts or omissions in
the performance of his or her duties as a director of Federated.
This provision in Federateds certificate of incorporation
may have the effect of reducing the likelihood of derivative
litigation against Federateds directors and may discourage
or deter stockholders or management from bringing a lawsuit
against Federateds directors for breach of their duty of
care, even though such an action, if successful, might otherwise
have benefited Federated and its stockholders. These provisions
do not limit or affect a stockholders ability to seek and
obtain relief under federal securities laws.
No
Stockholder Action by Written Consent
Federateds certificate of incorporation provides that any
action required or permitted to be taken by the Federated
stockholders must be effected at a duly called annual or special
meeting of stockholders and may not be effected by a written
consent of Federated stockholders. This prevents Federated
stockholders from initiating or effecting any action by written
consent, thereby limiting the ability of Federated stockholders
to take actions opposed by Federateds board of directors.
Federateds certificate of incorporation requires the
approval of the holders of at least 80% of the then-outstanding
shares of its voting stock entitled to vote in the election of
directors, voting together as a single class, to amend, alter or
repeal any provision of Federateds certificate of
incorporation prohibiting stockholder actions by written
consent. However, if a majority, but less than 80%, of
Federateds then-outstanding shares of voting stock
entitled to vote in the election of directors, voting together
as a single class, votes to amend, alter or repeal any
provisions of Federateds certificate of incorporation
prohibiting stockholder actions by written consent, such
amendment, alteration or repeal will become effective
12 months after such approval.
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Special
Meetings of Stockholders
Federateds certificate of incorporation and by-laws
provide that special meetings of stockholders may be called only
by the chairman of the Federated board of directors, the
secretary of Federated upon receipt of a written request from a
majority of directors (assuming no vacancies) or the Federated
board of directors upon receipt of a written request from not
less than 15% of Federateds voting stock entitled to vote
in the election of directors, voting together as a single class.
Section 203
of the Delaware General Corporation Law
Federateds certificate of incorporation contains a
provision substantially the same as Section 203 of the
Delaware General Corporation Law. Thus, Federated is subject to
Section 203, which prohibits publicly held Delaware
corporations from engaging in a business combination
with an interested stockholder for a period of three
years following the time of the transaction in which the person
or entity became an interested stockholder, unless:
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prior to that time, either the business combination or the
transaction which resulted in the stockholder becoming an
interested stockholder is approved by the board of directors of
the corporation;
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upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the outstanding voting stock
of the corporation, excluding for this purpose shares owned by
persons who are directors and also officers of the corporation
and by specified employee benefit plans; or
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at or after such time the business combination is approved by
the board of directors of the corporation and by the affirmative
vote of at least
662/3%
of the outstanding voting stock which is not owned by the
interested stockholder.
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For the purposes of Section 203, a business
combination is broadly defined to include mergers, asset
sales and other transactions resulting in a financial benefit to
the interested stockholder. An interested
stockholder is a person who, together with affiliates and
associates, owns or within the immediately preceding three years
did own 15% or more of the corporations voting stock.
DESCRIPTION
OF DEPOSITARY SHARES
Federated may offer depositary shares (either separately or
together with other securities) representing fractional shares
of Federateds preferred stock of any series. In connection
with the issuance of any depositary shares, Federated will enter
into a deposit agreement with a bank or trust company, as
depositary, which will be named in the applicable prospectus
supplement. Depositary shares will be evidenced by depositary
receipts issued pursuant to the related deposit agreement.
Immediately following Federateds issuance of the security
related to the depositary shares, Federated will deposit the
shares of its preferred stock with the relevant depositary and
will cause the depositary to issue, on Federateds behalf,
the related depositary receipts. Subject to the terms of the
deposit agreement, each owner of a depositary receipt will be
entitled, in proportion to the fraction of a share of preferred
stock represented by the related depositary share, to all the
rights, preferences and privileges of, and will be subject to
all of the limitations and restrictions on, the preferred stock
represented by the depositary receipt (including, if applicable,
dividend, voting, conversion, exchange, redemption, sinking
fund, repayment at maturity, subscription and liquidation
rights).
DESCRIPTION
OF WARRANTS
We may issue warrants for the purchase of debt securities of
Federated Holdings, common stock, preferred stock or depositary
shares of Federated or any combination thereof. Warrants may be
issued independently or together with any other securities
offered by a prospectus supplement. Warrants may be attached to
or separate from such securities. Warrants may be issued under
warrant agreements to be entered into among Federated
and/or
Federated Holdings and a warrant agent specified in the
applicable prospectus supplement. The warrant agent will act
solely as an agent of Federated
and/or
Federated Holdings in connection with the warrants of a
particular series
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and will not assume any obligation or relationship of agency or
trust for or with any holders or beneficial owners of warrants.
The applicable prospectus supplement will describe the terms of
the warrants in respect of which this prospectus is being
delivered, including, where applicable, the following:
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the title of such warrants;
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the aggregate number of such warrants;
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the price or prices at which such warrants will be issued;
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the designation, number and terms of the debt securities of
Federated Holdings, the common stock, preferred stock or
depositary shares of Federated or combination thereof,
purchasable upon exercise of such warrants;
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the designation and terms of the other securities, if any, with
which such warrants are issued and the number of such warrants
issued with each such security;
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the date, if any, on and after which such warrants and the
related underlying securities will be separately transferable;
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the price at which each underlying security purchasable upon
exercise of such warrants may be purchased;
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the date on which the right to exercise such warrants shall
commence and the date on which such right shall expire;
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the minimum amount of such warrants which may be exercised at
any one time;
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information with respect to book-entry procedures, if any;
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a discussion of any applicable federal income tax
considerations; and
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any other terms of such warrants, including terms, procedures
and limitations relating to the transferability, exchange and
exercise of such warrants.
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DESCRIPTION
OF PURCHASE CONTRACTS
We may issue purchase contracts, including contracts obligating
holders to purchase from us, and for us to sell to holders, a
specific or varying number of debt securities of Federated
Holdings, shares of common stock, preferred stock or depositary
shares of Federated, warrants, or securities of an entity
unaffiliated with us, or any combination of the above, at a
future date or dates. Alternatively, the purchase contracts may
obligate us to purchase from holders, and obligate holders to
sell to us, a specific or varying number of debt securities of
Federated Holdings, shares of common stock, preferred stock or
depositary shares of Federated, warrants, or other property, or
any combination of the above. The price of the securities or
other property subject to the purchase contracts may be fixed at
the time the purchase contracts are issued or may be determined
by reference to a specific formula described in the purchase
contracts. We may issue purchase contracts separately or as a
part of units each consisting of a purchase contract and one or
more of the other securities of Federated Holdings
and/or
Federated described in this prospectus or securities of third
parties, including U.S. Treasury securities, securing the
holders obligations under the purchase contract. The
purchase contracts may require us to make periodic payments to
holders or vice versa and the payments may be unsecured or
pre-funded on some basis. The purchase contracts may require
holders to secure the holders obligations in a manner
specified in the applicable prospectus supplement.
The applicable prospectus supplement will describe the terms of
any purchase contracts in respect of which this prospectus is
being delivered, including, to the extent applicable, the
following:
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whether the purchase contracts obligate the holder or us to
purchase or sell, or both purchase and sell, the securities
subject to purchase under the purchase contract, and the nature
and amount of each of those securities, or the method of
determining those amounts;
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whether the purchase contracts are to be prepaid or not;
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whether the purchase contracts are to be settled by delivery, or
by reference or linkage to the value, performance or level of
the securities subject to purchase under the purchase contract;
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any acceleration, cancellation, termination or other provisions
relating to the settlement of the purchase contracts; and
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whether the purchase contracts will be issued in fully
registered or global form.
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DESCRIPTION
OF UNITS
We may issue units comprising one or more securities of
Federated Holdings
and/or
Federated described in this prospectus in any combination. Units
may also include debt obligations of third parties, such as
U.S. Treasury securities. Each unit will be issued so that
the holder of the unit also is the holder of each security
included in the unit. Thus, the holder of a unit will have the
rights and obligations of a holder of each included security.
The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or
transferred separately at any time or at any time before a
specified date or occurrence.
The applicable prospectus supplement will describe the terms of
any units in respect of which this prospectus is being
delivered, including, to the extent applicable, the following:
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the designation and terms of the units and the securities
included in the units, including whether and under what
circumstances those securities may be held or transferred
separately;
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any provision for the issuance, payment, settlement, transfer or
exchange of the units or of the securities included in the
units; and
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whether the units will be issued in fully registered or global
form.
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RATIO OF
EARNINGS TO FIXED CHARGES
The following table shows Federateds historical ratio of
earnings to fixed charges for the twenty-six weeks ended
July 29, 2006 and each of the previous five fiscal years.
Federateds ratio of earnings to fixed charges for each of
the periods set forth below has been computed on a consolidated
basis and should be read in conjunction with the consolidated
financial statements, including the notes to those financial
statements, and other information set forth in the reports filed
by Federated with the SEC.
For purposes of determining the ratio of earnings to fixed
charges, earnings consist of income from continuing
operations before income taxes plus fixed charges (excluding
interest capitalized). Fixed charges represent
interest incurred, amortization of debt expenses, and that
portion of rental expenses on operating leases deemed to be the
equivalent of interest.
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26 Weeks Ended
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Fiscal Year Ended
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July 29,
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January 28,
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January 29,
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January 31,
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February 1,
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February 2,
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2006
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2006
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2005
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2004
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2003
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2002
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1.6x
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4.7
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x
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3.9
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x
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3.7
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x
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3.4
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x
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2.6x
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USE OF
PROCEEDS
We intend to use the net proceeds from the sales of the
securities described in this prospectus as set forth in the
applicable prospectus supplement.
CERTAIN
LEGAL MATTERS
In connection with particular offerings of the securities in the
future, and if stated in the applicable prospectus supplements,
the validity of those securities may be passed upon for us by
Dennis J. Broderick, Federateds Senior Vice President,
General Counsel and Secretary or by Jones Day, as our counsel,
and for any underwriters or agents by counsel named in the
applicable prospectus supplement.
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EXPERTS
The consolidated financial statements and managements
report on the effectiveness of internal control over financial
reporting incorporated into this prospectus by reference from
Federateds Annual Report on
Form 10-K
for the year ended January 28, 2006, as amended, have been
audited by KPMG LLP, an independent registered public accounting
firm, as stated in their reports, which are incorporated by
reference herein, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements and managements
report on the effectiveness of internal control over financial
reporting incorporated into this prospectus by reference from
the Annual Report on
Form 10-K
for the year ended January 29, 2005, as amended, of The May
Department Stores Company have been audited by
Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their reports, which are
incorporated by reference herein, and have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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$1,100,000,000
Federated
Retail Holdings, Inc.
5.90% Senior
Notes Due 2016
Prospectus
November 17, 2006
Joint
Book-Running Managers
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Banc
of America Securities LLC |
Credit
Suisse |
JPMorgan |
Co-Managers
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Citigroup |
Piper
Jaffray |
Wells
Fargo Securities |
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Fifth
Third Securities, Inc. |
BNY
Capital Markets, Inc. |
The
Williams Capital Group |