e424b3
This
preliminary prospectus supplement relates to an effective
registration statement under the Securities Act of 1933, but is
not complete and may be changed. This preliminary prospectus
supplement and the accompanying prospectus are not an offer to
sell these securities and are not soliciting an offer to buy
these securities in any jurisdiction where the offer or sale is
not permitted.
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File
Pursuant to Rule 424(b)(3)
File
No. 333-134179
SUBJECT TO COMPLETION, DATED
JULY 11, 2007
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated July 11, 2007)
$
PepsiAmericas, Inc.
% Notes
due
We are offering $ aggregate
principal amount of
our % Notes
due
(the Notes). Interest on the Notes will be payable
semiannually in arrears on
each
and ,
beginning ,
2008. The Notes will be subject to redemption at our option in
whole or in part at any time and from time to time at a price
calculated as described herein. There is no sinking fund. The
Notes will be sold in minimum denominations of $2,000 and
integral multiples of $1,000 in excess thereof. The Notes will
not be listed on any securities exchange.
The Notes will be our unsecured and unsubordinated obligations
and will rank equal in priority with all of our existing and
future unsecured and unsubordinated indebtedness.
Investing in the Notes involves
risks. See Risk Factors beginning on page 4 of
the accompanying prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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Per
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Note
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Total
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Public Offering Price
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%
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$
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Underwriting Discount
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%
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$
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Proceeds to PepsiAmericas (before
expenses)
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%
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$
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Interest on the Notes will accrue
from ,
2007 to date of delivery.
The underwriters expect to deliver the Notes to purchasers
through the book-entry facilities of The Depository
Trust Company for the accounts of its participants,
including Euroclear Bank S.A./N.V., as operator of the Euroclear
System, and Clearstream Banking, société anonyme, on
or
about ,
2007.
Joint Book-Running Managers
,
2007.
You should rely only on the information contained in this
document or to which we have referred you. We have not, and the
underwriters have not, authorized anyone to provide you with
additional or different information. This document may only be
used where it is legal to offer and sell these securities. The
information in this document may only be accurate as of the date
of this document.
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-2
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S-3
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S-4
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S-4
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S-13
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S-18
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S-20
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Prospectus
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ABOUT
THIS PROSPECTUS SUPPLEMENT
We are using this prospectus supplement, together with the
accompanying prospectus, to offer the Notes. This prospectus
supplement sets forth certain terms of the Notes. It supplements
the description of the debt securities contained in the
accompanying prospectus. If information in this prospectus
supplement is inconsistent with that contained in the
accompanying prospectus, this prospectus supplement will apply
and will supersede any such information in the accompanying
prospectus.
It is important for you to read and consider all information
contained in this prospectus supplement and the accompanying
prospectus in making a decision to invest in the Notes. You
should also read and consider the information in the documents
we have referred you to in Where You Can Find More
Information on page 3 of the accompanying prospectus.
References in this prospectus supplement to
PepsiAmericas, we, us and
our are to PepsiAmericas, Inc. and its subsidiaries
unless the context otherwise requires.
S-2
SUMMARY
TERMS OF THE NOTES
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Issuer: |
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PepsiAmericas, Inc. |
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Securities Offered: |
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We will issue $ aggregate
principal amount of % Notes
due . |
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Maturity: |
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, . |
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Interest Payment Dates: |
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We will pay interest on the Notes
on
and of
each year,
beginning ,
2008. |
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Interest Accrual: |
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The Notes will accrue interest from and including the date of
issuance to but excluding their stated maturity or date of
earlier redemption, computed on the basis of a
360-day year
consisting of twelve
30-day
months. |
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Optional Redemption: |
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At any time and from time to time we will have the option to
redeem some or all of the Notes at the Redemption Price (as
defined herein) plus accrued and unpaid interest. |
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Repurchase at the Option of Holders Upon a Change of Control: |
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If we experience a change of control triggering
event (which is defined in this prospectus supplement and
involves a change in control and related rating of the Notes
below investment grade), we may be required to offer to purchase
the Notes at a purchase price equal to 101% of the principal
amount, plus accrued and unpaid interest. |
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Sinking Fund: |
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The Notes are not entitled to any sinking fund. |
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Ranking: |
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The Notes will rank equal in priority with all of our existing
and future unsecured and unsubordinated indebtedness. |
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Use of Proceeds: |
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We intend to use the net proceeds of the sale of the Notes
primarily to fund the previously announced acquisition of an
interest in the juice company Sandora, LLC, which transaction is
subject to regulatory approval in Ukraine, to repay commercial
paper issued by us and for other general corporate purposes. |
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Trustee: |
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Wells Fargo Bank, National Association. |
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Denominations and Form: |
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We will issue the Notes in the form of one or more fully
registered global Notes registered in the name of the nominee of
The Depository Trust Company, or DTC. Beneficial interests
in the Notes will be represented through book-entry accounts of
financial institutions acting on behalf of beneficial owners as
direct and indirect participants in DTC. Clearstream Banking,
société anonyme and Euroclear Bank, S.A./ N.V., as
operator of the Euroclear System, will hold interests on behalf
of their participants through their respective U.S.
depositaries, which in turn will hold such interests in accounts
as participants of DTC. Except in the limited circumstances
described in this prospectus supplement, owners of beneficial
interests in the Notes will not be entitled to have Notes
registered in their names, will not receive or be entitled to
receive Notes in definitive form and will not be considered
holders of Notes under the indenture. The Notes will be issued
only in denominations of $2,000 and integral multiples of $1,000
in excess thereof. |
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Further Issues: |
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We may create and issue further notes of each series ranking
equally and ratably with the notes of such series in all
respects, so that such further notes shall be consolidated and
form a single series with the notes of such series. |
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Governing Law: |
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Minnesota |
S-3
USE OF
PROCEEDS
We estimate that we will receive approximately
$ from the sale of the Notes,
after deducting the underwriting discount and our offering
expenses. We expect to use the net proceeds primarily to fund
the previously announced acquisition of an interest in the juice
company Sandora, LLC, which transaction is subject to regulatory
approval in Ukraine, to repay commercial paper issued by us with
a weighted average maturity of less than 30 days and an
average interest rate of 5.3% per year, and for other general
corporate purposes. We reserve the right to otherwise fund the
above-referenced acquisition and, if such acquisition does not
receive regulatory approval, to use the net proceeds for the
repayment of commercial paper and for other general corporate
purposes. Pending application of the proceeds of the sale of the
Notes, we intend to invest such proceeds in short-term
investments.
DESCRIPTION
OF THE NOTES
General
The Notes will be issued as a single series of debt securities
under the Indenture referred to in the accompanying prospectus
between PepsiAmericas and Wells Fargo Bank, National
Association, as trustee, and are limited initially to an
aggregate initial offering price not to exceed
$ . We may, without notice to or
the consent of any of the holders of the Notes, create and issue
additional debt securities so that those additional debt
securities will form a single series with the Notes. The Notes
will be governed by Minnesota law. For a description of the
rights attaching to different series of our debt securities
(including the Notes offered hereby) under the Indenture, see
Description of the Debt Securities starting on
page 8 of the accompanying prospectus.
The stated maturity of the Notes
is , .
We will issue the Notes only in fully registered form in minimum
denominations of $2,000 and integral multiples of $1,000 in
excess thereof.
The Notes will initially be represented by book-entry Notes.
Payments of principal of, and any premium and interest on, the
Notes will be made to the depositary, or its nominee, as the
holder thereof, in accordance with arrangements then in effect
between the trustee and the depositary. See
Book-Entry Only Issuance below.
The Notes will be denominated in U.S. dollars and payments
of principal of, and any premium and interest on, the Notes will
be made in U.S. dollars in the manner specified in this
prospectus supplement and the accompanying prospectus.
The Notes are unsecured and will not be subject to any sinking
fund or analogous provisions.
Interest
Each Note will bear interest semiannually in arrears from and
including its date of issue, or from and including the most
recent Interest Payment Date with respect to which interest on
such Note has been paid or duly provided for, to but excluding
the relevant Interest Payment Date or stated maturity or earlier
Redemption Date, as the case may be, at the rate
of % per year until the principal
thereof is paid or made available for payment. The
Interest Payment Dates with respect to the Notes
will
be
and
of each year,
beginning ,
2008. Interest will be computed on the basis of a
360-day year
of twelve
30-day
months.
Interest on an Interest Payment Date will be payable to the
person in whose name a Note is registered at the close of
business on the immediately
preceding
or (whether
or not a Business Day), as the case may be (each, a Record
Date). Interest on a Redemption Date other than an
Interest Payment Date will be payable against presentation and
surrender of the Notes.
S-4
If any Interest Payment Date, any Redemption Date or the
stated maturity of a Note falls on a day that is not a Business
Day, the related payment of principal, premium, if any, or
interest will be made on the next succeeding Business Day and
will be treated as if made on the date such payment was due, and
no interest will accrue on the amount so payable for the period
from and after such Interest Payment Date, Redemption Date
or the stated maturity, as the case may be.
Business Day means any day other than a Saturday or
Sunday and other than a day on which banking institutions in New
York, New York or Minneapolis, Minnesota are authorized or
obligated by law or executive order to close.
Optional
Redemption
The Notes will be subject to redemption at our option, at any
time in whole or from time to time in part, upon not fewer than
30 nor more than 60 days prior written notice to the
holders thereof, at the Redemption Price, together with
unpaid interest accrued to the Redemption Date. We will,
however, pay the interest installment due on any Interest
Payment Date that occurs on or before a Redemption Date to
the holders of the Notes as of the close of business on the
Record Date immediately preceding such Interest Payment Date. If
less than the entire principal amount of a Note is redeemed, the
principal amount of such Note that remains outstanding after
such redemption must be an authorized denomination (which shall
not be less than the minimum authorized denomination) for the
Notes. The Redemption Price for any Note being
redeemed equals the greater of:
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100% of the principal amount of such Note being redeemed; and
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as determined by an Independent Investment Banker, the sum of
the present values of the remaining scheduled payments of
principal and interest on such Note from the
Redemption Date (exclusive of interest payable on such
Redemption Date) through the stated maturity date,
discounted to the Redemption Date on a semiannual basis
(assuming a
360-day year
consisting of twelve
30-day
months) at the Treasury Rate
plus %.
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Comparable Treasury Issue means the United States
Treasury security selected by an Independent Investment Banker
as having a maturity comparable to the remaining term of the
Notes to be redeemed that would be used, at the time of
selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Notes to be redeemed.
Comparable Treasury Price means, with respect to any
Redemption Date, (i) the arithmetic average of at
least three Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations or (ii) if fewer
than five Reference Treasury Dealer Quotations are obtained, the
arithmetic mean of all such obtained Reference Treasury Dealer
Quotations.
Independent Investment Banker means one of the
Redemption Treasury Dealers.
Redemption Date means the date or dates
specified by us for the redemption of the Notes pursuant to our
optional redemption right.
Redemption Treasury Dealer means Citigroup
Global Markets Inc. and Morgan Stanley & Co.
Incorporated and their respective successors, and three other
firms that are primary U.S. government securities dealers
(each a Primary Treasury Dealer) which we specify
after consultation with the Independent Investment Banker. If
any of the Redemption Treasury Dealers ceases to be a
Primary Treasury Dealer, we will substitute another Primary
Treasury Dealer.
Reference Treasury Dealer Quotations means, with
respect to each Redemption Treasury Dealer and any
Redemption Date, the arithmetic average, as determined by
the trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the trustee by such
Redemption Treasury Dealer at 5:00 p.m. (New York City
time) on the third Business Day before such Redemption Date.
S-5
Treasury Rate means, with respect to any
Redemption Date, (i) the yield, under the heading
which represents the average for the week immediately prior to
the third Business Day before such Redemption Date,
appearing in the most recently published statistical release
designated H.15(519) or any successor publication which is
published weekly by the Federal Reserve and which establishes
yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption Treasury
Constant Maturities, for the maturity corresponding to the
remaining term of the Notes to be redeemed (if no maturity is
within three months before or after such remaining term, yields
for the two published maturities most closely corresponding to
such remaining term shall be determined and the Treasury Rate
shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding to the nearest month) or
(ii) if such release (or any successor release) is not
published during the week preceding the third Business Day
before such Redemption Date or does not contain such
yields, the rate per annum equal to the semiannual equivalent
yield to maturity of the Comparable Treasury Issue for the Notes
to be redeemed, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such
Redemption Date.
If we have given notice as provided in the Indenture and made
funds available for the redemption of any Notes called for
redemption on the Redemption Date referred to in that
notice, those Notes will cease to bear interest on that
Redemption Date and the only right of the holders of those
Notes will be to receive payment of the Redemption Price
plus accrued and unpaid interest to the Redemption Date.
If we choose to redeem less than all of the Notes, we will
notify the trustee in writing at least 45 days before
giving notice of redemption, or such shorter period as may be
satisfactory to the trustee, of the aggregate principal amount
of the Notes to be redeemed and the applicable
Redemption Date. The trustee will select, in the manner it
deems fair and appropriate, the Notes to be redeemed in part. In
the case of a Global Note, the trustee will send the redemption
notice to DTCs nominee, Cede & Co., and DTC will
reduce its direct participants holding of the Notes on a
basis that is consistent with its then current procedures.
Repurchase
at the Option of Holders Upon a Change of Control
If a Change of Control Triggering Event occurs, unless we have
exercised our right to redeem the Notes as described above,
holders of Notes will have the right to require us to repurchase
all or any part (equal to $2,000 or an integral multiple of
$1,000 in excess thereof) of their Notes pursuant to the offer
described below (the Change of Control Offer) on the
terms set forth in the Notes. In the Change of Control Offer, we
will be required to offer payment in cash equal to 101% of the
aggregate principal amount of Notes repurchased plus accrued and
unpaid interest, if any, on the Notes repurchased, to the date
of purchase (the Change of Control Payment). Within
30 days following any Change of Control Triggering Event,
we 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 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
Notes and described in such notice.
We 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 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 Notes, we
will be required to comply with the applicable securities laws
and regulations and will not be deemed to have breached our
obligations under the Change of Control provisions of the Notes
by virtue of such conflicts.
On the Change of Control Payment Date, we will be required, to
the extent lawful, to:
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accept for payment all Notes or portions of 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 Notes or portions of Notes
properly tendered; and
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deliver or cause to be delivered to the trustee the Notes
properly accepted together with an officers certificate
stating the aggregate principal amount of Notes or portions of
Notes being purchased.
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The definition of Change of Control includes a phrase relating
to the direct or indirect sale, transfer, conveyance or other
disposition of all or substantially all of our and
our subsidiaries properties or assets taken as a whole.
Although there is a limited body of case law interpreting the
phrase substantially all, there is no precise
established definition of the phrase under applicable law.
Accordingly, the ability of a holder of Notes to require us to
repurchase its Notes as a result of a sale, transfer, conveyance
or other disposition of less than all of our and our
subsidiaries assets taken as a whole to another Person may
be uncertain.
Below Investment Grade Rating Event means a decrease
in the ratings of the Notes below an Investment Grade Rating by
the Rating Agencies 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 the public notice of the occurrence of the
Change of Control (which period shall be extended so long as the
rating of the Notes is under publicly announced consideration
for possible downgrade by any of the Rating Agencies); provided
that a Below Investment Grade Rating Event otherwise arising by
virtue of a particular reduction in rating shall not be deemed
to have occurred in respect of a particular Change of Control
(and thus shall not be deemed a Below Investment Grade Rating
Event for purposes of the definition of Change of Control
Triggering Event) if the Rating Agencies making the reduction in
rating to which this definition would otherwise apply do not
announce or publicly confirm or inform the trustee in writing at
our request that the reduction was the result, in whole or in
part, of any event or circumstance comprised of or arising as a
result of, or in respect of, the applicable Change of Control
(whether or not the applicable Change of Control shall have
occurred at the time of the Below Investment Grade Rating Event).
Change of Control means the occurrence of either 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
PepsiAmericas and its subsidiaries taken as a whole to any
Person other than PepsiAmericas or PepsiCo, Inc. or one or more
of their respective subsidiaries; or (2) the consummation
of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any Person (other
than PepsiCo, Inc. or one or more of its subsidiaries) becomes
the beneficial owner, directly or indirectly, of more than 50%
of the then outstanding number of shares of PepsiAmericas
voting stock.
Change of Control Triggering Event means the
occurrence of both a Change of Control and a Below Investment
Grade Rating Event.
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.
Person has the meaning set forth in the indenture
and includes a person as used in
Section 13(d)(3) of the Exchange Act.
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 Notes or fails to
make a rating of the Notes publicly available for reasons
outside of our control, a nationally recognized
statistical rating organization within the meaning of
Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act, selected by us 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.
S-7
Repurchase
We may at any time purchase Notes at any price in the open
market or otherwise. We may, at our discretion, hold, resell or
surrender to the trustee for cancellation any Notes that we
purchase.
Sinking
Fund
The Notes are not entitled to any sinking fund.
Book-Entry
Only Issuance
All interests in the Notes will be subject to the operations and
procedures of The Depository Trust Company
(DTC), Euroclear Bank S.A./N.V.
(Euroclear) and Clearstream Banking,
société anonyme (Clearstream). Holders of
the Notes may hold their Notes through DTC (in the United
States) or Clearstream or Euroclear (in Europe) if they are
participants of such systems, or directly through organizations
that are participants in such systems.
DTC will act as the initial securities depositary for the Notes.
The Notes will be initially issued as fully registered
securities registered in the name of Cede & Co.,
DTCs nominee. Fully registered global certificates
representing the aggregate principal amount of the Notes will be
issued and will be deposited with, or on behalf of, DTC
(Global Note).
Clearstream and Euroclear may hold omnibus positions on behalf
of their participants through customers securities
accounts in Clearstreams
and/or
Euroclears names on the books of their respective
U.S. depositaries, which, in turn, hold such positions in
customers securities accounts in the
U.S. depositaries names on the books of DTC.
Citibank, N.A. acts as the U.S. depositary for Clearstream
and JPMorgan Chase Bank, N.A., an affiliate of one of the
underwriters, acts as the U.S. depositary for Euroclear
(each, a U.S. Depositary and, collectively, the
U.S. Depositaries).
Purchases of Notes within the DTC system must be made by or
through direct participants, which will receive a credit for
those Notes on DTCs records. The ownership interest of
each beneficial owner of Notes will be recorded on the direct
and indirect participants records. Beneficial owners will
not receive written confirmation from DTC of their purchases,
but beneficial owners are expected to receive written
confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the direct or
indirect participants through which the beneficial owners
entered into the transaction. Transfers of ownership interests
in the Notes are to be accomplished by entries made on the books
of participants acting on behalf of beneficial owners.
To facilitate subsequent transfers, all Notes deposited by
participants with DTC are registered in the name of DTCs
nominee, Cede & Co. The deposit of Notes with DTC and
their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the
actual beneficial owners of the Notes. DTCs records
reflect only the identity of the direct participants to whose
accounts such Notes are credited, which may or may not be the
beneficial owners. The participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants,
and by direct and indirect participants to beneficial owners
will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from
time to time.
We will make payments due on the Notes to Cede & Co.,
as nominee of DTC, in immediately available funds. DTCs
practice is to credit direct participants accounts, upon
DTCs receipt of funds and corresponding detailed
information, on the relevant payment date in accordance with
their respective holdings shown on DTCs records. Payments
by participants to beneficial owners will be governed by
standing instructions and customary practices, as is the case
with securities held for the account of customers in bearer form
or registered in street name, and will be the
responsibility of such participant and not our responsibility or
the responsibility of DTC, subject to any statutory or
regulatory requirements as may be in effect from time
S-8
to time. Payment to Cede & Co. is our responsibility
or the responsibility of the paying agent. Disbursement of such
payments to direct participants is the responsibility of
Cede & Co. Disbursement of such payments to the
beneficial owners is the responsibility of direct and indirect
participants.
Except as provided herein, a beneficial owner of an interest in
a Global Note will not be entitled to receive physical delivery
of Notes. Accordingly, each beneficial owner must rely on the
procedures of DTC to exercise any rights under the Notes. The
laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive
form. Such laws may impair the ability to transfer beneficial
interests in a Global Note.
As long as the depositary, or its nominee, is the registered
holder of a Global Note, the depositary or such nominee will be
considered the sole owner and holder of the Notes represented
thereby for all purposes under those Notes and the Indenture.
Except in the limited circumstances referred to below, owners of
beneficial interests in a Global Note will not be entitled to
have such Global Note or any Notes represented thereby
registered in their names, will not receive or be entitled to
receive physical delivery of certificated Notes in exchange for
the Global Note and will not be considered to be the owners or
holders of such Global Note or any Notes represented thereby for
any purpose under those Notes or the Indenture. Accordingly,
each person owning a beneficial interest in such Global Note
must rely on the procedures of the depositary and, if such
person is not a participant, on the procedures of the
participant through which such person owns its interest to
exercise any rights of a holder under the Indenture.
The Indenture provides that the depositary, as a holder, may
appoint agents and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice,
consent, waiver, or other action which a holder is entitled to
give or take under the Indenture. We understand that, under
existing industry practices, in the event that we request any
action of holders or an owner of a beneficial interest in a
Global Note desires to give or take any action that a holder is
entitled to give or take under the Indenture, the depositary
would authorize the participants holding the relevant beneficial
interests to give or take such action, and such participants
would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Neither we nor any underwriter gives any assurance that DTC,
Clearstream or Euroclear or any of their respective participants
will distribute to the beneficial owners of the Notes:
(i) payments of principal, premium, if any, and interest
payments with respect to the Notes; (ii) confirmation of
ownership interest in the Notes; or (iii) notices sent to
DTC or Cede & Co., its nominee, as the registered
owner of the Notes, or that they will do so on a timely basis,
or that any of DTC, Clearstream or Euroclear or any of their
respective participants will serve and act in the manner
described in this prospectus supplement.
Neither we nor any underwriter will have any responsibility or
obligations to any of DTC, Clearstream or Euroclear or any of
their respective participants or the beneficial owners of the
Notes with respect to: (i) the accuracy of any records
maintained by DTC, Clearstream or Euroclear or any of their
respective participants; (ii) the payment by DTC,
Clearstream or Euroclear or any of their respective participants
of any amount due to any beneficial owner of the Notes in
respect of principal, premium, if any, and interest payments on
the Notes; (iii) the delivery by DTC, Clearstream or
Euroclear or any of their respective participants of any notice
to any beneficial owner of the Notes that is required or
permitted to be given to owners under the terms of the Notes; or
(iv) any consent given or other action taken by DTC as
registered holder of the Notes.
DTC has advised us and the underwriters that it is a
limited-purpose trust company organized under the New York
Banking Law, a banking organization within the
meaning of the New York Banking Law, 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 pursuant to the
provisions of Section 17A of the Exchange Act. DTC was
created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions, such as
transfers and pledges, among its participants in such securities
through electronic computerized 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 own DTC. Access to
DTCs book-entry system is also available to others, such
as banks,
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brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either
directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Clearstream has advised us and the underwriters as follows:
Clearstream holds securities for its participants and
facilitates the clearance and settlement of securities
transactions between its participants through electronic
book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates.
Transactions may be settled by Clearstream in any of 36
currencies, including U.S. dollars. Clearstream provides to
its participants, among other things, services for safekeeping,
administration, clearance and settlement of internationally
traded securities and securities lending and borrowing.
Clearstream also deals with domestic securities markets in over
30 countries through established depository and custodial
relationships.
Clearstream is registered as a bank in Luxembourg, and as such
is subject to regulation by the Commission de Surveillance du
Secteur Financier, and the Banque Centrale du Luxembourg, which
supervise and oversee the activities of Luxembourg banks.
Clearstream participants are world-wide financial institutions,
including securities brokers and dealers, banks, trust companies
and clearing corporations, and may include the underwriters.
Clearstreams U.S. participants are limited to
securities brokers and dealers and banks. Currently, Clearstream
has approximately 2,000 participants located in over 80
countries, including all major European countries, Canada, and
the United States. Indirect access to Clearstream is available
to other institutions that clear through or maintain a custodial
relationship with an account holder of Clearstream. Clearstream
has established an electronic bridge with Euroclear as the
operator of the Euroclear System (the Euroclear
Operator) in Brussels to facilitate settlement of trades
between Clearstream and the Euroclear Operator.
Euroclear has advised us and the underwriters as follows:
Euroclear holds securities and book-entry interests in
securities for participating organizations and facilitates the
clearance and settlement of securities transactions between its
participants, and between its participants and participants of
certain other securities intermediaries through electronic
book-entry changes in accounts of such participants or other
securities intermediaries. Euroclear provides its participants,
among other things, with safekeeping, administration, clearance
and settlement, securities lending and borrowing, and related
services. Euroclear participants are investment banks,
securities brokers and dealers, banks, central banks,
supranationals, custodians, investment managers, corporations,
trust companies and certain other organizations and may include
the underwriters. Non-participants in the Euroclear System may
hold and transfer book-entry interests in securities through
accounts with a participant in the Euroclear System or any other
securities intermediary that holds a book-entry interest in the
securities through one or more securities intermediaries
standing between such other securities intermediary and
Euroclear.
Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions
Governing Use of Euroclear and the related Operating Procedures
of the Euroclear System, and applicable Belgian law
(collectively, the Terms and Conditions). The terms
and Conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear and
receipts of payments with respect to securities in Euroclear.
All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Terms
and Conditions only on behalf of Euroclears participants,
and has no record of or relationship with persons holding
through Euroclears participants.
Investors electing to acquire Notes through an account with
Euroclear or some other securities intermediary must follow the
settlement procedures of such an intermediary with respect to
the settlement of the Notes. Notes to be acquired against
payment through an account with Euroclear will be credited to
the securities clearance accounts of the respective Euroclear
participants in the securities processing cycle for the business
day following the settlement date for value as of the settlement
date, if against payment.
Investors electing to acquire, hold or transfer Notes through an
account with Euroclear or some other securities intermediary
must follow the settlement procedures of such an intermediary
with respect to the settlement of secondary market transactions
in the Notes.
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Investors who are participants in the Euroclear System may
acquire, hold or transfer interests in the Notes by book-entry
to accounts with Euroclear. Investors who are not participants
in the Euroclear System may acquire, hold or transfer interests
in the Notes by book-entry to accounts with a securities
intermediary who holds a book-entry interest in the Notes
through accounts with Euroclear.
Investors that acquire, hold and transfer interests in the Notes
by book-entry through accounts with Euroclear or any other
securities intermediary are subject to the laws and contractual
provisions governing their relationship with their intermediary,
as well as the laws and contractual provisions governing the
relationship between such an intermediary and each other
intermediary, if any, standing between themselves and the
individual Notes.
Under Belgian law, investors that are credited with securities
on the records of Euroclear have a
co-property
right in the fungible pool of interests in securities on deposit
with Euroclear in an amount equal to the amount of interests in
securities credited to their accounts. In the event of the
insolvency of Euroclear, Euroclears participants would
have a right under Belgian law to the return of the amount and
type of interests in securities credited to their accounts with
Euroclear. If Euroclear did not have a sufficient amount of
interests in securities on deposit of a particular type to cover
the claims of all participants credited with such interests in
securities on Euroclears records, all participants having
an amount of interests in securities of such type credited to
their accounts with Euroclear would have the right under Belgian
law to the return of their pro-rata share of the amount of
interests in securities actually on deposit.
Under Belgian law, Euroclear is required to pass on the benefits
of ownership in any interests in securities on deposit with it
(such as dividends, voting rights and other entitlements) to any
person credited with such interests in securities on its records.
Investors electing to hold their Notes through Euroclear or
Clearstream accounts will follow the settlement procedures
applicable to conventional EuroBonds in registered form. Notes
will be credited to the securities custody accounts of Euroclear
and Clearstream holders on the business day following the
settlement date against payment for value on the settlement date.
Distributions with respect to the Notes held beneficially
through Clearstream will be credited to the cash accounts of its
participants in accordance with its rules and procedures, to the
extent received by its U.S. Depositary. Distributions with
respect to the Notes held beneficially through Euroclear will be
credited to the cash accounts of its participants in accordance
with the Terms and Conditions, to the extent received by its
U.S. Depositary. Such distributions will be subject to tax
reporting in accordance with relevant U.S. tax laws and
regulations.
Clearstream or the Euroclear Operator, as the case may be, will
take any other action permitted to be taken by an owner of the
Notes on behalf of a Clearstream participant or Euroclear
participant only in accordance with the relevant rules and
procedures and subject to the U.S. Depositarys
ability to effect such actions on its behalf through DTC.
Secondary market trading between DTCs participants (other
than the U.S. Depositaries) will be settled using the
procedures applicable to U.S. corporate debt obligations in
same-day
funds. Secondary market trading between Euroclears
participants
and/or
Clearstreams participants will be settled using the
procedures applicable to conventional EuroBonds in
same-day
funds.
When Notes are to be transferred from the accounts of a DTC
participant (other than U.S. Depositaries) to the account
of a Euroclear participant or a Clearstream participant, the
purchaser must send instructions to the applicable
U.S. Depositary one business day before the settlement
date. Euroclear or Clearstream, as the case may be, will
instruct its U.S. Depositary to receive the Notes against
payment. Its U.S. Depositary will then make payment to the
DTC participants account against delivery of the Notes.
After settlement has been completed, the Notes will be credited
to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Euroclear
participants or Clearstream participants account.
Credit for the Notes will appear on the next day (European time)
and cash debit will be back-valued to, and the interest on the
Notes will accrue, from the value date (which would be the
preceding day when settlement
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occurs in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Euroclear or
Clearstream cash debit will be valued instead as of the actual
settlement date.
Euroclear and Clearstream participants will need to make
available to the respective clearing systems the funds necessary
to process
same-day
funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or
existing lines of credit, as they would for any settlement
occurring within Euroclear or Clearstream. Under this approach,
they may take on credit exposure to Euroclear or Clearstream
until the Notes are credited to their accounts one day later.
As an alternative, if Euroclear or Clearstream has extended a
line of credit to them, participants/customers can elect not to
pre-position funds and allow that credit line to be drawn upon
to finance settlement. Under this procedure, Euroclear or
Clearstream participants purchasing Notes would incur overdraft
charges for one day, assuming they cleared the overdraft when
the securities were credited to their accounts. However,
interest on the Notes would accrue from the value date.
Therefore, in many cases, the investment income on Notes earned
during that one day period may substantially reduce or offset
the amount of such overdraft charges, although this result will
depend on each participants/customers particular
cost of funds.
Because the settlement is taking place during New York business
hours, DTCs participants can employ their usual procedures
for sending securities to the applicable U.S. Depositary
for the benefit of the applicable Euroclear or Clearstream
participant. The sale proceeds will be available to the DTC
seller on the settlement date. Thus, to a DTC participant, a
cross-market transaction will settle no differently from a trade
between two DTC participants.
Due to time zone differences in their favor, Euroclear and
Clearstream participants may employ their customary procedure
for transactions in which securities are to be transferred by
the respective clearing system, through the applicable
U.S. Depositary to another DTC participant. In these cases,
Euroclear or Clearstream will instruct its U.S. Depositary
to credit the securities to the DTC participants account
against payment. The payment will then be reflected in the
account of the Euroclear or Clearstream participant the
following business day, and receipt of the cash proceeds in the
Euroclear or Clearstream participants account will be
back-valued to the value date (which would be the preceding day,
when settlement occurs in New York). If the Euroclear or
Clearstream participant has a line of credit with its respective
clearing system and elects to draw on such line of credit in
anticipation of receipt of the sale proceeds in its account, the
back-valuation may substantially reduce or offset any overdraft
charges incurred over that
one-day
period. If settlement is not completed on the intended value
date (i.e., the trade fails), receipt of the cash proceeds in
the Euroclear or Clearstream participants account would
instead be valued as of the actual settlement date.
Book-entry Notes represented by a Global Note can be exchanged
for definitive Notes in registered form only if:
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DTC notifies us that it is unwilling or unable to continue as
depositary for such Global Note and we do not appoint a
successor depositary within 90 days after receiving that
notice;
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at any time DTC ceases to be a clearing agency registered under
the Exchange Act and we do not appoint a successor depositary
within 90 days after becoming aware that DTC has ceased to
be registered as a clearing agency;
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we in our sole discretion determine such Global Note will be
exchangeable for definitive Notes in registered form and notify
the trustee of our decision; or
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an event of default with respect to the Notes represented by the
Global Note has occurred and is continuing and beneficial owners
representing a majority in principal amount of the Notes advise
DTC to cease acting as depositary for such Notes.
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Such book-entry Notes will be exchanged for definitive Notes
issued in minimum denominations of $2,000 and integral multiples
of $1,000 in excess of that amount in registered form for the
same aggregate principal amount. The definitive Notes will be
registered in the names of the owners of the beneficial
interests in the Global Note as directed by DTC.
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The information in this section concerning DTC, Euroclear and
Clearstream and their respective book-entry systems has been
obtained from sources that we believe to be reliable, but
neither we nor any underwriter takes any responsibility for its
accuracy or completeness. We assume no responsibility for the
performance by DTC, Euroclear or Clearstream or any of their
respective participants of their respective obligations,
including obligations that they have under the rules and
procedures that govern their operation, and the procedures
specified above may be changed or discontinued without notice.
UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the principal United States
federal income tax consequences of the purchase, ownership and
disposition of Notes to beneficial owners thereof. This summary
is based on the Internal Revenue Code of 1986, as amended (the
Code), legislative history, administrative
pronouncements, judicial decisions and final, temporary and
proposed Treasury regulations, changes to any of which
subsequent to the date of this prospectus supplement may affect
the tax consequences described herein. Any such change may apply
retroactively.
This summary discusses only the principal United States federal
income tax consequences to beneficial owners holding Notes as
capital assets. It does not address all of the tax consequences
that may be relevant to a beneficial owner in light of the
beneficial owners particular circumstances or to
beneficial owners subject to special rules (including pension
plans and other tax-exempt investors, banks, thrifts, insurance
companies, real estate investment trusts, regulated investment
companies, dealers in securities, currencies and persons so
treated for United States federal income tax purposes, persons
whose functional currency is other than the United States
dollar, and persons who hold Notes as part of a straddle,
hedging or conversion transaction).
You should consult your tax advisors with regard to the
application of United States federal income tax laws to your
particular situation as well as any tax consequences to you
arising under the laws of any state, local or foreign taxing
jurisdiction.
As used below, United States Holder means a
beneficial owner of a Note who or which is, for
United States federal income tax purposes, (i) a
citizen or resident of the United States for United States
federal income tax purposes, including an alien individual who
is a lawful permanent resident of the United States or
meets the substantial presence test prescribed under
the Code, (ii) a corporation or partnership (including any
entity treated as a corporation or partnership for United States
federal income tax purposes) that is created or organized in or
under the laws of the United States, any state thereof or the
District of Columbia unless, in the case of a partnership,
United States Treasury regulations provide otherwise,
(iii) an estate taxed by the United States without regard
to its source of income or (iv) a trust, if the trust has
validly elected to be treated as a United States person for
United States federal income tax purposes or if (a) a court
within the United States can exercise primary supervision over
its administration and (b) one or more United States
persons have authority to control all of its substantial
decisions. The term also includes certain beneficial owners who
are former citizens and residents of the United States whose
income and gain from the Notes will be subject to United States
taxation.
Taxation
of Interest
The interest on the Notes is qualified stated
interest includible in a United States Holders
income as ordinary income when actually or constructively
received (if such United States Holder uses the cash method of
accounting for United States federal income tax purposes) or
when accrued (if such United States Holder uses an accrual
method of accounting for United States federal income tax
purposes).
Market
Discount
If a United States Holder acquires a Note after its original
issue for a purchase price that is less than its adjusted issue
price (i.e., the stated principal amount of the Note less any
principal payments thereon), the amount of such difference is
treated as market discount for United States federal
income tax purposes,
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unless such difference is less than 1/4 of one percent of
the stated redemption price at maturity multiplied by the number
of complete years to maturity from the date of acquisition.
Under the market discount rules of the Code, a United States
Holder is required to treat any principal payment on, or any
gain on the sale, exchange, retirement or other disposition of,
a Note as ordinary income to the extent of the accrued market
discount that has not previously been included in income. Thus,
partial principal payments are treated as ordinary income to the
extent of accrued market discount that has not previously been
included in income. If the United States Holder disposes of the
Note in certain otherwise nontaxable transactions, the United
States Holder includes as ordinary income any accrued market
discount as if such United States Holder had sold the Note at
its then fair market value.
In general, the amount of market discount that has accrued is
determined on a ratable basis. A United States Holder may,
however, elect to determine the amount of accrued market
discount on a constant yield to maturity basis. This election is
made on a
note-by-note
basis and is irrevocable.
A United States Holder may not be allowed to deduct immediately
a portion of the interest expense on any indebtedness incurred
or continued to purchase or to carry Notes with market discount.
A United States Holder may elect to include market discount in
income currently as it accrues, in which case the interest
deferral rule set forth in the preceding sentence will not
apply. Such an election will apply to all debt instruments
acquired by the United States Holder on or after the first day
of the first taxable year to which such election applies and is
irrevocable without the consent of the Internal Revenue Service
(the IRS). A United States Holders tax basis
in a Note will be increased by the amount of market discount
included in such United States Holders income under such
an election.
Amortizable
Bond Premium
If a United States Holder purchases a Note for an amount in
excess of the sum of all amounts payable on the Note after the
date of acquisition (other than payments of qualified stated
interest), such Holder will be considered to have purchased such
Note with amortizable bond premium equal in amount
to such excess. Generally, a United States Holder may elect to
amortize such premium as an offset to qualified stated interest
income, using a constant yield method similar to that described
below (see Election to Treat All Interest as
Original Issue Discount), over the remaining term of the
Note. A United States Holder that elects to amortize bond
premium must reduce its tax basis in the Note by the amount of
the premium used to offset qualified stated interest income as
set forth above. An election to amortize bond premium applies to
all taxable debt obligations held during or after the taxable
year for which the election is made and may be revoked only with
the consent of the IRS.
Election
to Treat All Interest as Original Issue Discount
United States Holders may elect to include in gross income all
interest that accrues on a Note, including any stated interest,
acquisition discount, market discount, original issue discount,
de minimis original issue discount, de minimis market discount
and unstated interest (as adjusted by amortizable bond premium
and acquisition premium), by using the constant yield method
described below. In applying the constant yield method to a Note
with respect to which this election has been made, the issue
price of the Note will equal the electing United States
Holders adjusted basis in the Note immediately after its
acquisition, the issue date of the Note will be the date of its
acquisition by the electing United States Holder, and no
payments on the Note will be treated as payments of qualified
stated interest. This election will generally apply only to the
Note with respect to which it is made and may not be revoked
without the consent of the IRS. Such an election for a Note with
amortizable bond premium results in a deemed election to
amortize bond premium for all debt instruments owned and later
acquired by the United States Holder with amortizable bond
premium and may be revoked only with the permission of the IRS.
Similarly, such an election for a Note with market discount
results in a deemed election to accrue market discount in income
currently for such Note and for all other bonds acquired by the
United States Holder with market discount on or after the first
day of the taxable year to which such election first applies,
and may be revoked only with the permission of the IRS. A United
States
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Holders tax basis in a Note is increased by each accrual
of the amounts treated as original issue discount under the
constant yield election described in this paragraph.
The constant yield method is applied as follows. First, the
Notes yield to maturity is computed. The yield
to maturity is the discount rate that, when used in computing
the present value of all interest and principal payments to be
made under the Note (including payments of qualified stated
interest) produces an amount equal to the issue price of the
Note. The yield to maturity must be constant over the term of
the Note and, when expressed as a percentage, must be calculated
to at least two decimal places.
Second, the term of the Note is divided into accrual
periods. Accrual periods may be of any length and may vary
in length over the term of the Note, provided that each accrual
period is no longer than one year and that each scheduled
payment of principal or interest occurs either on the final day
of an accrual period or on the first day of an accrual period.
Third, the total amount of interest on the Note is allocated
among accrual periods. In general, the interest allocable to an
accrual period equals the product of the adjusted issue
price of the Note at the beginning of the accrual period
and the yield to maturity of the Note, less the amount of any
qualified stated interest allocable to the accrual period. The
adjusted issue price of a Note at the beginning of the first
accrual period is its issue price. Thereafter, the adjusted
issue price of the Note is its issue price, increased by the
amount of interest previously includible in the gross income of
any beneficial owner and decreased by the amount of any payment
previously made on the Note other than a payment of qualified
stated interest.
Fourth, the daily portions of interest are
determined by allocating to each day in an accrual period its
ratable portion of the interest allocable to the accrual period.
A United States Holder includes in income in any taxable year
the daily portions of interest for each day during the taxable
year that such United States Holder held the Notes. Under the
constant yield method described above, United States Holders
generally are required to include in income increasingly greater
amounts of interest in successive accrual periods.
Sale,
Exchange or Redemption of Notes
A United States Holder generally recognizes gain or loss upon
the sale, exchange or redemption of a Note equal to the
difference between the amount realized upon such sale, exchange
or redemption and the United States Holders adjusted tax
basis in the Note. Such adjusted tax basis in the Note generally
equals the cost of the Note, increased by acquisition discount
or market discount previously included in the United States
Holders income in respect of the Note and the amount, if
any, of income attributable to de minimis original issue
discount and de minimis market discount included in the United
States Holders income in respect of the Note, and reduced
(but not below zero) by (i) any payments on the Note other
than payments of qualified stated interest and (ii) any
amortizable bond premium that the United States Holder has taken
into account. To the extent attributable to accrued but unpaid
qualified stated interest, the amount realized by the United
States Holder is treated as a payment of interest. Any gain or
loss recognized on the sale, exchange or redemption of a Note is
capital gain or loss, except as provided under
Market Discount above. The excess of net
long-term capital gains over net short-term capital losses is
taxed at a lower rate than ordinary income for certain
non-corporate taxpayers. The distinction between capital gain or
loss and ordinary income or loss is also relevant for purposes
of, among other things, limitations on the deductibility of
capital losses.
Non-United
States Holders
Under current United States federal income tax law now in
effect, and subject to the discussion of backup withholding in
the following section, payments of principal and interest with
respect to a Note by PepsiAmericas or by any paying agent to any
beneficial owner of a Note that is not a United States Holder (a
non-United
States Holder) are not subject to withholding of United
States federal income tax, provided, in the case of interest,
that (i) such
non-United
States Holder does not actually or constructively own 10% or
more of the total combined voting power of all classes of
PepsiAmericas stock entitled to vote, (ii) such
non-United
States Holder is not for United States federal income tax
purposes a controlled foreign corporation
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related, directly or indirectly, to PepsiAmericas through stock
ownership, (iii) such
non-United
States Holder is not a bank receiving interest described in
Section 881(c)(3)(A) of the Code and (iv) either
(A) the beneficial owner of the Note certifies, under
penalties of perjury, to PepsiAmericas or paying agent, as the
case may be, that such owner is a
non-United
States Holder and provides such Holders name and address,
or (B) a securities clearing organization, bank or other
financial institution that holds customers securities in
the ordinary course of its trade or business (a financial
institution) and holds the Note, certifies, under
penalties of perjury, to PepsiAmericas or paying agent, as the
case may be, that such certificate has been received from the
beneficial owner by it or by a financial institution between it
and the beneficial owner and furnishes the payor with a copy
thereof. The foregoing certification may be provided by the
beneficial owner of a Note on IRS
Form W-8BEN
or on a similar form.
Form W-8BEN
is valid for a period starting on the date the form is signed
and ending the last day of the third calendar year following the
year the form is signed, unless a change in circumstances makes
any information in the form incorrect.
A withholding agent may rely on an intermediary withholding
certificate furnished by a qualified intermediary (as defined in
Treas. Reg. Sec. 1.1441-1) on behalf of one or more beneficial
owners (or other intermediaries) without having to obtain the
beneficial owner certificate described above. Qualified
intermediaries must obtain withholding certificates, such as IRS
Form W-8BEN,
from each beneficial owner.
For purposes of the certification requirements, the withholding
regulations generally treat, as the beneficial owners of
payments on a Note, those persons that, under general United
States federal income tax principles, are the actual taxpayers
with respect to such payments, rather than persons such as
nominees or agents legally entitled to such payments. In the
case of payments to an entity classified as a foreign
partnership under United Stated federal income tax principles,
the partners, rather than the partnership, generally will be
required to provide the required certifications to qualify for
the withholding exemption described above. A payment to a United
States partnership, however, is treated for these purposes as
payment to a United States payee, even if the partnership has
one or more foreign partners.
Notwithstanding the foregoing, interest described in
Section 871(h)(4) of the Code is subject to United States
withholding tax at a 30% rate (or such lower rate as may be
provided by an applicable treaty). In general, interest
described in Section 871(h)(4) of the Code includes
(subject to certain exceptions) any interest the amount of which
is determined by reference to receipts, sales or other cash flow
of the issuer or a related person, any income or profits of the
issuer or a related person, any change in the value of any
property of the issuer or a related person or any dividends,
partnership distribution or similar payments made by the issuer
or a related person. Interest described in
Section 871(h)(4) of the Code may include other types of
contingent interest identified by the IRS in future Treasury
regulations.
If a
non-United
States Holder is engaged in a trade or business in the United
States and interest on the Note is effectively connected with
the conduct of such trade or business, the
non-United
States Holder, although exempt from the withholding tax
discussed in the preceding paragraphs, is subject to United
States federal income tax on such interest in the same manner as
if it were a United States Holder. In lieu of the certificate
described above, such
non-United
States Holder must provide a properly executed IRS
Form W-8ECI
in order to claim an exemption from withholding tax. In
addition, if such
non-United
States Holder is a foreign corporation, it may be subject to a
branch profits tax equal to 30% (or such lower rate as may be
specified by an applicable treaty) of its effectively connected
earnings and profits for the taxable year, subject to
adjustments. For this purpose, interest on a Note is included in
the earnings and profits of such
non-United
States Holder if such interest is effectively connected with the
conduct by such
non-United
States Holder of a trade or business in the United States.
Generally, any gain or income (other than that attributable to
accrued interest, which is taxable in the manner described
above) realized upon the sale, exchange, retirement or other
disposition of a Note is not subject to United States federal
income tax unless (i) such gain or income is effectively
connected with a trade or business in the United States of the
non-United
States Holder or (ii) in the case of a
non-United
States Holder who is an individual, the
non-United
States Holder is present in the United States for 183 days
or more in the taxable year of such sale, exchange, retirement
or other disposition and either (A) such individual has a
S-16
tax home (as defined in Section 911(d)(3) of
the Code) in the United States or (B) the gain is
attributable to an office or other fixed place of business
maintained by such individual in the United States.
Estate
Tax
A Note held by an individual who at death is not a citizen or
resident of the United States will not be includible in the
individuals gross estate for purposes of the United States
federal estate tax as a result of the individuals death if
(i) the individual did not actually or constructively own
10 percent or more of the total combined voting power of
all classes of stock of PepsiAmericas entitled to vote,
(ii) the income on the Note would not have been effectively
connected with a United States trade or business of the
individual at the individuals death and
(iii) interest on the Note is not described in
Section 871(h)(4) of the Code.
Backup
Withholding And Information Reporting
United States Holders. In general, information reporting
requirements apply to interest and principal payments made to,
and to the proceeds of sales before maturity by, certain
non-corporate United States Holders. In addition, a 28% backup
withholding tax in 2006 and thereafter applies if (i) the
non-corporate United States Holder fails to furnish such
non-corporate United States Holders Taxpayer
Identification Number (TIN) (which, for an
individual, would be his or her Social Security Number) to the
payor in the manner required, (ii) the non-corporate United
States Holder furnishes an incorrect TIN and the payor is so
notified by the IRS, (iii) the payor is notified by the IRS
that such non-corporate United States Holder has failed properly
to report payments of interest and dividends or (iv) in
certain circumstances, the non-corporate United States Holder
fails to certify, under penalties of perjury, that it has not
been notified by the IRS that it is subject to backup
withholding for failure properly to report interest and dividend
payments. Backup withholding does not apply with respect to
payments made to certain exempt recipients, such as corporations
(within the meaning of Section 7701(a) of the Code) and
tax-exempt organizations.
Non-United States Holders. In the case of a
non-United
States Holder, under Treasury regulations, backup withholding
and information reporting will not apply to payments of
principal, premium and interest on a Note if such
non-United
States Holder provides the required certification to establish
an exemption from the withholding of United States federal
income tax or otherwise establishes an exemption. Similarly,
unless PepsiAmericas or its paying agent has actual knowledge
that the payee is a United States Holder, backup withholding
will not apply to (i) payments of interest made outside the
United States to certain offshore accounts and
(ii) payments on the sale, exchange, redemption, retirement
or other disposition of a Note effected outside the United
States. However, information reporting (but not backup
withholding) will apply to (i) payments of interest made by
a payor outside the United States and (ii) payments on the
sale, exchange, redemption, retirement or other disposition of a
Note effected outside the United States if payment is made by a
broker that is, for United States federal income tax purposes,
(A) a United States person, (B) a controlled foreign
corporation, (C) a United States branch of a foreign bank
or foreign insurance company, (D) a foreign partnership
controlled by United States persons or engaged in a United
States trade or business or (E) a foreign person 50% or
more of whose gross income is effectively connected with the
conduct of a United States trade or business for a specified
three-year period, unless such payor or broker has in its
records documentary evidence that the beneficial owner is not a
United States Holder and certain other conditions are met or the
beneficial owner otherwise establishes an exemption.
Backup withholding tax is not an additional tax. Rather, any
amounts withheld from a payment to a
non-United
States Holder under the backup withholding rules are allowed as
a refund or a credit against such
non-United
States Holders United States federal income tax, provided
that the required information is furnished to the IRS.
You should consult your own tax advisors regarding the
application of information reporting and backup withholding to
your particular situations, the availability of an exemption
therefrom, and the procedure for obtaining such an exemption, if
available.
S-17
UNDERWRITING
Citigroup Global Markets Inc. and Morgan Stanley & Co.
Incorporated are acting as joint book-running managers of the
offering of Notes and as representatives of the underwriters
named below. Subject to the terms and conditions stated in the
underwriting agreement
dated ,
2007, among us and the underwriters named below, we have agreed
to sell to each of the underwriters, and each of the
underwriters has severally agreed to purchase, the principal
amount of Notes set forth opposite the name of such underwriter.
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Principal
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Amount of
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Notes
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Citigroup Global Markets Inc.
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$
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Morgan Stanley & Co.
Incorporated
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Total
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$
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The underwriting agreement provides that the obligations of the
several underwriters to purchase the Notes included in this
offering are subject to approval of a number of legal matters by
counsel and to certain other conditions. The underwriters are
obligated to purchase all of the Notes if they purchase any of
the Notes.
The underwriters propose to offer the Notes directly to the
public initially at the public offering price set forth on the
cover page of this prospectus supplement and to certain dealers
at the public offering price less a concession not in excess
of % of the principal amount of the
Notes. The underwriters may allow, and such dealers may reallow,
a discount not in excess of % of
the principal amount of the Notes on sales to certain other
dealers. After the initial offering of the Notes to the public,
the public offering price and other selling terms may be changed
by the underwriters.
We estimate that we will incur approximately
$ in expenses in connection with
this offering.
We have agreed to indemnify the underwriters against certain
liabilities, including civil liabilities under the Securities
Act of 1933, or to contribute to payments which the underwriters
may be required to make in respect thereof.
The following table shows the underwriting discounts that we are
to pay to the underwriters in connection with this offering
expressed as a percentage of the principal amount of the Notes):
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Paid by
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PepsiAmericas
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Per Note
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%
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The Notes are a new issue of securities with no established
trading market. The Notes will not be listed on any securities
exchange or on any automated dealer quotation system. The
underwriters may make a market in the Notes, but will not be
obligated to do so and may discontinue any market-making
activities at any time without notice. No assurance can be given
that an active public market for the Notes will develop or, even
if one develops, will be maintained or be liquid. If an active
public trading market for the Notes does not develop, the market
price and liquidity of the Notes is likely to be adversely
affected.
The underwriters may engage in over-allotment, stabilizing and
syndicate covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act. Over-allotment
involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions
permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the Notes in the open
market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate
member when the Notes originally sold by such syndicate member
are
S-18
purchased in a syndicate covering transaction to cover syndicate
short positions. These transactions may cause the price of the
Notes to be higher than it would otherwise be in the absence of
such transactions. These transactions, if commenced, may be
discontinued at any time without notice.
The underwriters and their affiliates have provided, and in the
future may continue to provide, investment banking and other
commercial and advisory services to us in the ordinary course of
business for which they have received, and will receive,
customary compensation.
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 Notes
to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the 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 Notes to the public in
that Relevant Member State at any time:
(a) to legal entities
which are authorised or regulated to operate in the financial
markets or, if not so authorised or regulated, whose corporate
purpose is solely to invest in securities;
(b) to any legal entity
which has two or more of (1) an average of at least
250 employees during the last financial year; (2) a
total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts; or
(c) in any other
circumstances which do not require the publication by us of a
prospectus pursuant to Article 3 of the Prospectus
Directive.
For the purposes of this provision, the expression an
offer of Notes to the public in relation to any
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 Notes to be offered so as to enable an
investor to decide to purchase or subscribe the 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 also represented and agreed that:
(a)(i) 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 (ii) it has not offered or
sold and will not offer or sell the 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 Notes would otherwise constitute a
contravention of Section 19 of the Financial Services and
Markets Act 2000 (FSMA) by us;
(b) it has only
communicated or caused to be communicated and will only
communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning
of Section 21 of the FSMA) received by it in connection
with the issue or sale of the Notes in circumstances in which
Section 21(1) of the FSMA does not apply to us; and
(c) it has complied and
will comply with all applicable provisions of the FSMA with
respect to anything done by it in relation to the Notes in, from
or otherwise involving the United Kingdom.
S-19
LEGAL
MATTERS
The validity of the Notes will be passed upon for us by Briggs
and Morgan, Professional Association, Minneapolis, Minnesota,
and certain legal matters relating to the Notes will be passed
upon for the underwriters by Mayer, Brown, Rowe & Maw
LLP, Chicago, Illinois.
S-20
Prospectus
PepsiAmericas, Inc.
Debt Securities
This prospectus relates to debt securities that we may sell from
time-to-time in one or more offerings. We will provide the
specific terms of the particular debt securities issued under
this prospectus in a prospectus supplement for each security.
You should read this prospectus and any supplement carefully
before investing.
An investment in our debt securities involves risks. You should
read and consider carefully the Risk Factors
beginning on page 4 of this prospectus.
This prospectus may be used to offer and sell debt securities
only if accompanied by a prospectus supplement for those debt
securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is July 11, 2007.
TABLE OF
CONTENTS
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Page
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About this Prospectus
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2
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PepsiAmericas, Inc.
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2
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Where You Can Find More Information
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3
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Disclosure Regarding
Forward-Looking Statements
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3
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Risk Factors
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4
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Ratio of Earnings to Fixed Charges
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7
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Use of Proceeds
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7
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Description of the Debt Securities
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8
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Plan of Distribution
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14
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Legal Matters
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14
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Experts
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ABOUT
THIS PROSPECTUS
In this prospectus, PepsiAmericas, Inc. may be referred to as
PepsiAmericas, our, we or
us. This prospectus is part of a registration
statement that we filed with the SEC utilizing the shelf
registration process. Under this shelf process, we may sell the
debt securities described in this prospectus in one or more
offerings. This prospectus provides you with a general
description of the debt securities we may offer. Each time we
sell debt securities, we will provide a prospectus supplement
that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or
change information contained in this prospectus. You should
carefully read both this prospectus and any prospectus
supplement together with additional information described under
the heading Where You Can Find More Information.
We are not making an offer of the debt securities in any
jurisdiction where the offer or sale is not permitted. You
should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the
date on the front of each of those documents.
PEPSIAMERICAS,
INC.
We manufacture, distribute and market a broad portfolio of
beverage products in the United States, Central Europe and the
Caribbean, and have expanded our distribution to include snack
foods and beer in certain markets.
We sell a variety of brands that we bottle under licenses from
PepsiCo, Inc. (PepsiCo) or PepsiCo joint ventures,
which accounted for approximately 90 percent of our total
net sales in fiscal year 2006. We account for approximately
19 percent of all Pepsi-Cola beverage products sold in the
U.S. In some territories, we manufacture, package, sell and
distribute products under brands licensed by companies other
than PepsiCo, and in some territories we distribute our own
brands, such as the Toma brands in Central Europe.
Our distribution channels for the retail sale of our products
include supermarkets, supercenters, club stores, mass
merchandisers, convenience stores, gas stations, small grocery
stores, dollar stores and drug stores. We also distribute our
products through various other channels, including restaurants
and cafeterias, vending machines, and other formats that provide
for immediate consumption of our products. Our largest
distribution channels are supermarkets and supercenters, and our
fastest growing channels in fiscal year 2006 were club stores,
drug stores and dollar stores.
We deliver our products through these channels primarily using a
direct store delivery system. In our territories, we are
responsible for selling products, providing timely service to
our existing customers and identifying and obtaining new
customers. We are also responsible for local advertising and
marketing, as well as the execution in our territories of
national and regional selling programs instituted by brand
owners. The
2
bottling business is capital intensive. Manufacturing operations
require specialized high-speed equipment, and distribution
requires investment in trucks and warehouse facilities, as well
as extensive placement of fountain equipment and cold drink
vending machines and coolers.
Our principal executive offices are located at 4000 Dain
Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota
55402, and our telephone number is
(612) 661-4000.
WHERE YOU
CAN FIND MORE INFORMATION
We are subject to the information and reporting requirements of
the Securities Exchange Act of 1934, as amended. Accordingly, we
file reports, proxy statements and other information with the
SEC. You may read and copy materials we file with the SEC at the
SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information on
the operation of the public reference room by calling the SEC at
1-800-SEC-0330.
The SEC also maintains an Internet site that contains reports,
proxy and information statements, and other information
regarding issuers that file electronically with the SEC at
http://www.sec.gov.
We have filed with the SEC a registration statement on
Form S-3
under the Securities Act relating to the debt securities. This
prospectus is part of the registration statement, but does not
contain all of the information, exhibits and undertakings set
forth in the registration statement. For further information,
please refer to the registration statement, which may be read
and copied in the manner and at the sources described above.
The SEC allows us to incorporate by reference the
information we file with them, which means that we can disclose
important information to you by referring you to documents we
file with the SEC. The information incorporated by reference is
considered to be part of this registration statement.
Information that we file later with the SEC will automatically
update and supersede this information. We incorporate by
reference the documents listed below and any future documents we
file with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act until the termination of the particular
offering of debt securities:
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Annual Report on
Form 10-K
for the fiscal year ended December 30, 2006;
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Quarterly Report on
Form 10-Q
for the quarterly period ended March 31, 2007; and
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Current Report on
Form 8-K
filed on June 13, 2007.
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We will provide, without charge, to each person to whom this
prospectus is delivered, upon written or oral request, a copy of
any or all of the foregoing documents. Please direct written
requests to PepsiAmericas, Inc., 4000 Dain Rauscher Plaza, 60
South Sixth Street, Minneapolis, Minnesota 55402, Attention:
Investor Relations. Please direct telephone requests to Investor
Relations at
(612) 661-3883.
You should only rely on the information incorporated by
reference or provided in this prospectus and any prospectus
supplement. We have not authorized anyone else to provide you
with additional or different information.
DISCLOSURE
REGARDING FORWARD-LOOKING STATEMENTS
All statements other than statements of historical facts
included or incorporated by reference in this prospectus,
including, without limitation, statements regarding our future
financial position and results, business strategy, budgets,
projected costs and plans and objectives of management for
future operations, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Exchange Act. We intend
such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995 and include
this statement for purposes of complying with these safe harbor
provisions. Forward-looking statements generally can be
identified by the use of forward-looking terminology such as
may, will, expect,
intend, estimate,
anticipate, believe or
continue or the negative thereof or variations
thereon or similar terminology. Although we believe that the
expectations reflected in our forward-looking
3
statements are reasonable, we cannot give any assurance that our
expectations will prove to be correct. Important factors that
could cause actual results to differ materially from our
expectations are disclosed under Risk Factors and
elsewhere in, or are incorporated by reference in, this
prospectus. All subsequent written and oral forward-looking
statements attributable to us, or persons acting on our behalf,
are expressly qualified in their entirety by the cautionary
statements. We do not undertake any obligation to update our
forward-looking statements or risk factors to reflect future
events or circumstances, except as may be required by applicable
law. Among the events and uncertainties that could adversely
affect future periods are:
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competition, including product and pricing pressures;
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changing trends in consumer tastes;
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changes in our relationship
and/or
support programs with PepsiCo and other brand owners;
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market acceptance of new product and package offerings;
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weather conditions;
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cost and availability of raw materials;
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changing legislation;
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outcomes of environmental claims and litigation;
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availability and cost of capital, including changes in our debt
ratings;
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labor and employee benefit costs;
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unfavorable interest rate and currency fluctuations;
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costs of legal proceedings; and
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general economic, business and political conditions in the
countries and territories where we operate.
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RISK
FACTORS
An investment in our debt securities involves risks. Before
purchasing our debt securities, you should carefully consider
the following risk factors. The risks we have highlighted below
are not the only ones we face.
Our operating results may fluctuate based on changes in
marketplace conditions, especially customer and competitor
consolidation, changes in customer preferences, including our
customers shift from carbonated soft drinks to
non-carbonated beverages, and unfavorable weather conditions in
the territories in which we operate.
We face intense competition in the carbonated soft drink market
and the non-carbonated beverage market and are impacted by both
customer and competitor consolidation. Our response to
marketplace competition and retailer consolidations may result
in lower than expected net pricing of our products. Retail
consolidation has increased the importance of our major
customers and further consolidation is expected. In addition,
competitive pressures may cause channel and product mix to shift
from more profitable channels and packages and adversely affect
our overall pricing. Our efforts to improve pricing may result
in lower than expected volumes. Changes in net pricing and
volume could have an adverse effect on our business, results of
operations and financial condition.
Health and wellness trends have decreased demand for sugared
carbonated soft drinks and shifted interest to diet soft drinks
and non-carbonated beverages. In response to changes in
consumers preferences, we have increased our emphasis on
non-carbonated beverages, including Aquafina, Tropicana juice
drinks, Lipton Iced Tea, energy drinks, and diet carbonated
beverages. Our business could be adversely impacted by our
inability to offset the decline in sales of sugared carbonated
soft drinks with sales of diet soft drinks and non-carbonated
beverages. Because we rely mainly on PepsiCo to provide us with
the products that we sell, if
4
PepsiCo fails to develop innovative products that respond to
these and other consumer trends, this could put us at a
competitive disadvantage in the marketplace and adversely affect
our business and financial results. In addition, our business
could be adversely affected by other consumer trends, such as
consumer health concerns about obesity, product attributes and
ingredients. Consumer preferences may change due to a variety of
factors, including the aging of the general population, changes
in social trends, changes in travel, vacation or leisure
activity patterns or a downturn in economic conditions.
Additionally, our business is highly seasonal and unfavorable
weather conditions in our markets may impact sales volume. Sales
volumes in our Central Europe operations tend to be more
sensitive to weather conditions than our U.S. and Caribbean
operations.
An increase in the price of raw materials, natural gas and
fuel or a decrease in the availability of raw materials, natural
gas and fuel could adversely affect our financial condition.
Disruption of our supply chain also could have an adverse effect
on our business, financial condition and operating
results.
Increases in the price of ingredients, packaging materials,
other raw materials, natural gas and fuel could adversely impact
our earnings and financial condition if we are unable to pass
along these higher costs to our customers. The inability of
suppliers to deliver concentrate, raw materials, other
ingredients and products to us could also adversely affect
operating results. The inability of our suppliers to meet our
requirements could result in short-term shortages until
alternative sources of supply could be located. In particular,
we require significant amounts of aluminum cans and plastic
bottle containers to support our requirements. Failure of our
suppliers to meet our purchase requirements could reduce our
profitability. In addition, we also require access to
significant amounts of water. Any sustained interruption in the
supply of these materials or any significant increase in their
prices could have a material adverse effect on our business and
financial results.
Energy prices, including the price of natural gas, gasoline and
diesel fuel, are cost drivers for our business. Sustained high
energy or commodity prices could negatively impact our operating
results and demand for our products. Events such as natural
disasters could impact the supply of fuel and could impact the
timely delivery of our products to our customers.
Our ability to make, move and sell products is critical to our
success. Damage or disruption to our supply chain, including our
manufacturing or distribution capabilities, due to weather,
natural disaster, fire or explosion, terrorism, pandemic,
strikes or other reasons could impair our ability to manufacture
and sell our products. Failure to take adequate steps to
mitigate the likelihood or potential impact of such events, or
to effectively manage such events if they occur, could adversely
affect our business, financial condition and results of
operations, as well as require additional resources to restore
our supply chain. In addition, unstable economic and political
conditions or civil unrest in the countries in which we operate
could have an adverse effect on our business results or
financial condition.
The successful operation of our business depends upon our
relationship with PepsiCo, including its level of advertising,
bottler incentives and brand innovation. We may also have
conflicts of interest with PepsiCo.
We operate under various bottling agreements with PepsiCo that
allow us to manufacture, package, distribute and sell carbonated
and non-carbonated beverages. Our inability to comply with the
terms and conditions established in these agreements could
result in termination of bottling agreements which would have a
material adverse impact on our short-term and long-term
business. These agreements provide that we must purchase all of
the concentrate for PepsiCo beverages at prices and on terms
which are set by PepsiCo in its sole discretion. Any significant
concentrate price increases could materially affect our business
and financial results.
PepsiCos advertising campaigns and their effectiveness,
bottler incentives provided by PepsiCo, and PepsiCos brand
innovation directly impact our operations. Bottler incentives
cover a variety of initiatives to support volume and market
share growth. The level of support is negotiated regularly and
can be increased or decreased at the discretion of PepsiCo.
PepsiCo is under no obligation to continue past levels of
support in the future. Material changes in expected levels of
bottler incentive payments and other support arrangements could
5
adversely affect future results of operations. Furthermore, if
the sales volume of sugared carbonated beverages continues to
decline, our sales volume growth will increasingly depend on
product innovation by PepsiCo. Even if PepsiCo maintains a
robust pipeline of new products, we may be unable to achieve
volume growth through product and packaging initiatives.
PepsiCo also provides procurement services for certain raw
materials which result in rebates from vendors as a result of
procurement volume. Cost of goods sold may be negatively
impacted if we are unable to maintain targeted volume levels to
secure such anticipated rebates or if PepsiCo no longer provides
this service on our behalf.
Our past and ongoing relationship with PepsiCo could give rise
to conflicts of interest. These potential conflicts include
balancing the objectives of increasing sales volume of PepsiCo
beverages and maintaining or increasing our profitability. Other
possible conflicts could relate to the nature, quality and
pricing of services or products provided to us by PepsiCo or by
us to PepsiCo. In addition, one member of our Board of Directors
is a Senior Vice President at PepsiCo.
In addition, under our Master Bottling Agreement, we must obtain
PepsiCos approval to acquire any independent PepsiCo
bottler. PepsiCo has agreed not to withhold approval for any
acquisition within
agreed-upon
U.S. territories if we have successfully negotiated the
acquisition and, in PepsiCos reasonable judgment,
satisfactorily performed our obligations under the Master
Bottling Agreement.
At the end of fiscal year 2006, PepsiCo beneficially owned
approximately 44 percent of our common stock. As a result,
PepsiCo is able to significantly affect the outcome of our
shareholder votes, thereby affecting matters concerning us.
A negative change in our credit rating or the availability
of capital could impact borrowing costs and financial
results.
We depend, in part, upon the issuance of unsecured debt to fund
our operations and contractual commitments. A number of factors
could cause us to incur increased borrowing costs and to have
greater difficulty accessing public and private markets for
unsecured debt. These factors include the global capital market
environment and outlook, our financial performance and outlook,
and our credit ratings as determined primarily by rating
agencies. It is possible that our other sources of funds,
including available cash, bank facilities and cash flow from
operations, may not provide adequate liquidity to fund our
operations and contractual commitments.
Because our international operations are conducted under
multiple local currencies, our operating results experience
foreign currency fluctuations.
Our
non-U.S. operations
are exposed to foreign exchange rate fluctuations resulting from
foreign currency transactions and translation of the
operations financial results from local currency into
U.S. dollars upon consolidation. As exchange rates vary,
revenue and other operating results, when translated, may differ
materially from expectations.
The cost to remediate environmental concerns associated
with previously owned subsidiaries could be materially different
than our estimates.
We are subject to federal and state requirements for protection
of the environment, including those for the remediation of
contaminated sites related to previously owned subsidiaries. We
routinely assess our environmental exposure, including
obligations and commitments for remediation of contaminated
sites and assessments of ranges and probabilities of recoveries
from other responsible parties, including insurance providers.
Due to the regulatory complexities and risk of unidentified
contaminants on our former properties, the potential exists for
remediation costs to be materially different from the costs we
have estimated.
We cannot predict the outcome of legal proceedings and an
adverse determination could negatively impact our financial
results, nor can we predict the nature or outcome of future
legal proceedings.
The nature of operations of previously owned subsidiaries
exposes us to the potential for various claims and litigation
related to, among other things, personal injury and asbestos
product liability claims. The nature
6
of assets we currently own and operate exposes us to the
potential for various claims and litigation related to, among
other things, personal injury and property damage. The
resolution of outstanding claims and assessments may be
materially different than what we have estimated.
In addition, litigation or other claims based on alleged
unhealthful properties of soft drinks could be filed against us
and would require our management to devote significant time and
resources to dealing with such claims. While we would not
believe such claims to be meritorious, any such claims would be
accompanied by unfavorable publicity that could adversely affect
the sales of certain of our products. Our failure to abide by
laws, orders or other legal commitments could subject us to
fines, penalties or other damages, including costs associated
with recalling products. We could be required to recall products
if they become contaminated or damaged.
Increases in the cost of compliance with applicable
regulations, including those governing the production,
packaging, quality, labeling and distribution of beverage
products, could negatively impact our financial results.
Our operations and properties are subject to various federal,
state and local laws and regulations, including those governing
the production, packaging, quality, labeling and distribution of
beverage products, environmental laws, competition laws, taxes
and accounting standards. We are also subject to the
jurisdiction of regulatory agencies of foreign countries. New
laws or regulations or changes in existing laws or regulations
could negatively impact our financial results by restricting our
ability to distribute products in certain venues or through
higher operating costs to achieve compliance.
Changes in tax laws or in the tax status of our
international operations could increase our tax liability and
negatively impact our financial results.
We are subject to taxes in the U.S. and various foreign
jurisdictions. As a result, our effective tax rate could be
adversely affected by changes in the mix of earnings in the
U.S. and foreign countries with differing statutory tax
rates, legislative changes impacting statutory tax rates,
including the impact on recorded deferred tax assets and
liabilities, changes in tax laws or material audit assessments.
In addition, deferred tax balances reflect the benefit of net
operating loss carryforwards, the realization of which will
depend upon generating future taxable income in the
corresponding tax jurisdiction.
A strike or work stoppage by our union employees, which
represent approximately one-third of our workforce, could
disrupt our business.
Approximately 34 percent of our employees are covered by
collective bargaining agreements. These agreements expire at
various dates, including some in fiscal year 2007. Our inability
to successfully renegotiate these agreements could cause work
stoppages and interruptions, which may adversely impact our
operating results. The terms and conditions of existing or
renegotiated agreements could also increase the cost to us, or
otherwise affect our ability to fully implement future
operational changes to enhance our efficiency.
RATIO OF
EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed
charges for the periods indicated.
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First Three Months
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Fiscal Years
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2007
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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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Ratio of earnings to fixed charges
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2.1
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1.8
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3.1
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x
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3.8
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x
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4.8
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x
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3.8
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x
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3.6x
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USE OF
PROCEEDS
Unless otherwise indicated in the applicable prospectus
supplement, we will use the net proceeds from the sale of the
debt securities for general corporate purposes, including the
repayment of existing indebtedness.
7
DESCRIPTION
OF THE DEBT SECURITIES
We will issue the debt securities under an Indenture dated as of
August 15, 2003, between us and Wells Fargo Bank, National
Association, as trustee. We have summarized selected provisions
of the Indenture below. The summary set forth below is not
complete and is qualified in its entirety by reference to the
Indenture. It does not describe certain exceptions and
qualifications contained in the Indenture or the debt
securities. If you would like more information on the provisions
of the Indenture, you should review the Indenture, which is an
exhibit to the registration statement relating to the debt
securities.
References to article and section numbers of the Indenture are
included in the summary so that you can easily locate the
provisions being summarized.
General
The debt securities will be our unsecured, senior debt
obligations and will rank equally with all of our other
unsecured and unsubordinated indebtedness. The Indenture does
not limit the amount of the debt securities that we may issue
and permits us to issue debt securities in one or more series.
Each series of debt securities may have different terms. The
terms of any series will be determined in accordance with a
resolution of our board of directors or in a supplement to the
Indenture relating to that series.
A supplement to this prospectus will describe specific terms
relating to the series of debt securities being offered.
(Section 2.01) These terms will include some or all of the
following:
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the title of the series of debt securities;
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the total principal amount;
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the interest rate or rates, if any (which may be fixed or
variable), and interest payment dates;
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the date or dates of maturity;
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whether the series can be redeemed by us or the holder;
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whether there will be a sinking fund;
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the portion of the series of debt securities due upon
acceleration of maturity in the event of a default;
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the denominations in which the debt securities will be issuable
if other than denominations of $1,000 if registered and $5,000
if unregistered;
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the form used to evidence ownership of the debt securities;
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whether the debt securities are convertible;
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the manner of payment of principal and interest;
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additional offices or agencies for registration of transfer and
exchange and for payment of principal, premium, if any, and
interest;
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whether the debt securities will be registered or unregistered,
and the circumstances, if any, upon which the debt securities
may be exchanged for debt securities issued in a different form;
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if denominated in a currency other than United States dollars,
the currency in which the debt securities are to be denominated,
or in which payments of principal, premium, if any, and interest
will be made and the circumstances, if any, when the currency of
payment may be changed;
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if we or a holder have the right to elect that the payments of
principal, premium, if any, or interest are to be made in a
currency other than that in which the debt securities are
denominated or stated to be payable, the terms and conditions
upon which that election may be made and how the exchange rate
between the currency in which those debt securities are
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denominated or stated to be payable and the currency in which
the debt securities are elected to be paid pursuant to that
election will be determined;
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if payments of principal, premium, if any, or interest may be
determined with reference to one or more securities issued by us
or another company, any currency or other index, how those
amounts shall be determined;
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whether defeasance and discharge provisions will apply; and
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any other terms consistent with the Indenture.
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Each series of debt securities will be a new issue with no
established trading market. Accordingly, we cannot assure you
that any trading market for the debt securities will develop, be
maintained or be liquid. We may purchase debt securities at any
time in the open market or otherwise. Debt securities we
purchase may, in our discretion, be held, resold, canceled or
used to satisfy any sinking fund or redemption requirements.
Debt securities bearing no interest or interest at a rate which,
at the time of issuance, is below the prevailing market rate
will be sold at a substantial discount below their stated
principal amount. Special United States federal income tax
considerations applicable to any of these discounted debt
securities (or to certain other debt securities issued at par
which are treated as having been issued at a discount for United
States federal income tax purposes) will be described in the
applicable prospectus supplement.
The debt securities may be denominated in United States dollars
or in any other currency. If any of the debt securities are
denominated in any foreign currency or if principal, premium, if
any, and interest on any of the debt securities are payable in
any foreign currency, the restrictions, elections, tax
consequences, specific terms and other information with respect
to that issue of debt securities and that foreign currency will
be set forth in the prospectus supplement relating to those debt
securities.
Form and
Exchange of the Debt Securities
All of the debt securities will be issued in fully registered
form without coupons or in unregistered form with or without
coupons. The debt securities may also be issued in the form of
one or more temporary or definitive global securities.
Registered debt securities which are book-entry securities will
be issued as registered global securities. A debt security in
global form will be deposited with, or on behalf of, a
depositary, which will be named in the applicable prospectus
supplement. A global debt security may not be transferred,
except as a whole, among the depositary for that debt security
and its nominees or successors. If any debt securities of a
series are issuable as global securities, the applicable
prospectus supplement will describe any circumstances when
beneficial owners of any of those global debt securities may
exchange their interests for definitive debt securities of that
series of like tenor and principal amount in any authorized form
and denomination, the manner of payment of principal and
interest on those global debt securities and the specific terms
of the depositary arrangement with respect to those global debt
securities.
Unless otherwise indicated in a prospectus supplement,
principal, premium, if any, and interest will be payable, and
the debt securities may be registered for transfer or exchange,
at the principal corporate trust office of the trustee in
Minneapolis, Minnesota, provided that at our option, payment of
interest on registered debt securities may be made by check or
by wire transfer. (Sections 4.01 and 4.02) 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.
(Section 2.06)
Certain
Restrictions on PepsiAmericas
The restrictions summarized in this section will apply to all
debt securities unless a prospectus supplement indicates
otherwise. Certain capitalized terms used in the following
description of these restrictions are defined under the caption
Certain Definitions at the end of this section.
Limitations on Liens. If we or one of our
Restricted Subsidiaries incur debt secured by a mortgage,
security interest, lien, pledge or other encumbrance on a
Principal Property, or on any shares of capital stock or
indebtedness of any Restricted Subsidiary (whether that
Principal Property, shares of stock or indebtedness
9
are now owned or hereafter acquired), we are required to secure
the then outstanding debt securities equally and ratably with
(or prior to) our secured debt. (Section 4.05).
The Indenture permits us and our Restricted Subsidiaries to
create certain liens without securing the debt securities.
(Section 4.05) Among the permitted liens are:
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liens affecting property of a corporation existing at the time
it becomes a Subsidiary or at the time it is merged into or
consolidated with or purchased by us or a Subsidiary;
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liens existing at the time of acquisition of the affected
property or purchase money liens incurred within 365 days
after acquisition of the property (provided such liens are
limited to such property and improvements thereon);
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liens to secure the cost of construction of new plants or
facilities, incurred within 365 days of completion of
construction;
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liens which secure indebtedness owing by a Restricted Subsidiary
to us or another Restricted Subsidiary;
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liens existing prior to the issuance of the debt securities;
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liens in connection with the issuance of certain pollution
control or industrial revenue bonds or similar financings;
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certain statutory liens or similar liens arising in the ordinary
course of business;
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certain liens in connection with legal proceedings and
government contracts and certain deposits or liens made to
comply with workers compensation or similar legislation;
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liens existing on property acquired by us or a Restricted
Subsidiary through the exercise of rights arising out of
defaults on receivables acquired in the ordinary course of
business;
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liens for certain judgments and awards;
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liens for certain taxes, assessments, governmental charges or
levies not yet past due or delinquent or which can thereafter be
paid without penalty, or which are being contested in good faith
by appropriate proceedings and for which adequate reserves have
been established, if appropriate, or other liens of a similar
nature which do not materially impair the use of the property in
the operation of our or any of our Restricted Subsidiaries
business or the value of the property for the purposes of that
business; and
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certain extensions, renewals or replacements of any liens
referred to above.
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Limitations on Sale and Lease-Back
Transactions. We and our Restricted Subsidiaries
may not sell or transfer any Principal Property with the
intention of entering into a lease of the facility (except for
temporary leases of a term, including renewals, not exceeding
five years and except for leases between us and a Restricted
Subsidiary or between Restricted Subsidiaries, which Principal
Property has been or is to be sold or transferred by us or such
Restricted Subsidiary) unless either:
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we or the Restricted Subsidiary would be entitled (under
Section 4.05) to incur debt secured by a lien on the
property to be leased without equally and ratably securing the
debt securities;
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within 365 days after the effective date of the
transaction, we apply to the voluntary retirement of our funded
debt an amount equal to the greater of (1) the net proceeds
of the sale of the property leased in the transaction or
(2) the fair value, in the opinion of our board of
directors, of the leased property at the time of the
transaction; or
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within 365 days after the effective date of the
transaction, we apply to the purchase, acquisition or
construction of property or other assets used in our business or
the business of any Restricted Subsidiary an amount equal to the
greater of (1) the net proceeds of the sale of
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the property leased in the transaction or (2) the fair
value, in the opinion of our board of directors, of the leased
property at the time of the transaction. (Section 4.06)
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Exempted Indebtedness. Notwithstanding the
limitations on liens and sale and lease-back transactions
described above, we and our Restricted Subsidiaries may issue,
assume, or guarantee indebtedness secured by a lien or other
encumbrance without securing the debt securities, or may enter
into sale and lease-back transactions without retiring funded
debt, or enter into a combination of those transactions, if the
sum of the principal amount of all of the secured indebtedness
and the aggregate value of all of those sale and lease-back
transactions does not at any such time exceed 15% of our
consolidated total assets as shown in the audited consolidated
balance sheet contained in our latest annual report to
shareholders. (Section 4.07)
Merger, Consolidation and Sale of Assets. We
may not consolidate or merge with or into any other corporation,
or sell, lease or transfer all or substantially all of our
assets to any other entity, unless:
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we survive the merger or consolidation or the surviving or
successor corporation is a United States corporation which
assumes by supplemental indenture all of our obligations under
the debt securities and under the Indenture; and
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after giving effect to the merger, consolidation, sale, lease or
transfer, no Event of Default (as described below) under the
Indenture and no event which, after notice or lapse of time or
both, would become an Event of Default shall have occurred and
be continuing. (Section 11.01)
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If we sell or transfer substantially all of our assets and the
purchaser assumes our obligations under the Indenture, we will
be discharged from all obligations under the Indenture and the
debt securities. (Section 11.02)
Unless otherwise described in a prospectus supplement, the debt
securities will not contain any covenants or provisions which
may protect you in the event of a highly leveraged or similar
transaction involving us. Accordingly, we could enter into
transactions in the future that could increase the amount of
debt outstanding at that time or otherwise adversely affect our
capital structure or credit rating.
Certain Definitions. The terms summarized
below are defined in the Indenture:
Consolidated Net Worth means the excess of our
consolidated assets over liabilities, plus any shares of stock
of any class of a Subsidiary (other than directors
qualifying shares) that are not owned by us or one of our
Subsidiaries, as determined from time to time in accordance with
accounting principles generally accepted in the United States
consistently applied. (Section 6.01)
Government Obligations with respect to any series of
debt securities means direct noncallable obligations of the
government that issued the currency in which the debt securities
of that series are denominated or noncallable obligations the
payment of the principal of and interest on which is fully
guaranteed by that government and which, in either case, are
full faith and credit obligations of that government.
(Article One)
Principal Property means any manufacturing plant or
warehouse owned or leased by us or one of our Subsidiaries
located within the United States, the gross book value of which
exceeds one percent of Consolidated Net Worth, other than
manufacturing plants and warehouses which, in the opinion of our
board of directors, are not of material importance to the
business conducted by us and our Restricted Subsidiaries, taken
as a whole. (Article One)
Restricted Subsidiary means any of our Subsidiaries
which (1) owns or leases a Principal Property and
(2) is incorporated under the laws of any state in the
United States or has substantially all of its property located
within the United States or carries on substantially all of its
business within the United States. (Article One)
Subsidiary means any corporation at least a majority
of the outstanding securities of which having ordinary voting
power to elect a majority of the board of directors of such
corporation (whether or not any other class of securities has or
might have voting power by reason of the occurrence of a
contingency) is at
11
the time owned or controlled, directly or indirectly, by us, or
by one or more of our subsidiaries, or by us and one or more of
our subsidiaries. (Article One)
Satisfaction
and Discharge of the Indenture
If we deliver to the trustee for cancellation all outstanding
Notes, or if all outstanding Notes not previously delivered to
the trustee for cancellation have become due and payable, and we
(i) deposit with the trustee as trust funds the entire
amount required to pay at maturity all such Notes not previously
delivered to the trustee for cancellation and (ii) have
previously paid all other sums payable under the Notes, the
Notes will be satisfied and the Indenture will cease to be of
further effect, other than with respect to certain of our
obligations thereunder. (Section 12.01)
If provision is made pursuant to the Indenture for the
defeasance of a series of debt securities, we, at our option
(unless otherwise provided in a prospectus supplement), with
regard to that series of debt securities:
(1) will be discharged
from any and all obligations in respect of the debt securities
of that series (except for certain obligations to register the
transfer or exchange of debt securities of that series, to
replace stolen, lost, destroyed or mutilated debt securities of
that series, to maintain paying agencies and to hold monies for
payment in trust); or
(2) may omit to comply
with the provisions of the Indenture described above under the
captions Limitations on Liens, Limitations on
Sale and Lease-Back Transactions, Exempted
Indebtedness and Merger, Consolidation and Sale of
Assets,
if we deposit with the trustee, in trust, money or Government
Obligations which will provide sufficient funds to pay the
principal of (and premium, if any) and interest on the debt
securities of that series on the dates those payments are due.
To exercise either of the above options in the immediately
preceding paragraph, we must deliver to the trustee an opinion
of counsel of recognized national standing to the effect that
holders of the debt securities of that series will not recognize
income, gain or loss for federal income tax purposes as a result
of that deposit, defeasance and discharge and will be subject to
federal income tax on the same amount and in the same manner and
at the same times, as would have been the case if the deposit,
defeasance and discharge had not occurred.
(Sections 12.02(a) and (b)) Even if we successfully
exercise the option described above in clause (2), however, our
obligations under the Indenture and the debt securities of that
series (other than the covenants referred to in clause (2)
and the Events of Default (as described below) related to those
covenants) will continue. (Section 12.02(b))
If we choose to exercise our option not to comply with the
provisions of the Indenture described above under the captions
Limitations on Liens, Limitations on Sale and
Lease-Back Transactions, Exempted Indebtedness
and Merger, Consolidation and Sale of Assets with
respect to any series of debt securities and the series is
declared due and payable because of the occurrence of an Event
of Default other than a default under these provisions of the
Indenture, then the amount of money and Government Obligations
on deposit with the trustee will be sufficient to pay amounts
payable on the series of debt securities on the due date without
acceleration but generally will not be sufficient to pay amounts
due at the time of the acceleration resulting from such Event of
Default. However, we would remain liable for such payments.
Events of
Default
Event of Default means, with respect to any series
of debt securities, any of the following (Section 6.01):
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failure to pay interest on the debt securities of that series,
which failure continues for a period of 30 days after
payment is due;
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failure to make any principal or premium payment on the debt
securities of that series when due;
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failure to comply with any of our other agreements contained in
the Indenture or in the debt securities of that series for
90 days after the trustee notifies us of the failure (or
the holders of at least 25% of the outstanding debt securities
affected by the failure notify us and the trustee);
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certain events of bankruptcy, insolvency or reorganization of
us; or
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acceleration of any indebtedness for money borrowed by us or any
of our Restricted Subsidiaries in excess of the greater of
$50,000,000 in principal amount or 5% of Consolidated Net Worth.
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In general, the trustee is required to give notice of a default
with respect to a series of debt securities to the holders of
that series. The trustee may withhold notice of any default
(except a default in the payment of principal of, and premium,
if any, or interest on any debt security or in the making of any
sinking fund or purchase fund or analogous payment) if the
trustee in good faith determines that it is in the best interest
of the holders of that series to do so. (Section 7.02) An
Event of Default for a particular series of debt securities does
not necessarily constitute an Event of Default for other series
of debt securities. Additional Events of Default may be
prescribed for the benefit of holders of certain series of debt
securities and will be described in the applicable prospectus
supplement. (Section 6.01)
If there is a continuing Event of Default with respect to any
series of debt securities, then either the trustee or the
holders of at least 25% in aggregate principal amount of that
series may require us to immediately repay the principal and
accrued interest (or, if the debt securities of that series are
original issue discount securities, that portion of the
principal amount as may be specified in the terms of that
series) on the affected series. Subject to certain conditions,
the requirement to pay with respect to a series of debt
securities may be annulled, and past defaults waived (except a
continuing default in payment of principal of or premium, if
any, or interest on the debt securities), by the holders of a
majority in principal amount of the debt securities of that
series then outstanding. (Section 6.02)
The trustee may refuse to enforce the Indenture or the debt
securities unless it first receives satisfactory security or
indemnity. (Sections 7.01 and 7.03) Subject to certain
limitations specified in the Indenture, the holders of a
majority in principal amount of the then outstanding debt
securities of an affected series will have the right to direct
the time, method and place of conducting any proceeding for any
remedy available to the trustee under the Indenture or
exercising any trust or power conferred on the trustee with
respect to the debt securities of that series.
(Section 6.12)
Modification
of the Indenture
Under the Indenture, subject to certain exceptions, our rights
and obligations and the rights of the holders of the debt
securities of any series may be changed with the consent of the
holders of a majority in principal amount of the debt securities
then outstanding of such series. However, none of the following
changes is effective against any holder without its consent:
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changing the terms of payment of principal or interest;
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reducing the premium, if any, payable upon redemption;
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changing the currency in which any debt security is payable;
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reducing the amount to be paid upon acceleration of maturity; or
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reducing the percentage required for changes to the Indenture.
(Section 10.02)
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Reports
to the Trustee
We are required to provide the trustee with an officers
certificate each fiscal year stating that we reviewed our
activities during the preceding fiscal year and that, after
reasonable investigation and inquiry by the certifying officers,
we are in compliance with the requirements of the Indenture and
that no default exists or identifying the known defaults.
(Section 4.08)
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Regarding
the Trustee
We maintain ordinary banking relationships and credit facilities
with various banks, including the trustee, Wells Fargo Bank,
National Association.
PLAN OF
DISTRIBUTION
We may sell the debt securities through underwriters, dealers or
agents, or directly to purchasers. The underwriters may also
sell the debt securities directly to other purchasers or through
other dealers, who may receive compensation from the
underwriters in the form of discounts, concessions or
commissions.
If underwriters are used in the sale, the debt securities will
be sold to the underwriters for their own account. The
underwriters may resell the debt securities in one or more
transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the
time of sale. The obligations of the underwriters to purchase
the debt securities will be subject to certain conditions. Any
initial public offering price and any discounts or concessions
allowed or repaid to dealers may be changed from time to time.
We also may designate dealers, acting as our agents, to offer
and sell debt securities upon certain terms and conditions. We
may also sell debt securities directly to purchasers, without
the use of underwriters, dealers or agents.
Underwriters, dealers and agents that participate in the
distribution of the debt securities may be underwriters as
defined in the Securities Act of 1933, and any discounts or
commissions received by them from us and any profit on the
resale of the offered debt securities may be treated as
underwriting discounts and commissions under the Securities Act.
We will identify any underwriters or agents and describe their
compensation from us in a supplement to this prospectus.
We do not expect that the debt securities will be listed on a
national securities exchange or that, if listed, the listing
will continue until the maturity of the debt securities. Also,
certain broker-dealers may make a market in the debt securities,
but they will not be obligated to do so and may discontinue any
market making at any time and without any notice to you.
Further, we cannot assure you that any broker-dealer will make a
market in the debt securities or that any trading market for the
debt securities will develop, be maintained or be liquid. If we
know that the debt securities will be listed on an exchange or
that a broker-dealer will make a market in the debt securities,
we will include that information in the applicable prospectus
supplement.
We may have agreements with the underwriters, dealers and agents
to indemnify them against certain civil liabilities, including
liabilities under the Securities Act. We also may have
agreements to contribute to payments that the underwriters,
dealers or agents may be required to make. Underwriters, dealers
and agents may engage in transactions with, or perform services
for, us or our subsidiaries in the ordinary course of business.
LEGAL
MATTERS
Unless otherwise indicated in a prospectus supplement, the
validity of the offered debt securities will be passed upon for
us by Briggs and Morgan, Professional Association, Minneapolis,
Minnesota.
EXPERTS
The consolidated financial statements of PepsiAmericas, Inc. and
subsidiaries as of the end of fiscal years 2006 and 2005, and
for each of the fiscal years 2006, 2005 and 2004, and
managements assessment of the effectiveness of internal
control over financial reporting as of December 30, 2006,
have been incorporated by reference herein and in the
registration statement in reliance upon the reports of KPMG LLP,
independent registered public accounting firm, incorporated by
reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The audit report on managements assessment of the
effectiveness of internal control over financial reporting and
the effectiveness of internal control over financial reporting
as of December 30, 2006, contains an explanatory paragraph
that states the scope of managements assessment of the
effectiveness of internal control over financial reporting
includes all of PepsiAmericas consolidated subsidiaries
except for
Quadrant-Amroq
Bottling Company Limited (QABCL), a business acquired by
PepsiAmericas on July 3, 2006. KPMGs audit of
internal control over financial reporting of PepsiAmericas also
excluded an evaluation of the internal control over financial
reporting of QABCL.
14
$
PepsiAmericas, Inc.
% Notes
due
PROSPECTUS SUPPLEMENT
,
2007
Joint Book-Running Managers
Citi
Morgan Stanley