Filed Pursuant to Rule 424(b)(3)
Registration No. 333-110274
PROSPECTUS
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OFFER TO EXCHANGE UP TO $320,000,000 AGGREGATE PRINCIPAL AMOUNT
OF OUR 4.625% SENIOR NOTES DUE 2013,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OF THE $320,000,000 AGGREGATE PRINCIPAL AMOUNT
OF OUR OUTSTANDING UNREGISTERED 4.625% SENIOR NOTES DUE 2013
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN TIME
ON FEBRUARY 20, 2004, UNLESS EXTENDED.
- We are offering to exchange $320,000,000 aggregate principal amount of
our 4.625% Senior Notes due July 15, 2013, which are referred to in this
prospectus as the new notes, for all $320,000,000 aggregate principal
amount of our unregistered 4.625% Senior Notes due July 15, 2013, which
are referred to in this prospectus as the old notes. We refer to the new
notes and the old notes collectively as "the notes".
- The terms of the new notes will be substantially identical to the old
notes that we issued on July 10, 2003, except that the new notes will be
registered under the Securities Act of 1933 (the "Securities Act") and
will not be subject to the registration rights, additional interest
provisions and transfer restrictions applicable to the old notes.
- Interest on the new notes will accrue from January 15, 2004 at a rate of
4.625% per year, payable semi-annually in arrears on January 15 and July
15 of each year, beginning July 15, 2004.
- Subject to the terms of the exchange offer, all old notes that are
validly tendered and not withdrawn prior to expiration of the exchange
offer will be exchanged for an equal principal amount of new notes.
- Tenders of old notes may be withdrawn any time prior to the expiration of
the exchange offer.
- The exchange of old notes for new notes in the exchange offer should not
be a taxable event for U.S. holders for U.S. federal income tax purposes.
- We will not receive any proceeds from the exchange offer.
- No public market exists for the old notes or the new notes, and we do not
intend to apply for their listing on any national securities exchange or
to arrange for them to be quoted on any automated dealer quotation
system.
Neither the Securities and Exchange Commission (the "SEC") nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. They have not made, nor
will they make, any determination as to whether anyone should buy these
securities. Any representation to the contrary is a criminal offense.
The date of this prospectus is January 22, 2004
TABLE OF CONTENTS
PAGE
----
ABOUT THIS PROSPECTUS....................................... ii
FORWARD-LOOKING STATEMENTS.................................. ii
PROSPECTUS SUMMARY.......................................... 1
USE OF PROCEEDS............................................. 6
CAPITALIZATION.............................................. 7
RATIO OF CONSOLIDATED EARNINGS TO TOTAL FIXED CHARGES....... 8
THE EXCHANGE OFFER.......................................... 9
DESCRIPTION OF THE NEW NOTES................................ 17
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS.............. 26
ERISA CONSIDERATIONS........................................ 27
PLAN OF DISTRIBUTION........................................ 28
LEGAL OPINIONS.............................................. 29
EXPERTS..................................................... 29
WHERE YOU CAN FIND MORE INFORMATION......................... 29
INCORPORATION BY REFERENCE.................................. 30
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT US THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS PROSPECTUS. THIS
INFORMATION IS AVAILABLE WITHOUT CHARGE TO YOU UPON WRITTEN OR ORAL REQUEST. IF
YOU WOULD LIKE A COPY OF ANY OF THIS INFORMATION, PLEASE SUBMIT YOUR REQUEST TO
THE HARTFORD FINANCIAL SERVICES GROUP, INC., HARTFORD PLAZA, HARTFORD,
CONNECTICUT 06115, ATTENTION: BRIAN S. BECKER, SENIOR VICE PRESIDENT AND
CORPORATE SECRETARY (TELEPHONE: 860-547-5000).
IN ORDER TO OBTAIN TIMELY DELIVERY OF ANY INFORMATION THAT YOU REQUEST, YOU
MUST SUBMIT YOUR REQUEST NO LATER THAN FEBRUARY 12, 2004, WHICH IS FIVE BUSINESS
DAYS BEFORE THE DATE THE EXCHANGE OFFER EXPIRES.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-4 that we
have filed with the SEC pursuant to the Securities Act. We are submitting this
prospectus to holders of old notes so they can consider exchanging their old
notes for new notes. We may add, update or change information contained in this
prospectus through one or more supplements to this prospectus. Any statement
that we make in this prospectus will be modified or superseded by any
inconsistent statement made by us in a prospectus supplement. The rules of the
SEC allow us to incorporate by reference information into this prospectus. This
information incorporated by reference is considered to be a part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede this information. See "Incorporation by Reference." You
should read both this prospectus and any prospectus supplement together with the
additional information described under the heading "Where You Can Find More
Information."
No person has been authorized to give any information or to make any
representations, other than those contained or incorporated by reference in this
prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by The Hartford Financial Services
Group, Inc. or any underwriter, agent, dealer or remarketing firm. Neither the
delivery of this prospectus nor any sale made hereunder shall under any
circumstances create any implication that there has been no change in the
affairs of The Hartford Financial Services Group, Inc. since the date hereof or
that the information contained or incorporated by reference herein is correct as
of any time subsequent to the date of such information. We are not making the
exchange offer to, and we will not accept surrenders for exchange from, holders
of old notes in any jurisdiction in which the exchange offer or the acceptance
of the exchange offer would violate the securities or other laws of that
jurisdiction.
Unless otherwise indicated, or the context otherwise requires, references
in this prospectus to "The Hartford," "we," "us" and "our" or similar terms are
to The Hartford Financial Services Group, Inc. and its subsidiaries.
FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this prospectus or incorporated by
reference are forward-looking statements. These forward-looking statements are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and include estimates and assumptions related to economic,
competitive and legislative developments. These forward-looking statements are
subject to change and uncertainty which are, in many instances, beyond our
control and have been made based upon management's expectations and beliefs
concerning future developments and their potential effect upon us. There can be
no assurance that future developments will be in accordance with management's
expectations or that the effect of future developments on us will be those
anticipated by management. Actual results could differ materially from those
expected by us, depending on the outcome of various factors. These factors
include:
- the difficulty in predicting our potential exposure for asbestos and
environmental claims and related litigation, including our dispute with
Mac Arthur Company and its subsidiary, Western MacArthur Company, if the
conditions to the consummation of our previously announced settlement are
not satisfied;
- the uncertain nature of damage theories and loss amounts and the
development of additional facts related to the September 11, 2001
terrorist attack;
- the uncertain effect on us of the Jobs and Growth Tax Relief
Reconciliation Act of 2003, in particular the reduction in tax rates on
long-term capital gains and most dividend distributions;
- the response of reinsurance companies under reinsurance contracts, the
impact of increasing reinsurance rates and the availability and adequacy
of reinsurance to protect us against losses;
- the inability to effectively mitigate the impact of equity market
volatility on our financial position and results of operations arising
from obligations under annuity product guarantees;
- the possibility of more unfavorable loss experience than anticipated;
ii
- the possibility of general economic and business conditions that are less
favorable than anticipated;
- the incidence and severity of catastrophes, both natural and man-made;
- the effect of changes in interest rates, the stock markets or other
financial markets;
- stronger than anticipated competitive activity;
- unfavorable legislative, regulatory or judicial developments;
- our ability to distribute our products through distribution channels,
both current and future;
- the uncertain effects of emerging claim and coverage issues;
- the effect of assessments and other surcharges for guaranty funds and
second-injury funds and other mandatory pooling arrangements;
- a downgrade in our claims-paying, financial strength or credit ratings;
- the ability of our subsidiaries to pay dividends to us; and
- other factors described in such forward-looking statements.
iii
PROSPECTUS SUMMARY
The following summary highlights selected information contained or
incorporated by reference in this prospectus and does not contain all the
information that may be important to you. For a more complete understanding of
the exchange offer, our company, and the new notes, we encourage you to read
this entire prospectus carefully, including the financial data and related notes
and the documents incorporated by reference in this prospectus, before making a
decision to participate in the exchange offer.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
We are a diversified insurance and financial services holding company. We
are among the largest providers of investment products, individual life, group
life and disability insurance products, and property and casualty insurance
products in the United States. Hartford Fire Insurance Company, or Hartford
Fire, founded in 1810, is the oldest of our subsidiaries. Our companies write
insurance primarily in the United States. At September 30, 2003, our total
assets were $211.36 billion and our total stockholders' equity was $11.34
billion.
We were formed in December 1985 as a wholly owned subsidiary of ITT
Corporation. On December 19, 1995, all our outstanding shares were distributed
to ITT Corporation's stockholders and we became an independent company. On May
2, 1997, we changed our name from ITT Hartford Group, Inc. to our current name,
The Hartford Financial Services Group, Inc.
As a holding company that is separate and distinct from our insurance
subsidiaries, we have no significant business operations of our own. Therefore,
we rely on the dividends from our insurance company and other subsidiaries as
the principal source of cash flow to meet our obligations. These obligations
include payments on our debt securities and the payment of dividends on our
capital stock, including preferred stock. The Connecticut insurance holding
company laws limit the payment of dividends by Connecticut-domiciled insurers.
Under these laws, the insurance subsidiaries may only make their dividend
payments out of surplus. In addition, these laws require notice to and approval
by the Connecticut Insurance Commissioner for the declaration or payment by
those subsidiaries of any dividend if the dividend and other dividends or
distributions made within the preceding twelve months exceeds the greater of:
- 10% of the insurer's policyholder surplus as of December 31 of the
preceding year, or
- net income, or net gain from operations if the subsidiary is a life
insurance company, for the previous calendar year, in each case
determined under statutory insurance accounting principles.
In addition, if any dividend of a Connecticut-domiciled insurer exceeds the
insurer's earned surplus, calculated in accordance with the applicable insurance
holding company laws, it requires the prior approval of the Connecticut
Insurance Commissioner.
The insurance holding company laws of the other jurisdictions in which our
insurance subsidiaries are incorporated, or deemed commercially domiciled,
generally contain similar, and in some instances more restrictive, limitations
on the payment of dividends.
Our rights to participate in any distribution of the assets of any of our
subsidiaries, such as in a liquidation or reorganization, and the ability of
holders of the securities to benefit indirectly from a distribution, are subject
to the prior claims of creditors of the applicable subsidiary, except to the
extent that we may be a creditor of that subsidiary. Claims on these
subsidiaries by persons other than us include, as of September 30, 2003, claims
by policyholders for benefits payable amounting to $57.04 billion, claims by
separate account holders of $125.11 billion, and other liabilities including
claims of trade creditors, claims from guaranty associations and claims from
holders of debt obligations amounting to $17.87 billion.
Our principal executive offices are located at Hartford Plaza, Hartford,
Connecticut 06115, and our telephone number is (860) 547-5000.
1
THE EXCHANGE OFFER
The summary below describes the principal terms of the exchange offer.
Certain of the terms and conditions described below are subject to important
limitations and exceptions. "The Exchange Offer" section of this prospectus
contains a more detailed description of the terms and conditions of the exchange
offer.
The Private Offering.......... On July 10, 2003, we issued $320 million in
aggregate principal amount of old notes in a
private offering. In connection with that
offering, we entered into a registration rights
agreement in which we agreed, among other
things, to complete an exchange offer for the
old notes.
The Exchange Offer............ We are offering to exchange the new notes for a
like principal amount of old notes. Old notes
may be tendered, and new notes will be issued,
only in integral denominations of $1,000 and
integral multiples of $1,000.
The terms of the new notes will be identical in
all material respects to the terms of the old
notes except that the new notes will be
registered under the Securities Act and will
not be subject to the registration rights,
additional interest provisions and transfer
restrictions applicable to the old notes.
Subject to the satisfaction or waiver of
specified conditions, we will exchange new
notes for all the old notes that are validly
tendered and not validly withdrawn prior to the
expiration of the exchange offer. We will cause
the exchange to be effected promptly after the
expiration of the exchange offer. See "The
Exchange Offer -- Terms of the Exchange Offer."
Expiration Date............... The exchange offer will expire at 5:00 p.m.,
Eastern Time on February 20, 2004, unless we,
in our sole discretion, extend it, in which
case the expiration date shall be the latest
date to which the exchange offer is extended.
We do not currently intend to extend the
expiration date.
Procedures For Tendering...... If you wish to accept the exchange offer and
your old notes are held by a custodial entity
such as a bank, broker, dealer, trust company
or other nominee, you must instruct the
custodial entity to tender your old notes on
your behalf pursuant to the procedures of the
custodial entity. If your old notes are
registered in your name, you must complete,
sign and date the accompanying letter of
transmittal, or a facsimile of the letter of
transmittal, according to the instructions
contained in this prospectus and the letter of
transmittal. You then must mail or otherwise
deliver the letter of transmittal, or a
facsimile of the letter of transmittal,
together with the old notes and any other
required documents, to the exchange agent prior
to 5:00 p.m. Eastern time, on the expiration
date at the address set forth on the cover page
of the letter of transmittal.
Custodial entities that are participants in The
Depository Trust Company, which we refer to as
the "Depositary" or "DTC," may tender old notes
through DTC's Automated Tender Offer Program
which enables a custodial entity, and the
beneficial owner on whose behalf the custodial
entity is acting, to electronically agree to be
bound by the letter of transmittal. A
confirmation of such book-entry transfer of
such old notes into the exchange agent's
account at DTC must be received by the exchange
agent prior to 5:00 p.m.
2
Eastern time, on the expiration date. A letter
of transmittal need not accompany tenders
effected through the Automated Tender Offer
Program, which we refer to as the ATOP.
By tendering your old notes in either of these
manners, you will make and agree to the
representations that appear under "The Exchange
Offer -- Procedures for Tendering."
Guaranteed Delivery
Procedures.................... If you wish to tender your old notes, but
cannot properly do so prior to the expiration
date, you may tender your old notes according
to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Resale of New Notes........... Under existing interpretations of the
Securities Act by the staff of the SEC
contained in several no-action letters to third
parties, we believe that the new notes will
generally be freely transferable by holders
thereof after the exchange offer without
further registration under the Securities Act
(subject to certain representations required to
be made by each holder, as set forth under "The
Exchange Offer -- Procedures for Tendering").
However, any holder who (1) is one of our
"affiliates," (2) intends to participate in the
exchange offer for the purpose of distributing
the new notes or (3) is a broker-dealer
receiving new notes for its own account in
exchange for old notes that were acquired as a
result of market-making activities or other
trading activities, (x) will not be able to
rely on the interpretation of the staff of the
SEC and (y) must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with any sale or
transfer of the notes unless such sale or
transfer is made pursuant to an exemption from
such requirements.
We do not intend to seek our own interpretation
regarding the exchange offer and there can be
no assurance that the staff of the SEC would
make a similar determination with respect to
the new notes as it has in other
interpretations to other parties, although we
have no reason to believe otherwise.
Consequences of Failure to
Exchange...................... Old notes that are not tendered in the exchange
offer, are tendered but not accepted or are
tendered but subsequently validly withdrawn
will continue to bear a legend restricting
their transfer. You will not be able to offer
or sell the old notes unless:
- each offer or sale is made pursuant to an
exemption from the requirements of the
Securities Act; or
- the old notes are registered under the
Securities Act.
After the exchange offer is closed, we will no
longer have an obligation to register the old
notes except in some limited circumstances.
Therefore, upon completion of the exchange
offer, there may be no market for the old notes
and you may have difficulty selling them.
Withdrawal of Tenders......... You may withdraw the surrender of your old
notes at any time prior to the expiration date.
Conditions to the Exchange
Offer......................... The exchange offer is subject to customary
conditions, which we may assert or waive. See
"The Exchange Offer -- Conditions to the
Exchange Offer."
3
Appraisal Rights.............. You will not be entitled to any appraisal or
dissenters' rights in connection with the
exchange offer.
U.S. Federal Income Tax
Considerations................ The exchange of old notes for new notes in the
exchange offer should not be a taxable event
for U.S. federal income tax purposes. See
"Certain U.S. Federal Income Tax
Considerations."
Exchange Agent................ JPMorgan Chase Bank is serving as the exchange
agent in connection with the exchange offer.
JPMorgan Chase Bank also serves as trustee
under the indenture relating to the notes. The
address and telephone number of the exchange
agent are set forth under the caption "The
Exchange Offer -- Exchange Agent."
THE NEW NOTES
The summary below describes the principal terms of the new notes. The terms
of the new notes are identical in all material respects to the terms of the old
notes, except that the registration rights, additional interest provisions and
transfer restrictions applicable to the old notes are not applicable to the new
notes. The new notes will evidence the same debt as the old notes. The new notes
and the old notes will be governed by the same indenture. The "Description of
the New Notes" section of this prospectus contains a more detailed description
of the terms and conditions of the new notes.
Securities Offered............ 4.625% Senior Notes due July 15, 2013.
Interest Payment Dates........ We will pay interest on the new notes
semi-annually in arrears on January 15 and July
15 of each year, beginning on July 15, 2004.
Ranking....................... The new notes will be unsecured and will rank
equally with all of our other unsecured and
unsubordinated obligations from time to time
outstanding.
Redemption.................... We may redeem the new notes, in whole or in
part, at any time at the redemption price
described under "Description of the New
Notes -- Redemption."
Covenants..................... The indenture governing the notes contains
covenants that limit our ability to:
- incur debt secured by liens; and
- merge, consolidate or transfer all or
substantially all of our assets.
These covenants are subject to important
exceptions and qualifications that are
described under "Description of the New Notes."
Lack of Public Market......... There is no existing trading market for the new
notes, and there can be no assurance regarding
any future development of a trading market for
the new notes or the ability of holders of the
new notes to sell their new notes or the price
at which such holders may be able to sell their
new notes.
Use of Proceeds............... We will not receive any proceeds from the
exchange offer. See "Use of Proceeds."
4
SELECTED FINANCIAL INFORMATION
The selected income statement information for each of the years during the
three year period ended December 31, 2002 and the selected balance sheet
information at each of December 31, 2002 and December 31, 2001 in the table
below were derived from our audited consolidated financial statements which were
audited by Deloitte & Touche LLP, independent public accountants. The selected
income statement information for each of the years during the two year period
ended December 31, 1999 and the selected balance sheet information at each of
December 31, 2000, December 31, 1999 and December 31, 1998 were derived from our
audited consolidated financial statements which were audited by Arthur Andersen
LLP, independent public accountants. The selected financial information at and
for the nine months ended September 30, 2003 and 2002 was derived from our
unaudited condensed consolidated financial statements which have been reviewed
by Deloitte & Touche LLP and include all adjustments, consisting of normal
recurring accruals, which we consider necessary for a fair presentation of our
financial position and results of operations as of those dates and for those
periods. In addition, material intercompany transactions and balances have been
eliminated. This table should be read in conjunction with our consolidated
financial statements and the related notes that are incorporated by reference in
this prospectus.
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
2003 2002 2002 2001 2000 1999 1998
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT FOR PER SHARE DATA)
INCOME STATEMENT DATA
Revenues(1).................. $ 13,960 $ 12,137 $ 16,417 $ 15,980 $ 15,312 $ 13,945 $ 15,381
======== ======== ======== ======== ======== ======== ========
Net income (loss)(2)(3)...... $ (545) $ 742 $ 1,000 $ 507 $ 974 $ 862 $ 1,015
======== ======== ======== ======== ======== ======== ========
Earnings (loss) Per Share
Data:
Basic(2)(3)................ $ (2.03) $ 3.00 $ 4.01 $ 2.13 $ 4.42 $ 3.83 $ 4.36
Diluted(2)(3)(4)........... $ (2.03) $ 2.96 $ 3.97 $ 2.10 $ 4.34 $ 3.79 $ 4.30
Dividends declared per common
share...................... $ 0.81 $ 0.78 $ 1.05 $ 1.01 $ 0.97 $ 0.92 $ 0.85
BALANCE SHEET DATA
Assets....................... $211,365 $175,539 $181,975 $181,593 $171,951 $167,486 $150,632
======== ======== ======== ======== ======== ======== ========
Long-term debt............... $ 3,660 $ 2,595 $ 2,596 $ 1,965 $ 1,862 $ 1,548 $ 1,548
Company obligated mandatorily
redeemable preferred
securities of subsidiary
trusts holding solely
junior subordinated
debentures................. $ 962 $ 1,461 $ 1,468 $ 1,412 $ 1,243 $ 1,250 $ 1,250
Total stockholders' equity... $ 11,344 $ 10,943 $ 10,734 $ 9,013 $ 7,464 $ 5,466 $ 6,423
======== ======== ======== ======== ======== ======== ========
---------------
(1) The year ended December 31, 2001 includes a $91 reduction in premiums from
reinsurance cessions related to the terrorist attack on September 11, 2001.
1998 includes $541 related to the recapture of an in force block of
Corporate Owned Life Insurance business from MBL Life Assurance Co. of New
Jersey. 1998 includes revenues of $1,117 from London & Edinburgh, which was
sold in November 1998.
(2) The nine months ended September 30, 2003 includes an after-tax charge of
$1,701 ($6.32 per basic and $6.30 per diluted share) related to our 2003
asbestos reserve addition. The year ended December 31, 2001 includes $440 of
losses ($1.85 per basic and $1.82 per diluted share) related to the
terrorist attack on September 11, 2001 and a $130 tax benefit ($0.55 per
basic and $0.54 per diluted share) at Hartford Life, Inc.
(3) The year ended December 31, 2001 includes a $34 after-tax charge ($0.14 per
basic and diluted share) related to the cumulative effect of accounting
changes for our adoption of Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities" and Emerging Issues Task Force Issue 99-20, "Recognition of
Interest Income and Impairment on Purchased and Retained Beneficial
Interests in Securitized Financial Assets."
(4) As a result of the net loss for the nine months ended September 30, 2003,
SFAS No. 128, "Earnings Per Share", requires us to use basic weighted
average common shares outstanding in the calculation of the nine months
ended September 30, 2003 diluted earnings (loss) per share, since the
inclusion of options of 1.5 would have been antidilutive to the earnings per
share calculation. In the absence of the net loss, weighted average common
shares outstanding and dilutive potential common shares would have totaled
270.4.
5
USE OF PROCEEDS
The exchange offer is intended to satisfy our obligations under the
registration rights agreement we executed when we issued the old notes. We will
not receive any cash proceeds from the exchange offer. In exchange for the old
notes that you validly tender pursuant to the exchange offer, you will receive
new notes in like principal amount. The old notes that are surrendered in
exchange for the new notes will be retired and canceled by us upon receipt and
cannot be reissued. Accordingly, the issuance of the new notes under the
exchange offer will not result in any change in our outstanding debt.
We used the net proceeds from the sale of the old notes, plus available
cash, to redeem $320 million net aggregate principal amount of our 7.70% Junior
Subordinated Deferrable Interest Debentures, Series A, due February 28, 2016,
underlying the 7.70% Cumulative Quarterly Income Preferred Securities, Series A,
originally issued by Hartford Capital I (of which approximately $320 million
were outstanding on September 30, 2003).
6
CAPITALIZATION
The following table sets forth as of September 30, 2003 on a consolidated
basis:
-- our actual capitalization; and
-- our capitalization as adjusted to give effect to the issuance of
commercial paper in December 2003, most of the proceeds of which were
used to finance the acquisition of the group life and accident, and
short-term and long-term disability business of CNA Financial
Corporation; and
-- our capitalization as further adjusted to give effect to the
consummation of the sale of 6,325,000 shares of our common stock,
which we expect to close on January 22, 2004, for aggregate proceeds
of $388 million, assuming no exercise by the underwriters of their
option to purchase additional shares, and the application of the net
proceeds to reduce outstanding commercial paper.
The following data is qualified in its entirety by our financial statements
and other information contained elsewhere in this prospectus or incorporated by
reference.
AS OF SEPTEMBER 30, 2003
----------------------------------------------
AS ADJUSTED TO AS FURTHER
REFLECT ADJUSTED TO
ISSUANCE OF REFLECT THE
COMMERCIAL OFFERING OF
ACTUAL PAPER COMMON STOCK
------- ------------------- ------------
(UNAUDITED, IN MILLIONS)
Short-Term Debt............................... $ 515 $ 1,050 $ 650(1)
Long-Term Debt................................ 3,660 3,660 3,660
Company Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trusts
Holding Solely Junior Subordinated
Debentures (trust preferred securities)..... 962 962 962
Equity Excluding Accumulated Other
Comprehensive Income, Net of Tax............ 9,987 9,987 10,387(1)
Accumulated Other Comprehensive Income, Net of
Tax......................................... 1,357 1,357 1,357
------- ------- -------
Total Stockholders' Equity.................... 11,344 11,344 11,744(1)
------- ------- -------
Total Capitalization.......................... $16,481 $17,016 $17,016
------- ------- -------
------------
(1) Excludes the effect of issuance costs pertaining to the offering of common
stock.
7
RATIO OF CONSOLIDATED EARNINGS TO TOTAL FIXED CHARGES
For purposes of computing the ratio of consolidated earnings to total fixed
charges, "earnings" consist of income from operations before U.S. federal income
taxes and fixed charges. "Fixed charges" consist of interest expense (including
interest credited to contract holders), capitalized interest, amortization of
debt expense and an imputed interest component for rental expense.
The following table sets forth our ratio of consolidated earnings to total
fixed charges for the years and the periods indicated ($ in millions):
NINE MONTHS
ENDED SEPTEMBER
30, YEAR ENDED DECEMBER 31,
---------------- ------------------------------------
2003 2002 2002 2001 2000 1999 1998
------- ----- ---- ---- ---- ---- ----
Ratio of Consolidated Earnings to Total
Fixed Charges.......................... NM(1) 1.7 1.8 1.2(2) 2.1 1.9 1.9
Deficiency of Consolidated Earnings to
Total Fixed Charges.................... $1,160(3) -- -- -- -- -- --
---------------
(1) NM: not meaningful.
(2) For 2001, the calculation of the ratio of consolidated earnings to total
fixed charges reflects before-tax losses of $678 million relating to the
terrorist attack on September 11, 2001.
(3) Represents additional earnings that would be necessary to result in a one to
one ratio of consolidated earnings to total fixed charges. This amount
reflects a before-tax charge of $2.6 billion related to our 2003 asbestos
reserve addition.
8
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We issued the old notes on July 10, 2003 in a transaction exempt from the
registration requirements of the Securities Act. Concurrently, the initial
purchasers of the old notes resold the old notes to investors believed to be
"qualified institutional buyers" in reliance upon the exemption from
registration provided by Rule 144A under the Securities Act and to investors
outside the United States in compliance with Regulation S of the Securities Act.
As a condition to the initial sale of the old notes, we entered into a
registration rights agreement with the initial purchasers of the old notes
pursuant to which we agreed to use our reasonable best efforts to:
- file a registration statement relating to a registered exchange offer for
the notes with the SEC no later than the 120th day after the date that
the old notes were first issued;
- cause the SEC to declare the registration statement effective under the
Securities Act no later than the 210th day after the old notes were first
issued;
- keep the registration statement effective until the completion of the
exchange offer; and
- complete the exchange offer no later than the 240th day after the old
notes were first issued.
We have agreed to issue and exchange the new notes for all old notes
validly tendered and not validly withdrawn prior to the expiration of the
exchange offer. A copy of the registration rights agreement is being filed
herewith. The filing of the registration statement is intended to satisfy some
of our obligations under the registration rights agreement.
The term "holder" with respect to the exchange offer means any person in
whose name old notes are registered on the trustee's books or any other person
who has obtained a properly completed bond power from the registered holder, or
any person whose old notes are held of record by DTC who desires to deliver the
old notes by book-entry transfer at DTC.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal, we will accept any and all old
notes validly tendered prior to 5:00 p.m., Eastern Time, on the expiration date.
See "-- Expiration Date, Extensions, Terminations and Amendments" below for an
explanation of how the expiration date may be extended. Upon satisfaction or
waiver of all of the conditions to the exchange offer, we will issue, promptly
after the expiration date, an aggregate principal amount of up to $320 million
of new notes in exchange for a like principal amount of outstanding old notes
tendered and accepted in connection with the exchange offer. The new notes
issued in connection with the exchange offer will be delivered on the earliest
reasonably practicable date following the expiration date. Holders may tender
some or all of their old notes in connection with the exchange offer but only in
denominations of $1,000 and integral multiples of $1,000. The exchange is not
conditioned upon any number or aggregate principal amount of old notes being
tendered.
The form and terms of the new notes are identical in all material respects
to the form and terms of the old notes, except that the new notes will be
registered under the Securities Act and will not be subject to the registration
rights, additional interest provisions and transfer restrictions applicable to
the old notes. The new notes will evidence the same debt as the old notes and
will be issued under the same indenture and be entitled to the same benefits
under that indenture as the old notes being exchanged. Interest on each new note
will accrue from the last date on which interest was paid on the old note
surrendered in exchange therefor (unless issued after a record date for an
interest payment and prior to the related interest payment date, in which case
interest will accrue from such interest payment date) or, if no interest has
been paid, from the original issue date of the old note. As of the date of this
prospectus, $320 million in aggregate principal amount of the old notes is
outstanding. Substantially all of the principal amount of the old notes is
registered in the name of The Depository Trust Company ("DTC") or its nominee.
9
In connection with the issuance of the old notes, we arranged for the old
notes originally purchased by qualified institutional buyers to be issued and
transferable in book-entry form through the facilities of DTC. Initially, the
new notes will be issued in the form of global notes registered in the name of
DTC or its nominee and each beneficial owner's interest in the global notes will
be transferable in book-entry form through DTC. See "Description of the New
Notes -- Book-Entry, Delivery and Form."
Solely for reasons of administration, we have fixed the close of business
on January 22, 2004 as the record date for the exchange offer for purposes of
determining the persons to whom this prospectus and the letter of transmittal
will be mailed initially. There will be no fixed record date for determining
holders of the old notes entitled to participate in the exchange offer.
Holders of old notes do not have any appraisal or dissenters' rights in
connection with the exchange offer. We intend to conduct the exchange offer in
accordance with the requirements of the registration rights agreement and the
applicable requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and the related SEC rules and regulations.
Old notes that are not tendered in the exchange offer, are tendered but not
accepted or are tendered but subsequently validly withdrawn in connection with
the exchange offer will remain outstanding, will continue to accrue interest and
will be entitled to the benefits of the indenture under which they were issued.
However, some registration and other rights under the registration rights
agreement will terminate, and holders of the old notes generally will not be
entitled to any registration rights under the registration rights agreement,
subject to limited exceptions. See "-- Consequences of Failing to Tender Old
Notes in the Exchange Offer" and "-- Shelf Registration Statement" below.
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept all old notes validly tendered and will issue the new notes
promptly after the expiration date. See "-- Conditions to the Exchange Offer"
below.
If any tendered old notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events described in this
prospectus, or otherwise, we will return the old notes, without expense, to the
tendering holder as promptly as possible after the expiration date. Any old
notes not accepted for exchange for any reason will be returned without expense
to the tendering holder as promptly as practicable after the expiration or
termination of the exchange offer.
Holders who tender old notes will be required to pay brokerage commissions
or fees, if any. However, subject to the instructions in the letter of
transmittal, holders who tender old notes will, in certain circumstances, be
required to pay transfer taxes on the exchange of old notes in connection with
the exchange offer. We will pay certain other charges and expenses in connection
with the exchange offer. See "-- Fees and Expenses" below.
EXPIRATION DATE, EXTENSIONS, TERMINATION AND AMENDMENTS
The expiration date for the exchange offer is 5:00 p.m., Eastern Time, on
February 20, 2004, the 20th business day following the date of this prospectus.
We may, however, in our sole discretion, extend the period of time that the
exchange offer is open, in which case the term "expiration date" for the
exchange offer shall mean the latest date and time to which the exchange offer
is extended.
We expressly reserve the right, at any time, to extend the period of time
that the exchange offer is open, and delay acceptance for exchange of any old
notes, by giving oral or written notice of an extension to the holders of old
notes as described below. During any extension, all old notes previously
tendered will remain subject to the exchange offer and may be accepted for
exchange by us.
We expressly reserve the right to amend or terminate the exchange offer,
and not to accept for exchange any old notes, upon the occurrence of any of the
conditions of the exchange offer specified under "-- Conditions to the Exchange
Offer" below. We will give oral or written notice of any extension, amendment,
non-acceptance or termination to the holders of the old notes as promptly as
practicable.
10
CONDITIONS TO THE EXCHANGE OFFER
Our obligation to consummate the exchange offer is subject to the following
conditions:
- the exchange offer or the making of any exchange by a holder does not
violate applicable law or any applicable interpretation of the staff of
the SEC;
- the due tendering of the old notes in accordance with the exchange offer;
- no action or proceeding shall have been instituted or threatened in any
court or by or before any governmental agency with respect to the
exchange offer, which, in our judgment, would reasonably be expected to
impair our ability to proceed with the exchange offer; and
- each holder of the old notes to be exchanged in the exchange offer shall
have represented that:
-- any new notes to be received by the holder will be acquired in the
ordinary course of its business;
-- the holder has no arrangement or understanding with any person to
participate in the distribution of the new notes (within the meaning of
the Securities Act);
-- the holder is not an "affiliate" of ours as defined in Rule 405 under
the Securities Act, or, if the holder is our affiliate, the holder will
comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable;
-- if the holder is not a broker-dealer, the holder is not engaged in, and
does not intend to engage in, the distribution of the new notes;
-- if the holder is a broker-dealer, the holder will receive new notes for
the holder's own account in exchange for old notes that were acquired
as a result of market-making activities or other trading activities and
that the holder will deliver a prospectus in connection with any resale
of such new notes; and
-- the holder is not acting on behalf of any person who could not
truthfully make the foregoing representations.
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of old notes in any jurisdiction in which the exchange
offer or the acceptance of it would not be in compliance with the securities or
blue sky laws of such jurisdiction.
If you wish to participate in the exchange offer, you must represent to us
in the letter of transmittal or through DTC's Automated Tender Offer Program
(ATOP) that the representations listed above are true and correct. Under
existing interpretations of the Securities Act by the staff of the SEC contained
in several no-action letters to third parties (including Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley & Co. Incorporated
(available June 5, 1991), K-III Communications Corporation (available May 14,
1993) and Shearman & Sterling (available July 2, 1993)), we believe that the new
notes will generally be freely transferable by holders thereof after the
exchange offer without further registration under the Securities Act (subject to
certain representations required to be made by each holder, as set forth above).
However, any holder who (1) is one of our "affiliates," (2) intends to
participate in the exchange offer for the purpose of distributing the new notes
or (3) is a broker-dealer receiving new notes for its own account in exchange
for old notes that were acquired as a result of market-making activities or
other trading activities, (x) will not be able to rely on the interpretation of
the staff of the SEC and (y) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
transfer of the notes unless such sale or transfer is made pursuant to an
exemption from such requirements.
We do not intend to seek our own interpretation regarding the exchange
offer and there can be no assurance that the staff of the SEC would make a
similar determination with respect to the new notes as it has in other
interpretations to other parties, although we have no reason to believe
otherwise.
The conditions listed above are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any of these conditions. We
may waive these conditions in our reasonable
11
discretion, in whole or in part, at any time and from time to time. The failure
by us at any time to exercise any of the above rights shall not be considered a
waiver of these rights, and these rights shall be considered ongoing rights that
may be asserted at any time and from time to time. Our determination of the
satisfaction or waiver of these conditions will be made on or before the
expiration date. We will not accept any of the old notes for exchange unless all
of the conditions listed above have been satisfied or waived prior to the
expiration date.
If we determine in our reasonable discretion that any of the conditions are
not satisfied at the expiration date, we may:
- refuse to accept any old notes and return all tendered old notes to the
tendering holders;
- extend the exchange offer and retain all old notes tendered before the
expiration of the exchange offer, subject, however, to the rights of
holders to withdraw these old notes (See "-- Withdrawal of Tenders"
below); or
- waive unsatisfied conditions relating to the exchange offer and accept
all properly tendered old notes which have not been withdrawn.
Our determination concerning the events described above will be final and
binding upon all parties.
PROCEDURES FOR TENDERING
Unless the tender is made in book-entry form or pursuant to the guaranteed
delivery procedures described below under "Guaranteed Delivery Procedures," to
tender old notes in the exchange offer a holder must:
- complete, sign and date the letter of transmittal, or a facsimile of it;
- have the signatures guaranteed if required by the letter of transmittal;
and
- mail or otherwise deliver the letter of transmittal or the facsimile, the
old notes, and any other required documents to the exchange agent prior
to 5:00 p.m. Eastern Time, on the expiration date.
The exchange agent will make a request to establish an account with respect
to the old notes at DTC's Book-Entry Transfer Facility for purposes of the
exchange offer within two business days after the date of this prospectus. Any
institution that is a participant in DTC's Book-Entry Transfer Facility system
may make book-entry delivery of the old notes through DTC's ATOP. However, the
exchange for the old notes so tendered will only be made after a book-entry
confirmation of the book-entry transfer of old notes into the exchange agent's
account, and timely receipt by the exchange agent of an agent's message. The
term "agent's message" means a message, transmitted by the book-entry transfer
facility and received by the exchange agent and forming part of a book-entry
confirmation, which states that DTC's Book-Entry Transfer Facility has received
an express acknowledgement from a participant tendering old notes that are the
subject of such book-entry confirmation that such participant has received and
agrees to be bound by the terms of the letter of transmittal, and that we may
enforce such agreement against such participant. A letter of transmittal need
not accompany tenders offered through ATOP.
The tender by a holder of old notes will constitute an agreement between us
and the holder in accordance with the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal.
The method of delivery of old notes and the letter of transmittal and all
other required documents to the exchange agent is at the election and risk of
the holders. Instead of delivery by mail, we recommend that holders use an
overnight or hand delivery service. In all cases, holders should allow
sufficient time to assure delivery to the exchange agent before the expiration
date. No letter of transmittal or old notes should be sent to us. Holders may
request their brokers, dealers, commercial banks, trust companies, or nominees
to effect the tenders for them.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender its old notes should contact the registered holder promptly and
instruct the registered holder to tender the old notes on behalf of the
beneficial owner. If the
12
beneficial owner wishes to tender the old notes on its own behalf, the owner
must, prior to completing and executing the appropriate letter of transmittal
and delivery of its old notes, either make appropriate arrangements to register
ownership of the old notes in its name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take a
considerable period of time.
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by an "eligible guarantor institution" as defined in Rule 17Ad-15
under the Exchange Act unless the old notes are tendered:
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal; or
- for the account of an eligible guarantor institution.
If the letter of transmittal is signed by a person other than the
registered holder of the old notes, the old notes must be endorsed by the
registered holder or accompanied by a properly completed bond power, in each
case signed or endorsed in blank by the registered holder.
If the letter of transmittal or any old notes or bond powers are signed or
endorsed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, these persons should so indicate when signing and, unless the
requirement is waived by us, submit evidence satisfactory to us of their
authority to act in that capacity with the letter of transmittal.
We will determine all questions as to the validity, form, eligibility
(including time of receipt), and acceptance and withdrawal of tendered old notes
in our sole discretion. We reserve the absolute right to reject any and all old
notes not properly tendered or any old notes whose acceptance by us would, in
the opinion of our counsel, be unlawful. We also reserve the right to waive any
defects, irregularities or conditions of tender as to any particular old notes
either before or after the expiration date. Our interpretation of the terms and
conditions of the exchange offer (including the instructions in the letter of
transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of old notes must be cured
within a time period determined by us.
Although we intend to request the exchange agent to notify holders of
defects or irregularities relating to tenders of old notes, none of we, the
exchange agent or any other person has any duty to give this notice or will
incur any liability for failure to give this notice. Tenders of old notes will
not be considered to have been made until such defects or irregularities have
been cured or waived. Any old notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the exchange agent to the tendering holders,
unless otherwise provided in the letter of transmittal, as soon as practicable
following the expiration date.
In addition, we reserve the right, as set forth above under the caption
"-- Conditions to the Exchange Offer," to terminate the exchange offer with
respect to the old notes.
GUARANTEED DELIVERY PROCEDURES
If the procedures for tendering your old notes described above under
"Procedures for Tendering" cannot be completed on a timely basis, a tender may
be effected if:
- the tender is made through an eligible guarantor institution;
- prior to the expiration date, the exchange agent receives by facsimile
transmission, mail or hand delivery from such eligible guarantor
institution a properly completed notice of guaranteed delivery,
substantially in the form provided by us (or an agent's message in lieu
thereof), which:
- sets forth the name and address of the holder of old notes and the
amount of old notes tendered;
- states that the tender is being made thereby; and
- guarantees that within three New York Stock Exchange, or NYSE, trading
days after the expiration date, the certificates for all physically
tendered old notes, in proper form for transfer, or a book-entry
13
confirmation, as the case may be, a duly executed letter of transmittal
(provided that such letter of transmittal is not required to be
delivered if an agent's message is properly transmitted in lieu of a
properly completed notice of guaranteed delivery) and any other
documents required by the letter of transmittal will be deposited by the
eligible guarantor institution with the exchange agent; and
- the certificates for all physically tendered old notes, in proper form
for transfer, or a book-entry confirmation, as the case may be, a duly
executed letter of transmittal (provided that such letter of transmittal
is not required to be delivered if an agent's message is properly
transmitted in lieu of a properly completed notice of guaranteed
delivery) and all other documents required by the letter of transmittal
are received by the exchange agent within three NYSE trading days after
the expiration date.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of old notes may
be withdrawn at any time prior to 5:00 p.m., Eastern Time, on the expiration
date.
To withdraw a tender of old notes, a telegram, telex, facsimile
transmission or letter giving notice of withdrawal must be received by the
exchange agent at its address set forth herein prior to 5:00 p.m., Eastern Time,
on the expiration date. Any notice of withdrawal must:
- specify the name of the person who deposited the old notes to be
withdrawn;
- identify the old notes to be withdrawn, including the principal amount of
the old notes;
- in the case of old notes tendered by book-entry transfer, specify the
number of the account at the book-entry transfer facility from which the
old notes were tendered and specify the name and number of the account at
the book-entry transfer facility to be credited with the withdrawn old
notes and otherwise comply with the procedures of such facility;
- contain a statement that such holder is withdrawing its election to have
such old notes exchanged;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the old notes were tendered, including
any required signature guarantees, or be accompanied by documents of
transfer sufficient to have the trustee register the transfer of the old
notes into the name of the person withdrawing the tender; and
- specify the name in which any old notes are to be registered, if
different from that of the depositor.
We will determine all questions as to the validity, form and eligibility
(including time of receipt) of withdrawal notices. Any old notes so withdrawn
will be considered not to have been validly tendered for purposes of the
exchange offer, and no new notes will be issued in exchange for these old notes
unless the old notes withdrawn are validly re-tendered. Any old notes that have
been tendered but are not accepted for exchange or are withdrawn will be
returned to the holder without cost to such holder as soon as practicable after
withdrawal, rejection of tender, or termination of the exchange offer. Properly
withdrawn old notes may be re-tendered by following one of the procedures
described above under the caption "-- Procedures for Tendering" at any time
prior to the expiration date.
EXCHANGE AGENT
JPMorgan Chase Bank is the exchange agent for the exchange offer. You
should direct any questions and requests for assistance regarding the procedures
for tendering the old notes, requests for additional copies of
14
this prospectus or of the letter of transmittal, and requests for notice of
guaranteed delivery to the exchange agent, addressed as follows:
By Registered or Certified Mail:
JPMorgan Chase Bank
Institutional Trust Services
P.O. Box 2320
Dallas, Texas 75221-2320
Attention: Frank Ivins
For Information Call: (800) 275-2048
To Confirm by Telephone: (214) 468-6464
Facsimile Transmissions (eligible guarantor institutions only) (214) 468-6494
By Hand or Overnight Delivery:
JPMorgan Chase Bank
Institutional Trust Services
2001 Bryan Street, 9th floor
Dallas, Texas 75201
Attention: Frank Ivins
JPMorgan Chase Bank also serves as trustee under the indenture relating to
the notes.
FEES AND EXPENSES
We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer. We will pay certain other expenses to be
incurred in connection with the exchange offer, including the fees and expenses
of the exchange agent as well as accounting and legal fees.
Holders who tender their old notes for exchange will not be obligated to
pay transfer taxes. However, if new notes are to be issued or delivered to, or
if old notes not tendered or exchanged are to be registered in the name of, any
persons other than the registered holders of the old notes tendered, or if
tendered old notes are registered in the name of any persons other than the
persons signing the letter of transmittal, the amount of transfer taxes (whether
imposed on the registered holder of the old notes tendered or such other person)
payable on account of the transfer to such other person will be billed to the
holder of the old notes tendered unless satisfactory evidence of the payment of
such taxes or exemption therefrom is submitted.
ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old notes
as reflected in our accounting records on the date of the exchange. Accordingly,
we will not recognize any gain or loss for accounting purposes upon the
completion of the exchange offer. The expenses of the exchange offer will be
amortized by us over the term of the new notes.
CONSEQUENCES OF FAILING TO TENDER OLD NOTES IN THE EXCHANGE OFFER
Issuance of the new notes in exchange for the old notes under the exchange
offer will be made only after timely receipt by the exchange agent of the old
notes, a properly completed and duly executed letter of transmittal, and all
other required documents. Therefore, holders desiring to tender old notes in
exchange for new notes should allow sufficient time to ensure timely delivery.
We are under no duty to give notification of defects or irregularities to
tenders of old notes. Old notes that are not tendered in the exchange offer, are
tendered but not accepted or are tendered but subsequently withdrawn will,
following completion of the exchange offer, continue to be subject to the
existing restrictions upon transfer under the Securities Act, and, upon
completion of the exchange offer, certain registration rights under the
registration rights agreement will terminate.
15
In the event the exchange offer is completed, we generally will not be
required to register the remaining old notes, subject to limited exceptions. See
"-- Shelf Registration Statement" below. Remaining old notes will continue to be
subject to the following restrictions on transfer:
- the remaining old notes may be resold only if registered pursuant to the
Securities Act, if an exemption from registration is available, or if
neither registration nor an exemption is required by law, and
- the remaining old notes will bear a legend restricting transfer in the
absence of registration or an exemption.
We do not currently anticipate that we will register the remaining old
notes under the Securities Act. To the extent that old notes are tendered and
accepted in connection with the exchange offer, any trading market for remaining
old notes could be adversely affected.
SHELF REGISTRATION STATEMENT
We also may be required to use our reasonable best efforts to file a shelf
registration statement to permit certain holders of the old notes who are not
eligible to participate in the exchange offer to resell the old notes
periodically without being limited by the transfer restrictions. We will be
required to file a shelf registration statement only if:
- there is a change in law, SEC rules or regulations or applicable
interpretations thereof by the staff of the SEC, and as a result we are
not permitted to complete the exchange offer;
- any holder of the old notes (other than an initial purchaser) is
prohibited by law or SEC policy to participate in the exchange offer;
- the exchange offer registration statement is not declared effective
within 210 days of the date the old notes were first issued or the
exchange offer is not consummated within 240 days of the date the old
notes were first issued; or
- under certain circumstances, we are requested to do so by any initial
purchaser.
The shelf registration statement will permit only certain holders to resell
their old notes from time to time. In particular, such holders must:
- provide specified information in connection with the shelf registration
statement; and
- agree in writing to be bound by all provisions of the registration rights
agreement (including the indemnification and contribution obligations).
We will, in the event of the filing of a shelf registration statement, use
our reasonable best efforts to provide to each holder of old notes that are
covered by the shelf registration statement copies of the prospectus which is a
part of the shelf registration statement and notify each such holder when the
shelf registration statement has become effective. A holder who sells old notes
pursuant to the shelf registration statement will be required to be named as a
selling securityholder in the prospectus and to deliver a copy of the prospectus
to purchasers. Such holder will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales, and will be
bound by the provisions of the registration rights agreement which are
applicable to such a holder (including the indemnification and contribution
obligations).
If a shelf registration statement is required, we will use our reasonable
best efforts to:
- file the shelf registration statement with the SEC after such obligation
arises;
- cause the shelf registration statement to be declared effective by the
SEC as promptly as practicable after filing, but no later than the later
of the 300th day after the old notes were first issued or 60 days after
such obligation arises; and
- keep the shelf registration statement effective for a period of two years
after the date the shelf registration statement is declared effective (or
one year in the case of a shelf registration effected at the request of
an initial purchaser), or such shorter period that will terminate when
all of the old notes
16
covered by the shelf registration statement are sold thereunder, cease to
be outstanding or are already freely tradable.
Under certain circumstances, we may suspend the availability of the shelf
registration statement for certain periods of time, as specified in the
registration rights agreement.
ADDITIONAL INTEREST
If a Registration Default (as defined below) occurs, then we will be
required to pay additional interest to each holder of the old notes. We will pay
additional interest equal to 0.25% per year upon the occurrence of each
Registration Default. The amount of additional interest will increase by an
additional 0.25% per year for each subsequent 90-day period that a Registration
Default remains uncured. However, in no event will the rate of additional
interest exceed 0.50% per year. Such additional interest will accrue only for
those days that a Registration Default occurs and is continuing. All accrued
additional interest will be paid to the holders of the old notes in the same
manner as interest payments on the old notes, with payments being made on the
interest payment dates for the old notes. Following the cure of all Registration
Defaults, no more additional interest will accrue and the interest rate will
revert to the original rate. You will not be entitled to receive any additional
interest if you were, at the time the exchange offer was pending and
consummated, eligible to exchange, and did not validly tender, or withdrew after
validly tendering, your old notes for new notes in the exchange offer.
A "Registration Default" includes any of the following:
- we fail to file a registration statement relating to the exchange offer
on or before the date specified for such filing;
- any of the registration statements required by the registration rights
agreement are not declared effective by the SEC on or prior to the date
specified for such effectiveness;
- we fail to complete the exchange offer on or prior to the date specified
for such completion; or
- the shelf registration statement is declared effective but thereafter
ceases to be effective or usable in connection with resales of the notes
during the period specified in the registration rights agreement, subject
to our right to suspend the availability of the shelf registration
statement for certain periods.
REGULATORY REQUIREMENTS
Following the effectiveness of the registration statement covering the
exchange offer, no material federal or state regulatory requirement must be
complied with in connection with this exchange offer.
DESCRIPTION OF THE NEW NOTES
We will issue the new notes, and we issued the old notes, under an
indenture dated as of October 20, 1995 between us and JPMorgan Chase Bank, as
trustee, as supplemented by Supplemental Indenture No. 1 dated as of December
27, 2000 and by Supplemental Indenture No. 4 dated as of July 10, 2003, each
between us and the trustee. We refer to the indenture, so supplemented, as the
indenture. We have issued, and may in the future issue, other series of debt
securities under the indenture. The indenture does not limit the amount of debt
that we may issue under the indenture or the amount of other unsecured debt or
securities that we may issue.
As described under "The Exchange Offer -- Purpose and Effect of the
Exchange Offer," we have agreed to file this registration statement enabling
holders to exchange the old notes for the publicly registered new
17
notes. The form and terms of the new notes will be identical in all material
respects to the form and terms of the old notes, except that:
- the new notes will bear a different CUSIP number from the old notes;
- the new notes will be registered under the Securities Act and therefore
will not bear a legend restricting their transfer; and
- the holders of the new notes will not be entitled to certain rights of
the holders of old notes under the registration rights agreement,
including provisions which provide for an increase in the interest rate
of the old notes in certain circumstances relating to the timing of the
exchange offer.
The new notes will evidence the same debt as the old notes. The old notes
and the new notes will constitute a single series of securities under the
indenture and therefore will vote together as a single class for purposes of
determining whether holders of the requisite percentage in aggregate principal
amount thereof have taken actions or exercised rights they are entitled to take
or exercise under the indenture.
The following description of the terms of the indenture is a summary. We
have summarized only those portions of the indenture and the notes that we
believe will be most important to your decision to participate in the exchange
offer. You should keep in mind, however, that it is the indenture, and not this
summary, which defines your rights as a noteholder. There may be other
provisions in the indenture which are also important to you. You should read the
indenture for a full description of the terms of the notes. See "Where You Can
Find More Information" for information on how to obtain copies of the indenture
and the form of note.
In this section, the terms "The Hartford," "we," "us" and "our" do not
include any of our current or future subsidiaries, unless the context otherwise
indicates.
GENERAL
The new notes will mature on July 15, 2013 and will bear interest at the
rate of 4.625% per year from January 15, 2004. We will:
- pay interest semi-annually in arrears on January 15 and July 15 of each
year, commencing July 15, 2004;
- pay interest to the record holders on the preceding December 30 or June
30;
- compute interest on the basis of a 360-day year consisting of twelve
30-day months;
- make payments on the new notes at the offices of the trustee and paying
agent; and
- make payments by wire transfer for new notes held in book-entry form or
by check mailed to the address of the person entitled to the payment as
it appears on the securities register.
The new notes will only be issued in fully registered form in denominations
of $1,000 and integral multiples of $1,000.
There is no limit on the aggregate principal amount of notes of this series
that we may issue. Subject to certain tax limitations, we reserve the right,
from time to time and without the consent of any holders of any of the notes, to
re-open this series of notes to issue additional notes of the same tenor as the
outstanding notes, so that such additional notes shall be consolidated with,
form a single issue with and increase the aggregate principal amount of the
notes.
THE NEW NOTES WILL BE UNSECURED OBLIGATIONS
The new notes will be unsecured and will rank equally with all of our other
unsecured and unsubordinated obligations from time to time outstanding. As a
non-operating holding company, we have no significant business operations of our
own. Therefore, we rely on dividends from our insurance company and other
subsidiaries as the principal source of cash flow to meet our obligations for
payment of principal and interest on our outstanding debt obligations and
corporate expenses. Accordingly, the new notes will be effectively
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subordinated to all existing and future liabilities of our subsidiaries, and you
should rely only on our assets for payments on the notes. The payment of
dividends by our insurance subsidiaries is limited under the insurance holding
company laws in the jurisdictions where those subsidiaries are domiciled. See
"Prospectus Summary -- The Hartford Financial Services Group, Inc."
REDEMPTION
We may redeem the new notes, in whole or in part, at any time at a
redemption price equal to:
(i) any accrued and unpaid interest thereon to the date fixed for
redemption, plus;
(ii) the greater of (a) 100% of the principal amount thereof and (b) an
amount equal to the Discounted Remaining Fixed Amount Payments.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the new notes.
"Stated Maturity" means the date specified in the new notes as the fixed
date on which the principal of such notes or an installment of interest is due
and payable on such notes.
"Discounted Remaining Fixed Amount Payments" means an amount equal to the
sum of the Current Values of the amounts of interest and principal that would
have been payable by us pursuant to the terms of the new notes on each Interest
Payment Date after the date fixed for redemption and at the Stated Maturity of
the final payment of principal (assuming that we have not redeemed the new notes
prior to such Stated Maturity).
"Current Value" means, in respect of any amount, the present value of that
amount on the date fixed for redemption, after discounting that amount on a
semiannual basis from the originally scheduled date for payment, on the basis of
the Treasury Rate, plus 15 basis points, all computed in accordance with
generally accepted financial practice.
"Treasury Rate" means a per annum rate (expressed as a decimal and, in the
case of United States Treasury bills, converted to a per annum yield) determined
on the third business day prior to the date fixed for redemption to be the per
annum rate equal to the semiannual bond equivalent yield to maturity for United
States Treasury securities maturing at the Stated Maturity of the final payment
of principal of the new notes, as determined (i) by reference to the weekly
average yield to maturity for United States Treasury securities maturing on such
Stated Maturity as reported in the most recent Statistical Release H.15(519) of
the Board of Governors of the Federal Reserve, or (ii) if no such weekly average
yield is so reported, by interpolation between the most recent weekly average
yields to maturity for two series of United States Treasury securities, (a) one
maturing as close as possible to, but earlier than, such Stated Maturity and (b)
the other maturing as close as possible to, but later than, such Stated
Maturity, in each case as published in the most recent Statistical Release
H.15(519) of the Board of Governors of the Federal Reserve.
Notice of any redemption will be mailed at least 30 days, but not more than
60 days, before the date fixed for redemption to each holder of new notes to be
redeemed.
BOOK-ENTRY, DELIVERY AND FORM
The new notes will be represented by one or more global notes that will be
deposited with and registered in the name of DTC or its nominee. We will not
issue certificated notes, except in the limited circumstances described below.
Unless it is exchanged for certificated notes, a global note may not be
transferred except:
- by DTC (or any successor depositary) to its nominee;
- by a nominee of DTC to DTC or another nominee of DTC;
- by DTC or any nominee of DTC to a successor depositary, or a nominee of
the successor depositary;
- by a successor depositary to its nominee;
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- by a nominee of a successor depositary to the successor depositary or
another nominee; or
- by a successor depositary or any nominee of a successor depositary to
another successor depositary or its nominee.
Transfers of ownership interests in the global notes will be effected only
through entries made on the books of DTC participants acting on behalf of
beneficial owners. You, as the beneficial owner of new notes, will not receive
certificates representing ownership interests in the global notes, except in the
event that use of the book-entry system for the new notes is discontinued. You
will not receive written confirmation from DTC of your exchange. The direct or
indirect participants through whom you exchange the notes should send you
written confirmations providing details of your transactions, as well as
periodic statements of your holdings. The direct and indirect participants are
responsible for keeping accurate account of the holdings of their customers like
you. The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to own, transfer or pledge beneficial interests in
the global notes.
So long as DTC or its nominee is the registered owner and holder of the
global notes, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the new notes represented by the global notes for all
purposes under the indenture relating to the new notes. Except as provided
below, you, as the beneficial owner of interests in the global notes, will not
be entitled to have new notes registered in your name, will not receive or be
entitled to receive physical delivery of new notes in definitive form and will
not be considered the owner or holder thereof under the indenture. Accordingly,
you, as the beneficial owner, must rely on the procedures of DTC and, if you are
not a DTC participant, on the procedures of the DTC participants through which
you own your interest, to exercise any rights of a holder under the indenture.
We will issue definitive notes in exchange for the global notes if (1) DTC
or a successor depositary is at any time unwilling, unable or ineligible to
continue as depositary for the global notes or (2) an event of default has
occurred with respect to the new notes and is continuing. In addition, we may at
any time and in our sole discretion determine not to have the new notes
represented by one or more global notes. If that occurs, we will issue
definitive notes in exchange for the global notes.
Further, we may specify that you may, on terms acceptable to us, the
trustee and the depositary, receive definitive notes in exchange for your
beneficial interest in a global note. In that instance, you will be entitled to
physical delivery of definitive notes equal in principal amount to that
beneficial interest and to have the new notes registered in your name.
Neither we, the trustee, nor any other agent of ours or agent of the
trustee will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in
global notes or for maintaining, supervising or reviewing any records relating
to the beneficial ownership interests. DTC's practice is to credit the accounts
of DTC's direct participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interest in a security as
shown on the records of DTC, unless DTC has reason to believe that it will not
receive payment on the payment date. Beneficial owners may experience delays in
receiving distributions on their new notes because distributions will initially
be made to DTC and they must be transferred through the chain of intermediaries
to the beneficial owner's account. Payments by DTC participants to you will be
the responsibility of the DTC participant and not of DTC, the trustee or us.
Accordingly, we and any paying agent will have no responsibility or liability
for: (1) any aspect of DTC's records relating to, or payments made on account
of, beneficial ownership interests in notes represented by a global securities
certificate; (2) any other aspect of the relationship between DTC and its
participants or the relationship between those participants and the owners of
beneficial interests in a global securities certificate held through those
participants; or (3) the maintenance, supervision or review of any of DTC's
records relating to those beneficial ownership interests.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants 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.
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We have been informed that, under DTC's existing practices, if we request
any action of holders of notes, or an owner of a beneficial interest in a global
note such as you desires to take any action which a holder of notes is entitled
to take under the indenture, DTC would authorize the direct participants holding
the relevant beneficial interests to take such action, and those direct
participants and any indirect participants would authorize beneficial owners
owning through those direct and indirect participants to take such action or
would otherwise act upon the instructions of beneficial owners owning through
them.
DENOMINATIONS, REGISTRATION AND TRANSFER
The new notes will be exchangeable for other notes, in any authorized
denominations, of a like aggregate principal amount. You may present new notes
for exchange, or for registration of transfer, at the office of the registrar
for the notes under the indenture or at the office of any transfer agent we
designate for that purpose. You will not incur a service charge but you must pay
any taxes and other governmental charges as described in the indenture. We have
appointed the trustee as a registrar and transfer agent for the notes under the
indenture. We may at any time rescind the designation of any transfer agent that
we initially designate or approve a change in the location through which the
transfer agent acts. We may at any time designate additional transfer agents.
PAYMENT AND PAYING AGENTS
We will pay principal of, premium, if any, and interest on your new notes
at the office of the trustee in The City of New York or at the office of any
paying agent that we may designate.
We will pay any interest on the new notes to the registered owner of the
new notes at the close of business on the record date for the interest, except
in the case of defaulted interest. We may at any time designate additional
paying agents or rescind the designation of any paying agent.
Any moneys deposited with the trustee or any paying agent, or then held by
us in trust, for the payment of the principal of, premium, if any, and interest
on any new note that remain unclaimed for two years after the principal,
premium, if any, or interest has become due and payable will, at our request, be
repaid to us. After repayment to us, you are entitled to seek payment only from
us as a general unsecured creditor.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We will not consolidate with or merge into any other corporation or convey,
transfer or lease our properties and assets substantially as an entirety to any
person, and no person may consolidate with or merge into us or convey, transfer
or lease to us its properties and assets substantially as an entirety, unless:
- if we consolidate with or merge into another corporation or convey or
transfer our properties and assets substantially as an entirety to any
person, the successor corporation is organized under the laws of the
United States of America or any state or the District of Columbia, and
the successor corporation expressly assumes our obligations relating to
the notes;
- immediately after giving effect to the consolidation, merger, conveyance
or transfer, there exists no event of default, and no event which, after
notice or lapse of time or both, would become an event of default; and
- other conditions described in the indenture are met.
The general provisions of the indenture do not protect you against
transactions, such as a highly leveraged transaction, that may adversely affect
you.
LIMITATIONS UPON LIENS
With certain exceptions set forth below, the indenture provides that
neither we nor our restricted subsidiaries may issue, assume or guarantee any
indebtedness for money borrowed if the indebtedness is secured by a lien upon
any of our or any restricted subsidiaries' principal property, or on any shares
of stock of any restricted subsidiary, whether the principal property or shares
of stock are now owned or later acquired.
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GENERAL EXCEPTIONS
The indenture permits us to incur secured debt if we provide that the notes
and the other debt securities issued under the indenture will be secured equally
and ratably with, or in priority to, the new secured indebtedness. In this
event, we may also provide that any of our other indebtedness, including
indebtedness guaranteed by us or the restricted subsidiary, will be secured
equally with, or in priority to, the new secured indebtedness. Further, the
restriction on incurring secured indebtedness will not apply to:
- liens on property or shares of stock of any corporation existing at the
time the corporation becomes a restricted subsidiary;
- liens on property existing at the time it is acquired, or liens on
property which secure the payment of the purchase price of the property,
or liens on property which secure indebtedness incurred or guaranteed for
the purpose of financing the purchase price of the property or the
construction of that property, including improvements to existing
property, which indebtedness is incurred or guaranteed within 180 days
after the latest of the acquisition or completion of construction or
commencement of operation of the property;
- liens securing indebtedness owing by any restricted subsidiary to us or a
wholly owned restricted subsidiary;
- liens on the property of a corporation existing at the time the
corporation is merged into or consolidated with us or a restricted
subsidiary or at the time of a purchase, lease or other acquisition of
the properties of a corporation or other person as an entirety by us or a
restricted subsidiary;
- liens on our property or the property of a restricted subsidiary in favor
of the United States of America or any state, agency, instrumentality or
political subdivision of the United States of America, or in favor of any
other country, or any political subdivision of that country, to secure
any indebtedness incurred or guaranteed for the purpose of financing all
or any part of the purchase price or the cost of construction of the
property subject to those liens within 180 days after the latest of the
acquisition, completion of construction or commencement of operation of
that property; and
- any extension, renewal or replacement of any lien referred to in the five
preceding clauses.
EXCEPTIONS FOR SPECIFIED AMOUNT OF INDEBTEDNESS
We and one or more restricted subsidiaries may, without securing the notes
and the other debt securities issued under the indenture, issue, assume or
guarantee secured indebtedness which would otherwise be subject to the above
restrictions, provided that after doing so the aggregate amount of such secured
indebtedness does not exceed 10% of our consolidated net tangible assets. In
computing the aggregate amount of indebtedness outstanding for purposes of the
previous sentence, indebtedness issued, assumed or guaranteed pursuant to the
six exceptions above under "Limitations upon Liens -- General Exceptions" shall
be excluded.
When we use the term "consolidated net tangible assets," we mean the total
amount of assets, less applicable reserves and other properly deductible items,
after deducting:
- all current liabilities, excluding any liabilities which are by their
terms extendible or renewable at the option of the obligor to a time more
than 12 months after the time as of which the amount is being computed;
and
- all segregated goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles, all as set forth on
the most recent balance sheet of The Hartford and its consolidated
subsidiaries and prepared in accordance with generally accepted
accounting principles. Our subsidiaries include any corporation where
more than 50% of its voting stock is owned or controlled by us or by
another subsidiary.
When we use the term "principal property," we mean all land, buildings,
machinery and equipment, and leasehold interests and improvements relating to
these items, which would be reflected on our consolidated balance sheet prepared
in accordance with generally accepted accounting principles, excluding all
tangible
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property located outside the United States of America and excluding any tangible
property which, in the opinion of our board of directors set forth in a board
resolution, is not material to us and our consolidated subsidiaries taken as a
whole.
When we use the term "restricted subsidiary," we mean any subsidiary which
is incorporated under the laws of any state of the United States or of the
District of Columbia, and which is a regulated insurance company principally
engaged in one or more of the property, casualty and life insurance businesses.
However, no subsidiary is a restricted subsidiary:
- if the total assets of that subsidiary are less than 10% of our total
assets and the total assets of our consolidated subsidiaries, including
that subsidiary, in each case as set forth on the most recent fiscal
year-end balance sheets of the subsidiary and us and our consolidated
subsidiaries, respectively, and computed in accordance with generally
accepted accounting principles; or
- if in the judgment of our board of directors, as evidenced by a board
resolution, the subsidiary is not material to the financial condition of
The Hartford and our subsidiaries taken as a whole.
As of the date of this prospectus, the following subsidiaries meet the
definition of restricted subsidiary: Hartford Fire Insurance Company, Hartford
Life Insurance Company, Hartford Life and Accident Insurance Company and
Hartford Life and Annuity Insurance Company.
MODIFICATION AND WAIVER
MODIFICATION
We and the trustee may modify and amend the indenture relating to the notes
with (1) the consent of the holders of a majority in aggregate principal amount
of the notes and (2) if applicable, the consent of the holders of a majority in
aggregate principal amount of any other series of debt securities affected by
such amendment. However, no modification or amendment may, without the consent
of the holder of each outstanding note:
- change the stated maturity of the principal of, or any installment of
interest on, any outstanding note;
- reduce the principal amount of, or the rate of interest on or any premium
payable upon the redemption of any outstanding note;
- change the place of payment, or the coin or currency in which any
outstanding note, or the interest thereon, is payable;
- impair your right to institute suit for the enforcement of any payment on
or relating to any outstanding note after the stated maturity; or
- change the amendment provisions of the indenture requiring the consent of
the affected holders for waiver of compliance with the indenture or
waiver of past defaults.
WAIVER
The holders of a majority in principal amount of the outstanding notes may,
on behalf of the holders of all notes, waive compliance by us with certain
restrictive covenants of the indenture which relate to the notes.
The holders of not less than a majority in principal amount of the
outstanding notes may, on behalf of the holders of the notes, generally waive
any past default under the indenture relating to the notes. However, a default
in the payment of the principal of, premium, if any, or any interest on, any
note or relating to a provision which under the indenture cannot be modified or
amended without the consent of the holder of each outstanding note affected
cannot be so waived.
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EVENTS OF DEFAULT
Under the terms of the indenture, each of the following constitutes an
event of default for the notes:
- default for 30 days in the payment of any interest on the notes when due;
- default in the payment of principal or premium, if any, on the notes at
maturity;
- default in the performance of any other covenant in the indenture for 60
days after written notice;
- our bankruptcy, insolvency or reorganization; or
- acceleration or default in the payment of indebtedness for borrowed money
in excess of $25,000,000, which has not been rescinded or annulled within
30 days after notice or remedied, cured or waived.
We are required to furnish the trustee annually with a statement as to the
fulfillment of our obligations under the indenture. The indenture provides that
the trustee may withhold notice to you of any default, except in respect of the
payment of principal or interest on the notes, if it considers it in the
interests of the holders of the notes to do so.
EFFECT OF AN EVENT OF DEFAULT
If an event of default exists, the trustee or the holders of not less than
25% in principal amount of the outstanding notes may declare the principal
amount of the notes to be due and payable immediately by a notice in writing to
us, and to the trustee if given by holders. Upon that declaration, the principal
will become immediately due and payable. However, at any time after a
declaration of acceleration has been made, but before a judgment or decree for
payment of the money due has been obtained, the holders of a majority in
principal amount of the outstanding notes may, subject to conditions specified
in the indenture, rescind and annul that declaration.
Subject to the provisions of the indenture relating to the duties of the
trustee, if an event of default then exists, the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at your
request, order or direction, unless you have offered to the trustee reasonable
security or indemnity. Subject to the provisions for the security or
indemnification of the trustee, the holders of a majority in principal amount of
the outstanding notes have the right to direct the time, method and place of
conducting any proceeding for and remedy available to the trustee, or exercising
any trust or power conferred on the trustee in connection with the notes.
LEGAL PROCEEDINGS AND ENFORCEMENT OF RIGHT TO PAYMENT
You will not have any right to institute any proceeding in connection with
the indenture or for any remedy under the indenture, unless you have previously
given to the trustee written notice of a continuing event of default with
respect to the notes. In addition, the holders of at least 25% in principal
amount of the outstanding notes must have made written request, and offered
reasonable indemnity, to the trustee to institute that proceeding as trustee,
and, within 60 days following the receipt of that notice, the trustee must not
have received from the holders of a majority in principal amount of the
outstanding notes a direction inconsistent with that request, and must have
failed to institute the proceeding. However, you will have an absolute right to
receive payment of the principal of, and premium, if any, and interest on the
notes on or after the due dates expressed in the notes and to institute a suit
for the enforcement of that payment.
SATISFACTION AND DISCHARGE
The indenture provides that when, among other things, all notes not
previously delivered to the trustee for cancellation:
- have become due and payable, or
- will become due and payable at their stated maturity within one year,
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and we deposit or cause to be deposited with the trustee, in trust, an amount in
the currency or currencies in which the notes are payable sufficient to pay and
discharge the entire indebtedness on the notes not previously delivered to the
trustee for cancellation, for the principal, premium, if any, and interest to
the date of the deposit or to the stated maturity, as the case may be, then the
indenture will cease to be of further effect, and we will be deemed to have
satisfied and discharged the indenture with respect to the notes. However, we
will continue to be obligated to pay all other sums due under the indenture and
to provide the officers' certificates and opinions of counsel described in the
indenture.
DEFEASANCE
The indenture provides that we will be deemed to have paid and discharged
the entire indebtedness on all the notes at any time prior to their stated
maturity or redemption when:
- we have irrevocably deposited or caused to be deposited with the trustee,
in trust, either:
-- sufficient funds to pay and discharge the entire indebtedness on the
notes for the principal, premium, if any, and interest to the stated
maturity or any redemption date, or
-- the amount of U.S. government securities as will, in the written
opinion of independent public accountants delivered to the trustee,
together with predetermined and certain income to accrue, without
consideration of any reinvestment, be sufficient to pay and discharge
when due the entire indebtedness on the notes for principal, premium,
if any, and interest to the stated maturity or any redemption date;
- we have paid or caused to be paid all other sums payable on the notes;
- we have delivered to the trustee an officers' certificate and an opinion
of counsel to the effect that:
-- we have received from, or there has been published by, the Internal
Revenue Service a ruling, or
-- since the date of execution of the indenture, there has been a change
in the applicable federal income tax law,
in either case to the effect that the deposit and related defeasance would
not cause you to recognize income, gain or loss for federal income tax
purposes;
- we have delivered to the trustee an opinion of counsel that neither we
nor the trust held by the trustee will immediately after the deposit just
described be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940; and
- we have delivered to the trustee the other officers' certificates and
opinions of counsel as may be required by the indenture, each stating
that all conditions precedent relating to the satisfaction and discharge
of the entire indebtedness on all notes have been complied with.
GOVERNING LAW
The indenture is, and the new notes will be, governed by and construed in
accordance with the laws of the State of New York.
THE TRUSTEE
JPMorgan Chase Bank is trustee under the indenture. The trustee acts as
depositary for funds of, makes loans to and performs other services for, The
Hartford and our subsidiaries in the normal course of business. JPMorgan Chase
Bank also is the exchange agent for the exchange offer.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States federal
income tax considerations relating to the purchase, ownership and disposition of
the notes to holders who exchange old notes for new notes and who hold the notes
as capital assets. Except as provided below, this discussion applies only to (1)
an individual citizen or resident of the United States, (2) a corporation, or
other entity taxable as a corporation, created or organized in or under the laws
of the United States or any state thereof or the District of Columbia or (3) a
partnership, estate or trust treated, for United States federal income tax
purposes, as a domestic partnership, estate or trust (each referred to as a
"U.S. holder"). This discussion is based upon the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury regulations (including proposed Treasury
regulations) issued thereunder, Internal Revenue Service rulings and
pronouncements and judicial decisions now in effect, all of which are subject to
change, possibly with retroactive effect.
This discussion does not address all aspects of United States federal
income taxation that may be relevant to holders in light of their particular
circumstances, such as holders who are subject to special tax treatment (for
example, (1) banks, regulated investment companies, insurance companies, dealers
in securities or currencies or tax-exempt organizations, (2) persons holding
notes as part of a straddle, hedge, conversion transaction or other integrated
investment or (3) persons whose functional currency is not the U.S. dollar),
some of which may be subject to special rules, nor does it address alternative
minimum taxes, federal estate taxes or state, local or foreign taxes.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES IN
LIGHT OF THEIR OWN CIRCUMSTANCES.
EXCHANGE OF NOTES PURSUANT TO EXCHANGE OFFER
The exchange of an old note for a new note will not constitute a taxable
exchange of the old note. Accordingly, (1) no gain or loss will be recognized by
a U.S. holder (or an investor that is not a U.S. holder) upon receipt of a new
note; (2) the adjusted tax basis of the new note will be the same as the
adjusted tax basis of the old note exchanged therefor; and (3) the holding
period of the new note will include the holding period of the old note exchanged
therefor.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
The notes were not issued with an issue price that is less than their
stated redemption price at maturity by more than the statutory de minimis
amount. As a result, the notes will not be subject to the original issue
discount ("OID") rules, so that U.S. holders will generally be taxed on the
stated interest on the notes as ordinary income at the time it is paid or
accrued in accordance with the U.S. holder's regular method of tax accounting.
At the time we issued the old notes, there was a possibility that we would
have been obliged to pay amounts in excess of the stated interest and principal
on the notes, if the exchange offer registration statement had not been not
filed, declared effective or completed within the applicable time periods (or
certain other actions were not taken), as described above under the heading "The
Exchange Offer -- Additional Interest." Under applicable Treasury regulations,
the possibility that any payment in excess of stated interest or principal will
be made will not affect the amount or timing of interest income a U.S. holder of
a debt instrument is required to recognize, provided that there is only a remote
likelihood as of the date the notes are issued that the additional payments will
be made. At the time we issued the old notes we took the position that the
likelihood that we would be obligated to make any such additional payments was
remote. We continue to believe that that position is correct. Therefore, the
possibility of such payments should not affect the amount or timing of income a
U.S. holder will recognize. Our determination that these contingencies were
remote is binding on a U.S. holder unless the U.S. holder discloses a contrary
position in the manner required by applicable Treasury regulations. Our
determination is not, however, binding on the IRS, and if the IRS were to
challenge our determination, a U.S. holder might be required to accrue income on
the notes in excess of stated interest, and to treat as ordinary income rather
than capital gain any income realized on the taxable
26
disposition of a note before the resolution of the contingencies. The discussion
below assumes that our determination that these contingences were remote was
correct.
SALE, EXCHANGE, RETIREMENT OR OTHER DISPOSITION OF THE NOTES
Upon the sale, exchange or other disposition of a note, a U.S. holder will
generally recognize taxable gain or loss in an amount equal to the difference
between the amount realized by such U.S. holder and such U.S. holder's adjusted
tax basis in the notes. Any gain or loss so recognized will generally be capital
gain or loss and be long-term capital gain or loss if the U.S. holder has held
the notes for more than one year at the time of disposition. A reduced tax rate
on long-term capital gain may apply to individual holders. The deductibility of
capital losses is subject to limitations.
NON-U.S. HOLDERS
If an investor is not a U.S. holder as defined above (a "non-U.S. holder"),
payments received with respect to the notes should not be subject to United
States withholding tax, provided that such non-U.S. holder (1) does not actually
or constructively hold 10% or more of the combined voting power of all classes
of our stock that are entitled to vote within the meaning of section 871(h)(3)
of the Code, (2) is not a controlled foreign corporation for United States
federal income tax purposes that is related to us through stock ownership and
(3) complies with applicable certification requirements relating to its non-U.S.
status (including, in general, furnishing an IRS Form W-8 BEN or a substitute
form).
In general, United States federal withholding tax will not apply to any
gain or income realized by a non-U.S. holder on the sale, exchange or other
disposition of the notes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Unless a U.S. holder is an exempt recipient, such as a corporation,
payments under the notes and the proceeds received from the sale or other
disposition of notes may be subject to information reporting and may also be
subject to United States federal backup withholding tax at the applicable rate
if such U.S. holder fails to supply an accurate taxpayer identification number
or otherwise fails to comply with applicable United States information reporting
or certification requirements. Any amounts so withheld may be allowed as a
credit against the holder's United States federal income tax liability provided
the required information is furnished to the IRS.
A U.S. holder will also be subject to information reporting with respect to
payments on the notes and proceeds from the sale or other disposition of the
notes, unless such U.S. holder is a corporation or other exempt recipient and
appropriately establishes that exemption.
A non-U.S. holder may have to comply with certification procedures to
establish that such holder is not a U.S. person in order to avoid information
reporting and backup withholding tax.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and Section 4975 of the Code, prohibit pension, profit-sharing
or other employee benefit plans, as well as individual retirement accounts and
Keogh plans subject to Section 4975 of the Code ("Plans"), from engaging in
certain transactions involving "plan assets" with persons who are "parties in
interest" under ERISA or "disqualified persons" under the Code ("Parties in
Interest") with respect to certain Plans. As a result of our business, we may be
a Party in Interest with respect to certain Plans. Where we are a Party in
Interest with respect to a Plan (either directly or by reason of our ownership
of our subsidiaries), the purchase and subsequent holding of the old notes by or
on behalf of the Plan may have been, and the exchange of the old notes for the
new notes and the subsequent holding of the new notes may be, a prohibited
transaction under Section 406(a)(1) of ERISA and Section 4975(c)(1) of the Code,
unless exemptive relief were available under an applicable administrative
exemption (as described below) or there was some other basis on which the
transaction was not prohibited.
27
Accordingly, the offering materials with respect to the old notes stated
that such old notes could not be purchased or held by any Plan, any entity whose
underlying assets include "plan assets" by reason of any Plan's investment in
the entity (a "Plan Asset Entity") or any person investing "plan assets" of any
Plan, unless such purchaser or holder is eligible for the exemptive relief
available under prohibited Transaction Class Exemption ("PTCE") 96-23, 95-60,
91-38, 90-1 or 84-14 issued by the U.S. Department of Labor or there was some
other basis on which the purchase and holding of the old notes by the Plan Asset
Entity is not prohibited. By its purchase of the old notes, a holder of the old
notes or any interest therein was deemed to have represented that either (a) it
was not a Plan or a Plan Asset Entity and did not purchase the notes on behalf
of or with "plan assets" of any Plan or (b) its purchase and holding of the old
notes was eligible for the exemptive relief available under PTCE 96-23, 95-60,
91-38, 90-1 or 84-14 or there was some basis on which such participation and
holding is not prohibited. By its participation in the exchange offer, a holder
of the new notes or any interest therein will be deemed to have represented that
it is not in breach of the foregoing representation made in respect of the old
notes and that either (a) it is not a Plan or a Plan Asset Entity and is not
acquiring the new notes on behalf of or with "plan assets" of any Plan or (b)
its participation in the exchange offer and holding of the new notes is eligible
for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14
or there is some basis on which such participation and holding is not
prohibited.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and
foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to
these "prohibited transaction" rules of ERISA or Section 4975 of the Code, but
may be subject to similar rules under other applicable laws or documents. Due to
the complexity of the applicable rules, it is particularly important that
fiduciaries or other persons considering participating in the exchange offer and
holding the new notes on behalf of or with "plan assets" of any Plan consult
with their counsel regarding the relevant provisions of ERISA and the Code and
the availability of exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or
84-14.
PLAN OF DISTRIBUTION
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of new notes received in exchange for old notes where
such old notes were acquired as a result of market-making activities or other
trading activities.
We will not receive any proceeds from any sale of new notes by
broker-dealers. New notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the new notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such new notes. Any broker-dealer that
resells new notes that were received by it for its own account pursuant to the
exchange offer and any broker or dealer that participates in a distribution of
such new notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of new notes and any commission
or concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
We have agreed to pay certain expenses incident to the exchange offer other
than commissions or concessions of any brokers or dealers and will indemnify
certain holders of the notes against certain liabilities, including liabilities
under the Securities Act.
28
Based on interpretations by the staff of the SEC as set forth in no-action
letters issued to third parties (including Exxon Capital Holdings Corporation
(available May 13, 1988), Morgan Stanley & Co. Incorporated (available June 5,
1991), K-III Communications Corporation (available May 14, 1993) and Shearman &
Sterling (available July 2, 1993)), we believe that the new notes issued
pursuant to the exchange offer may be offered for resale, resold and otherwise
transferred by any holder of such new notes, other than any such holder that is
a broker-dealer or an "affiliate" of us within the meaning of Rule 405 under the
Securities Act, without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that:
- such new notes are acquired in the ordinary course of business,
- at the time of the commencement of the exchange offer such holder has no
arrangement or understanding with any person to participate in a
distribution of such new notes, and
- such holder is not engaged in, and does not intend to engage in, a
distribution of such notes.
We have not sought, and do not intend to seek, a no-action letter from the
SEC with respect to the effects of the exchange offer, and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the new notes as it has in such no-action letters.
LEGAL OPINIONS
The validity of the new notes offered hereby has been passed upon for us by
Debevoise & Plimpton, New York, New York.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this prospectus by reference from our Annual Report on
Form 10-K for the year ended December 31, 2002 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference (which report expresses an unqualified opinion
and includes an explanatory paragraph relating to the changes in our method of
accounting for (a) goodwill and indefinite-lived intangible assets in 2002, (b)
derivative instruments and hedging activities in 2001, and (c) the recognition
of interest income and impairment on purchased retained beneficial interests in
securitized financial assets in 2001), and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
With respect to the unaudited interim financial information for the periods
ended March 31, 2003 and 2002, June 30, 2003 and 2002 and September 30, 2003 and
2002 which is incorporated herein by reference, Deloitte & Touche LLP have
applied limited procedures in accordance with professional standards for a
review of such information. However, as stated in their reports included in our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003, June 30,
2003 and September 30, 2003 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their reports on the unaudited interim
financial information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement that we filed with the
SEC. The registration statement, including the attached exhibits, contains
additional relevant information about us. The rules and regulations of the SEC
allow us to omit some of the information about The Hartford. In addition, we
file reports, proxy statements, information statements and other information
with the SEC. This information may be read and copied at the Public Reference
Room of the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washing-
29
ton, D.C. 20549. Information regarding the operation of the Public Reference
Room may be obtained by calling the SEC at 1-800-SEC-0330. The material may also
be accessed electronically by means of the SEC's home page on the Internet at
http://www.sec.gov or through our web site at http://www.thehartford.com.
Our common stock is listed on The New York Stock Exchange, Inc. You can
also inspect reports and other information concerning us at the office of The
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
INCORPORATION BY REFERENCE
The rules of the SEC allow us to incorporate by reference information into
this prospectus. The information incorporated by reference is considered to be a
part of this prospectus, and information that we file later with the SEC will
automatically update and supercede this information. This prospectus
incorporates by reference the documents listed below.
- Our Annual Report on Form 10-K for the year ended December 31, 2002,
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003,
June 30, 2003 and September 30, 2003,
- Description of our common stock and the rights associated with our common
stock contained in our registration statement on Form 8-A, dated
September 18, 1995 (as amended by the Form 8-A/A filed on November 13,
1995),
- Our Current Reports on Form 8-K filed on March 17, 2003, March 25, 2003,
May 8, 2003, May 30, 2003, July 8, 2003, December 2, 2003, December 23,
2003 and January 14, 2004, and
- All documents filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Exchange Act after the date of this prospectus and before the
completion of the exchange offer.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents referred to above
which have been or may be incorporated by reference in this prospectus. You
should direct requests for those documents to The Hartford Financial Services
Group, Inc., Hartford Plaza, Hartford, Connecticut 06115, Attention: Brian S.
Becker, Senior Vice President and Corporate Secretary (Telephone: 860-547-5000).
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$320,000,000
(HARTFORD LOGO)
OFFER TO EXCHANGE UP TO $320,000,000 AGGREGATE PRINCIPAL AMOUNT
OF OUR 4.625% SENIOR NOTES DUE 2013,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
FOR ANY AND ALL OF THE $320,000,000 AGGREGATE PRINCIPAL AMOUNT
OF OUR OUTSTANDING UNREGISTERED 4.625% SENIOR NOTES DUE 2013
-------------------------
PROSPECTUS
JANUARY 22, 2004
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